Consumers scrutinise advice model
Garry Weaven
The role of the financial planner has come under scrutiny with 85 per cent of Australian consumers believing there should be a law in place requiring planners to provide advice or make investments only in the ‘best interest of their clients’, a new survey has found.
The Newspoll survey found that one in five Australian adults incorrectly believe there is a law in place requiring financial planners to provide advice or make investments in the best interest of their clients. While only 16 per cent of those surveyed believe financial planners give advice only with the best interests of their clients in mind.
The survey comes as a follow on from investigations last year by the Australian Securities and Investments Commission (ASIC), which found there were a number of financial planners who have been switching their clients out of super funds inappropriately.
In a speech to the November 2006 Financial Planners Association (FPA) conference, ASIC chairman, Jeffrey Lucy, also proposed financial planners should act in the best interests of their clients.
Industry Super Network spokesperson Garry Weaven, believes the survey shows Australian consumers want to have confidence in the financial advice they are given.
“The current system, where there is a conflict between sales and advice, does not meet the needs of today’s consumers and should be reformed,” Weaven said.
A recent review by SuperRatings showed that industry super funds could deliver $120,000 more retirement dollars out during one year, than retail master trusts.
The review found that Australians could be almost 25 per cent better off in an industry super fund, even if there was no investment outperformance. The research also showed that industry super funds on average delivered $17.90 earnings per dollar of fees taken out during one year, while retail master trusts on average delivered only $7.70.
The Newspoll survey was undertaken among a nationally representative sample of 1,200 respondents aged 18 years and over between February 23 and 25, 2007.
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