Government got it wrong, says AFA

The Government has seriously misread the major issues relating to financial advice, according to the chief executive of the Association of Financial Advisers (AFA), Richard Klipin.

New research into consumer attitudes towards financial advice commissioned by the AFA and carried out by CoreData found no overwhelming evidence that investors want to pay for advice in any one particular way.

"The Government, with its fixation on adviser remuneration, appears to have blinkered vision around the real issues - which is Australians need financial advice and are better off when they receive it," said Klipin at an AFA Media Briefing.

His comments follow recent announcements by the Government about a prospective ban on commission-based payments and the introduction of a fee-for-service remuneration model, which would commence in July 2012.

It is hoped the new remuneration model would create better transparency and eliminate conflicts of interest in providing financial advice.

However, Klipin said there will always be bad advisers, but there are many more good ones and that the research demonstrates there is already great value in financial advice.

"What [consumers] want is value for money and the cost of advice to be transparent and agreed [to] by them upfront. And that is what they currently get," he added.

The new survey also revealed consumers with financial advisers rank them the third most trusted professionals, after medical specialists and dentists.

CoreData/brandmanagement's Andrew Inwood said three in 10 Australians receive advice and at least three of the remaining seven have a latent need for it.

"The industry and the profession now need to focus on the clear benefits to consumers and ensure their [voices are] well heard and well understood by the broader community," Inwood said.

"What advisers now need to do is demonstrate value and utility to those people who do not actively seek advice," Klipin added.