A key risk for financial services firms today is conveying trustworthiness to clients, a KPMG report highlights.
The professional services firm identified the top risks threatening Australian businesses in the current environment in a report titled, Top Risks to Australian Business 2024–25. Looking specifically at the Australian financial services industry, KPMG described there is “growing mistrust” that presents both general and specific risks for the sector.
“General risks include the increasing challenge of demonstrating to customers and regulators that financial services firms are trustworthy and are acting in the best interests of their clients and the broader financial system,” the report stated.
“Stakeholders – from government officials to customers to employees – expect more and more from financial services firms, and the task of rebuilding trust following the 2019 royal commission is arguably still underway.”
Money Management previously spoke with five advisers who reflected on the five years since the Hayne royal commission concluded in 2019. Several described how they felt “shamed”, “lonely” and “saw their confidence dented” by the negative press and commentary surrounding the industry at the time.
KPMG encouraged financial services companies to invest in trust capital through a collaborative approach.
“However, the events that prompted the royal commission in Australia mean that the industry faces an uphill battle in doing so.”
KPMG’s report comes as new research from the Financial Advice Association Australian found that trust in financial advisers reached an all-time high, with 94 per cent of advised clients trusting their adviser to act in their best interests.
“According to clients of financial advisers, the top three ways to describe their financial advice relationship are: trusted and transparent, reliable, and has good rapport,” the paper stated.
The findings coincide with findings from CoreData, which revealed that the level of trust in Australian financial planners has bounced back to its pre-Hayne levels. In 2014, advisers were rated 5.5 on the trust scale, which then took a major hit in 2017 during the royal commission when trust levels fell to nearly three out of 10.
Since then, consumer trust levels in advisers have been on a slow upwards trajectory, following the transformative event, and have now returned to approximately 5.5 on the trust scale in 2024, CoreData found, nearly seven years after the royal commission.
