Debate over the Government's amendments to the Future of Financial Advice (FOFA) reforms has distracted Australians from focusing on the real purpose of financial advice, the Association of Financial Advisers (AFA) believes.
In the latest batch of second round submission to the Financial System Inquiry (FSI), released yesterday, AFA chief executive, Brad Fox, warned that restoring "trust in financial advice is absolutely critical" for the future of the financial advice profession, following negative media coverage in the wake of the Senate's report into the Australian Investments and Securities Commission (ASIC).
"The events of 2014, including the level of media coverage related to the FOFA amendments and the release of the Senate report into ASIC, have had a significantly negative impact upon the public perception of financial advice," he said.
"This is a poor outcome for consumers, the country and for financial advisers.
"It appears the impact has been greatest on those who don't have a financial adviser relationship. They have no context within which to assess the media driven information. They are more likely to take what the media has said (be it accurate or inaccurate) about the industry, or about specific advisers, and assume that this is typical across all advisers and advice."
While Fox raised concerns over the impact that negative reports about the financial advice profession were having, he told the FSI that AFA research had shown that those who sought advice "understood the role of their adviser, and trusted them".
"These consumers were happier with their investments and had greater peace of mind than those who were trying to navigate the complex world of investment and insurance without the help of a financial adviser," he said.
"The research clearly demonstrated that there is great value in financial advice.
The AFA also backed proposals for a "relevant university degree as the entry criteria for new financial advisers", but Fox said he did not believe that this goal could be achieved in the short-term.
