The AFA says recent research that reveals a low level of consumer trust in financial advisers means advisers must stand up for what they believe in and prepare for battle.
A paper released by Roy Morgan Research last week said that the debate over payment methods is only one issue that needs to be addressed in relation to financial advice. Norman Morris, Industry Communications Director, Roy Morgan Research,”Central to the fiduciary responsibility of advisers is that they are considered to be independent by their clients and not acting out of self-interest – such as having a greater focus on commissions, or recommendations limited to their own products,” he said.
According to Mr Morris, the research indicates that consumers are confused about what “independent financial advice” means, particularly when the advice brand is different to the brand of its owner, but also when the name is the same (eg AMP Financial Planning): “The fact that there are such major differences in understanding of the advisers’ status amongst clients who use the same dealer group should be of major concern to the regulators and is in need of attention,” said Mr Morris.
… only 25% of the population rates financial advisers as “very high” or “high” for ethics and honesty
In other Roy Morgan Research which compares how the population rates occupations for ‘ethics’ and ‘honesty’, only 25% of the population rates financial advisers as “very high” or “high” for ethics and honesty. This is a relatively low rating when compared to other professionals who people approach for advice e.g. pharmacists (85 per cent), doctors (79 per cent), dentists (68 per cent), accountants (50 per cent), bank managers (33 per cent) and lawyers (32 per cent).
Responding to these research findings, AFA President, Dr Jim Taggart, issued a challenge to advisers to “prepare for battle:”
“Trust is fundamental to the advice relationship,” Dr Taggart said. “We know from our own Back to Basics consumer research that those who have advisers highly trust them – in fact they rank advisers as the most trusted professional, after specialist doctors and dentists. However, those who don’t have advisers don’t trust them. We have to ask ourselves why.
We have been too quiet for too long…
“We have been too quiet for too long and ultimately, silence becomes consent,” Dr Taggart said. “The future of advice is now up for grabs and the only people who can fight this battle are those of us who truly believe in the value of advice. No-one else is going to fight our battles for us. We have to stand up for what we believe in.”
The statement was issued ahead of the AFA’s 2010 National Conference, which commences on Sunday 24 October.
