Two out of every five Australians have never used the services of a financial planner. There is a significant trust gap between those who use the services of financial planners and those who don’t – this is a major issue for the financial planning profession, and if recent research is anything to go by, the profession still has some major issues to deal with.
A 2010 Association of Financial Advisers (AFA) whitepaper examined this (dis)trust issue. It found that specialist doctors are the most trusted among those who give professional advice, who received a rating of 8 out of 10. Financial advisers were ranked a trust rating of 7.5 out of 10 by their clients, however, consumers who do not use the services of an adviser only gave them a rating of 4.5 out of 10.
This low level of trust in financial advisers can be put down to a number of reasons. The negative publicity surrounding high profile collapses of financial planning businesses such as Storm Financial have unfortunately tarred the image of financial planners across the board. Financial planners behaving badly is one of the main reasons that Minister Bill Shorten has introduced the Future of Financial Advice (FoFA) reforms.
While most planners do act responsibly and ethically on behalf of both their profession and clients, Australians continue to remain confused about planner independence when it comes to selecting financial products when it comes to the “Big 6” financial planning groups.
A recent Roy Morgan Research report, Superannuation and Wealth Management in Australia, found that advisers from these groups continue to show an overwhelming preference for their own products when advising clients. Roy Morgan has also found that just over a quarter of consumers rate financial planners as very high or high when it comes to ethics and honesty.
Financial advisers in the bigger financial planning groups are in a potentially difficult situation – and potential conflicts of interest are something that must be addressed if the profession is to improve its trust standing in the eyes of Australian consumers.
