Consumers see the value in financial advice but, in general, the perception is that its only for the wealthy.
These are the findings from research released earlier this week by the Australian Securities and Investment Commission (ASIC). In the report, entitled Financial Advice: what consumers really think, the regulator indicated it would conduct more research in this space.
“The good news for industry is that consumers who had recently received financial advice had more positive attitudes towards financial advisers than those who had not. Moreover, even limited knowledge of industry reforms, such as FOFA (Future of Financial Advice), appears to have improved consumer attitudes towards the sector. So, it is even more important for industry to get on board with the reforms,” ASIC Commissioner Danielle Press said, in an official message.
Gap in understanding
Back in March, ASIC’s report Financial Advice: The Mind Gap showed a general lack of public awareness when it comes to the difference between general advice and personal advice, with only 53 per cent of respondents able to correctly identify general advice.
At the time, ASIC Commissioner Karen Chester said, “And even when provided the general advice warning, nearly 40 per cent of those surveyed wrongly believed the adviser had an obligation to take their personal circumstances into account.”
She added, “This disturbing gap in understanding as to whether the advice they are getting is personal or not means many consumers are under the false premise their interests are being prioritised, when no such protection exists.”
Financial advice came under a tremendous amount of scrutiny during the Royal Commission into Misconduct in the Financial Services sector.
Since then, the Financial Adviser Standards and Ethics Authority (FASEA) and the corporate regulator have to come together to co-regulate the new professional standards in the advice industry.
Last week, the Australian Securities and Investments Commission (ASIC) announced they would be investigating the transition of removing grandfathered conflicted remuneration, a practice the Government committed earlier this year to ending by 2021.
Value and Accessibility
“Although not all Australians need financial advice, it is imperative that people wanting advice when making critical financial decisions are able to access high-quality advice and, equally, to feel confident that the advice is in their best interests,” Press said.
The report looked at the barriers to financial advice also, showing that 35 per cent of respondents said getting Financial advice was too expensive, with a further 18 per cent indicating they didn’t see the value in getting financial advice.
Figures taken from ASIC’s report
One of the report’s more-concerning aspects was that 49 per cent of online participants indicated that they thought financial advisers were more interested in making themselves rich than providing sound advice, with 37 per cent unconvinced advisers have consumers’ best interests at heart.
Those who had in fact received financial advice, and those with ‘even limited’ knowledge of the Future of Financial Advice (FOFA) reforms, however, seemed generally to have a more-positive perception of the industry.