ASIC slams advisers for 'woeful' advice

by Ben Abbott25 Jan 2012

Financial advisers have been raked over the parliamentary coals by advice watchdog ASIC, which has released findings painting a grim picture of advice quality in Australia.

In his opening address to a parliamentary committee yesterday, ASIC commissioner Peter Kell said a surveillance operation conducted by ASIC found only 3% of financial plans could be considered 'good'.

Thirty six per cent were considered 'poor' by ASIC, while the remaining 61% were said to adequately meet client needs.

The results refer to a shadow shopping exercise in which 64 plans were sought from Australian advisers, particularly for clients who were in or nearing retirement.

"There was consistent failure by advisers to talk to clients about what they can realistically fund out of their retirement savings," ASIC commissioner Peter Kell said in his statement.

"For example, only a few undertook rigorous retirement income projects and many plans contained woefully inadequate projections, with poor or unrealistic technical assumptions," he said.

Kell said the shadow shop was intended to establish from current retirement advice what good practice was, and as a result, the findings were "clearly disappointing".

The industry ws slammed for handing out too much "generic and pro forma advice". ASIC also noted conflict of interest as a problem, with consumers given products they did not seek or need.

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COMMENTS

  • by Peter 25/01/2012 10:16:37 AM

    I find ASIC comments disingenuous. They know full well that the content, layout, design and what must and what must not be addressed in a Statement of Advice is fully governed by the Licensee and their Legal Depts. As an Authorised Representative, I get told what to do and if I do something different, then I am in breach of compliance requirements and my Professional Liability Insurance. If the plans are in sufficient or wrong or whatever, then perhaps ASIC should stipulate specifically what needs to go into them and furthermore, I hate getting tarred with this brush when it is out of my control! And ASIC are aware of this! Thanks for nothing!

  • by WhistleBlower. 25/01/2012 10:22:07 AM

    ... and what's so surprising about this?
    I mean seriouisly - anyone older than 40 remembers that prior to being re-branded as "Financial Planners" these guys were called 'insurance salesman' --- you can't just re-brand a whole profession then audit it 15 years later and expect vastly different results.

    The qaulity of advice from Mortgage Brokers far outstrips that of expensive fortune telling with a 'over the horizon' prediction --- and, you can't even blame Financial Planners, it was stupid Government 17 years ago that led to re-paiting the veneer of that industry... and don't forget, we are discussing banks here, the artful dodgers.... they OWN the vast majority of Financial Planning infrastructure, brands, pipeline, compliance, maintenance.... what's the bet ASIC attempts to slight the little guy who's busting his guts and ignore the Mammoths in the room, banks!

  • by Terry 25/01/2012 11:04:20 AM

    I agree with you Whistleblower. I worked for one of those banks. the focus is purely on sell, sell, sell. not on the quality of the advice or the clients needs. it profot before customer. I couldn't work under that ethos.