Lodge online

Register for online access

How to lodge

Download paper forms

Search all forms

Search ASIC registers

Within: 

Search financial services/credit licensees and representatives, liquidators, auditors and more

Professional registers

--------------------------------------------------

More information

Lodge online

decrease text size increase text size print page
12-55MR ASIC releases full report on retirement advice shadow shopping research

Tuesday 27 March 2012


ASIC today released the full findings of ‘shadow shopping’ research which examined financial advice given to people to help them plan for retirement.

The purpose of Report 279 Shadow shopping study of financial advice (REP 279) was to investigate the quality of retirement advice provided and people’s experience of obtaining financial advice.

ASIC’s research found that:
ASIC Commissioner Peter Kell said, ‘The results of ASIC’s shadow shopping research demonstrate that there is scope for significant improvement in the provision of good quality retirement advice in Australia. Our research found there are several areas where the financial advice industry needs to lift its game.

‘Advisers are important gatekeepers who have a key role to play in helping consumers plan and manage their finances. This underlines the importance for the industry to remove conflicts of interest and improve overall professional standards to ensure that their client’s trust is not misplaced,’ he said.

Mr Kell said, ‘Financial advisers need to provide realistic and client focused communication about people’s retirement prospects including how long their money will last, even if this can on occasion be a challenging conversation.’

‘Too much poor advice provided to our shadow shoppers was overly product focused and not strategic enough to help clients develop a realistic and achievable plan for their retirement and make the most of their financial resources taking into account their circumstances and attitudes to risk,’ he said.

ASIC’s research also found that people have difficulty in assessing the quality of the financial advice they have received. Participants in the study rated their advisers and the advice they received highly, even when they received poor advice.

Mr Kell said, ‘Consumers’ difficulties in assessing advice quality are not surprising. People who thoroughly understand personal finance are less likely to need a financial planner.’

ASIC’s report points to a range of actions that are being taken to help improve the quality of advice. The recent Future of Financial Advice Reforms will play a key role in lifting standards in the industry and putting greater focus on the client. Major industry efforts to improve standards, such as through codes of conduct, can also make an important contribution to addressing some of the industry weaknesses identified by this research. In addition to this ASIC will also:
Consumers can find more information of finding a financial adviser at moneysmart.gov.au.


Background


This project looked at 64 examples of personal financial advice given to real consumers. Participants sought advice of their own initiative and found their own adviser. Our sample included advice examples from 36 different Australian Financial Services licensees.

A 12-person expert reference group comprised of industry representatives, a representative of the Financial Ombudsman Service and a representative of ASIC’s Consumer Advisory Panel provided guidance and oversight of the advice assessment process. ASIC analysed the advice examples in this research using quality of advice benchmarks developed in consultation with this expert reference group. Each advice example was graded good, adequate or poor based on these benchmarks.

The following problems were common in the advice we graded as poor or adequate:

Advice rated as adequate also had good elements, but fell short due to significant weaknesses in the recommended strategy or products. Poor quality financial advice failed to meet the requirements of the Corporations Act that the adviser must have a reasonable basis for their advice. The report includes real examples of both good and poor advice, providing useful guidance to industry.

Download Report 279 Shadow shopping study of financial advice


decrease text size increase text size print page