Winning back trust a slow burn for advisers

Picture: JONO SEARLE TRUST in financial advisers is slowly being rebuilt after years of confusion and costly controversies.

Money experts say improved regulations for minimum education standards, remuneration and ethics are preventing the potential return of some past dubious practices, including from major banks.

Certified financial planner Patrick Canion says there are 18,000 financial planners in Australia, so they are not hard to find, but research had found that a majority of people have not visited a planner and do not intend to.

“They see all the bad publicity over all the years, they don’t really understand what financial planners do and they don’t understand the changes that have happened in the way financial planners are remunerated,” he says.

“No-one can blame you for not immediately trusting a financial planner.

“They came out of the days of insurance agents when agents were paid by commission. Most did the right thing back then, but some didn’t, and the standards to get a ticket to practise were pretty low.”

Most planners now use feefor-service models, similar to other professionals, and the days of anybody being able to call themselves a financial adviser are numbered.

“From January 1, 2019, you cannot call yourself a financial planner or financial adviser unless you are registered with ASIC,” Mr Canion says.

In the past, anyone ranging from an investment spruiker to a mortgage salesperson could call themselves a financial adviser, he says. ANNUAL increases to health insurance premiums are causing Australian families pain, with new research revealing that after mortgage or rent, private health insurance is the most expensive cost to 27 per cent of households. Meanwhile, private health is among the top three most expensive bills for 71 per cent of households and in top five for 91 per cent. Commissioned by comparethemarket.com.au, the survey canvassed 1000 Australians with health insurance, after 34 private health insurers increased their premiums on April 1, some by as much as 8 per cent. The hikes added pressure to some already struggling household budgets, the site’s spokeswoman Abigail Koch said. Mr Canion says people can find help through the www.fpa.com.au website’s find a planner service, by checking online reviews of advisers, and by visiting more than one adviser for an initial meeting. Word-ofmouth is another tool, so check with family and friends. Mr Canion says rebuilding trust was likely to take another five years. “Trust comes from time, but

Australians over 65 were hit the hardest, with 44 per cent naming private health their most expensive household bill.

“If Australians do cut back or drop their cover, they need to be prepared to pay more or possibly face longer waiting times if they fall sick or get injured,” Ms Koch said.

Health customers will change providers if they see value. There has been strong interest in a One Big Switch campaign, which secured a $500 cashback deal for customers who change their health cover to HCF.

The campaign has attracted 71,000 registrations ahead of its June 30 end date, with 34,559 of these seeking a follow-up quote; proof that plenty of people are shopping around.

Mother-of-two Freya Pavlovic recently dropped her family’s hospital cover after the bills became too expensive.

“I was very stressed, so I said ‘we’re dropping it for the moment’,” Ms Pavlovic said.

“When I had my daughter, I was paying $90 a fortnight. Now she is 10 and I was paying $349 a month, so it has almost doubled.”

“We hadn’t put in a claim on hospital cover for four years and didn’t have room financially to keep paying. We’re looking at comparison websites to see what’s out there.”

One Big Switch director of campaigns Joel Gibson said the cost of health cover had effectively doubled over 12 years. “Health insurance is fast becoming a luxury, but people feel they can’t afford not to have it,”

he said. you have to take a leap of faith,” he says.

Consumer finance specialist Lisa Montgomery says rebuilding trust is “going to be a slow burn”.

“A big influencing factor has been that some of the big banks have been involved,” she says.

“We should be able to trust our banking system, particularly the big four, who have enjoyed a significant amount of trust.

“The implication of some of the bigger banks has been the tipping point for consumers in relation to how they see financial planners.”

Ms Montgomery says regulators have done a good job in recent years of “putting in place checks and balances, which should provide comfort to people”.

She says bad press had combined with a lack of understanding of financial advice to keep people away.

“As consumers, we don’t understand the space. That’s why over time property has been a really strong asset class – people understand property.

“They don’t understand shares and structured investment vehicles.

“When it comes to your retirement and trusting somebody to manage those dollars that are going to carry you, it’s such a big deal.”