Winning back trust a slow burn for advisers

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 practice 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. 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 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.”