Royal Commission shows us why Financial Planning, in its current form, isn’t worth the risk

It is unfortunate but to the industry’s enormous discredit, the Royal Commissioner Mr Ken Hayne, has a lot of material to work with in his scathing review of the Financial Planning Industry and many Financial Planners in particular.

Despite nearly 10 years of intermittent and often ineffective reform, Mr Ripoll believes it’s not there yet.

“Financial planning doesn’t have professional standards, a code of conduct, defined educational standards and the commitment to a fiduciary type duty to customers that real professions have,” lamented the former Labor MP – Mr Ripoll in a recent interview.

There are a plethora of problems that have been highlighted by a recent Australian Securities and Investment Commission survey which have found that despite these reforms  79 per cent of financial advice still breached the Corporations Act.

As quoted by the ABC “A large number of financial advisers are still tied within the major institutions and maybe the question is, are the systems they are working in supporting them giving advice that is in their clients’ best interests?”

One of the many issues at the heart of the Financial Planning industry’s problems is education, or the lack of it.

“The base levels for the current education is a lot lower than virtually any other industry that’s out there, for example hairdressing,” said Associate Professor, Adrian Raftery, from the Deakin Business School. It is deplorable and quite frankly terrifying how little education and training it can take to become a qualified and certified Financial Planner.

“You can be a car salesman one week and effectively do a 34-hour course and be a financial adviser the next week.”

Despite the official terms of  “Financial Planner” and “Financial Adviser” having been enshrined in legislation it means little in the greater scheme of things when you consider the terms are not relative to anything meaningful that relates to client outcomes and not just a bit of paper.

Lets face it – its been quotes that “Clients are also far more savvy than they were 10 years ago and they are putting a lot of pressure on the industry to improve, and that’s a great thing,”

With the proliferation of general information sites like Finder and iSelect which are still often hit and miss we see specialist companies like Hashching for Mortgages and Find Financial Advisors for Financial Planning services becoming more and more desirable.

The Royal Commission has highlighted how unprofessional and unethical the industry has been operating so its refreshing to see that the independent evaluation and recommendation sites like Find Financial Planners only recommends non bank Financial Planners that they heavily vet and qualify.

We find that most people rely on a referral from their friend or accountant but Find Financial Advisors check the Financial Planners qualifications, they review their last two independent audits, they even check with The Australian Securities and Investment Commission ASIC to make sure they haven’t been banned, disqualified, bankrupt or are under investigation.

This is a critical step most people cant or don’t know how to do and so fall prey to unscrupulous Financial Planners that look great and sound great but are often wolves in sheep clothing.

Find Financial Advisors then enforce a free first appointment policy on all approved Financial Planners and even do customer service surveys to make sure the experience exceeds expectations and so they can keep quality standards high.

We strongly recommend you use an independent vetting and management service like Find Financial Advisors as the way to find a quality and qualified Financial Planner that can check to make sure your Superannuation is being maximised, help create an investment and wealth creation strategy, set up or manage a self managed superannuation fund or even ensure you are adequately covered for your personal risk insurances.

The unique service that is provided by Find Financial Advisors vets and verifies Financial Planners and is both fee and obligation free to the consumer.

We hope that services like Find Financial Advisors and Hashching keep filling the need for truly independent and unbiased fee free services that help the consumer make a more informed and better qualified decision.

5 tips for finding a financial adviser

  1. One size doesn’t fit all, so shop around to find a planner that’s right for you. Make sure they really have expertise in the area in which they’re offering advice.
  2. Ensure the planner is licensed to provide advice or is the authorised representative of a financial services licence holder. All licence holders have to register with ASIC.
  3. Ask the planner for full disclosure about which financial institutions they have a financial relationship with, if any.
  4. Ask for an explanation of why the adviser is recommending products they receive a commission on. They may still be valid recommendations, but the adviser should be able to explain why the advice suits you.
  5. Make sure to get an annual statement outlining the advice you’ve received, why it was given and how much it costs if you’re charged on an ongoing basis instead of a fee for service.
Try a FREE Online Tool to find the best Financial Planner for your needs.