asic survey on financial planners

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    For those who have one.

    Heres an extract:


    Non-impartial advice:

    A common observation by several judges was that clients’ interests did not appear
    to be the sole factor in the plan strategy or product selection. They characterised
    this practice as “commission-driven product selling, not impartial advice”.

    “… like many others, [this plan] is just another ‘selling tool’ for managed
    funds” – Judge 4

    “This generic pro-forma style plan is [a] financial needs analysis / sales
    justification document. “ – Judge 2

    These plans often gave no reason why the recommended course of action was
    preferred, or the reasons appeared skewed to justify the product recommendation.

    “Plan seemed to focus straight to wealth accumulation via the advisor’s
    company master trust. No explanation as to why, the pros and cons, and
    how this recommendation was going to fully meet the client needs and
    objectives.” – Judge 9

    Recommendations frequently overlooked options that may be more cost-effective:
    • adviser elects to waive product entry fee — rarely recommended;
    • low cost superannuation funds — never recommended;
    • pay off mortgage rather than invest cash — rarely recommended;
    • salary sacrifice — recommended in a minority of plans.
    About half the plans recommended selling at least some of the client’s existing
    investments.

    The combination of commission-based remuneration and management sales
    targets sits uncomfortably with good practice and professional advice.

    “The main recommendation was to rollover client’s superannuation into a
    fund [master trust] from which the advisor receives commissions. No
    analysis or discussion to justify this. ‘Churning’ in a newer guise.” –
    Judge 7

    “This plan is unusual in that it exhibits some degree of advice integrity, a
    characteristic not commonly evident in many other plans reviewed. “ –
    Judge 4

    There appears to be a mismatch between what the consumers thought they were
    getting and what they actually received.


    http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Advice_Report.pdf/$file/Advice_Report.pdf
 
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