Advisers brace for ACA/ASIC report repercussions

The vast majority of financial planners believe the recent release of a damning report into the quality of financial planning advice will have a harmful effect on the public’s perception of financial advisers, a new survey has revealed.

The survey of almost 700 financial planners, conducted by Adviser Ratings, found 97 per cent believe the report will have a negative effect on public confidence in financial planners, while 53 per cent believe the report does not paint a fair picture of the industry.

The damning report, produced jointly by the Australian Consumers Association (ACA) and theAustralian Securities and Investments Commission(ASIC), found half of all plans produced by advisers were ‘borderline’ or worse.

However, 33 per cent of planners surveyed think that the report is fair, and 39 per cent did not feel it was necessary to distance themselves from the report.

In a question on “adviser feelings” in response to the report, 47.6 per cent chose “disappointment”, with “confirmation” the next most popular response, chosen by 30.2 per cent of respondents.

Other responses were “anger” (9.8 per cent) and “suspicion” (6.4 per cent), while “surprise”, “disbelief” and “satisfaction” were chosen by very few respondents (3.6, 1.2 and 1.2 per cent respectively).

With commissions paid to financial planners coming under fire in the ASIC/ACA report, the commission system was also a focus of the Adviser Ratings survey.

While 58.6 per cent of planners felt the report’s criticism of the commission system was unfair, 39.2 per cent thought that criticism of the commission system was warranted, and 39.6 per cent thought that the public image of planners would improved if commissions were abolished.

However, despite these concerns, 57 per cent of planners surveyed felt that the commission system should be maintained.

Planners were also surveyed on the separate issue of the $33 million payout to formerColonial First Statechief executive Chris Cuffe.

The majority, 68.5 per cent, thought that Cuffe was either “grossly overpaid” or “overpaid”, while 28.6 per cent said it was a “fair payment” and a surprising 2.9 per cent thought that Cuffe was “worth more”.