Consumers expect planners to be professionals
Some people would be surprised that financial planners are not already operating under the types of professional standards recommended by the Financial Systems Inquiry (FSI) given that other professional advisers and accountants are," according to plaintiff law firm, Slater and Gordon.
The law firm has claimed that, on this basis, all of the FSI recommendations need to be fully implemented to ensure financial planners meet consumer expectations.
Slater and Gordon commercial lawyer, James Naughton, specifically pointed to the FSI recommendations to require planners to hold a degree, pass an exam, undertake continuous professional development and subscribe to a code of ethics.
"Some people may be surprised that these professional standards are not yet in place in the financial advice industry, given that other professional advisers — for example, lawyers and accountants — are subject to strict educational and professional development controls," he said.
Naughton said the Government had also proposed that ASIC's register of financial advisors be amended to identify whether advisers have met the proposed new standards and that there were plans to restrict the use of the term "financial adviser" and "financial planner" to those listed on the register.
"These are all positive steps. However, it will be necessary for the Government to make sure that the proposals are fully implemented in order to provide the maximum benefit to consumers."
"While the overwhelming majority of planners provide professional and well considered advice to their clients, we have seen clients who have fallen through the cracks," Naughton said.
"The results of poor financial advice can be devastating, especially for people who have sought advice as they are approaching retirement. While bad advice can obviously lead to significant financial losses, a more insidious result can be that the lifestyle people envisaged for their retirement can be lost.
"If the recommendations in the Murray Report are fully implemented, some of the harm that can be caused by poor financial advice may be reduced in the future," Naughton said.
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