Finding a good adviser down to 'chance': Robin Bowerman
Finding a good financial adviser is "almost a matter of chance" according to Vanguard head of corporate affairs and market development Robin Bowerman.
"The problem we see is that finding a good adviser is almost a matter of chance rather than doing it by design," he said.
As evidence, he pointed to the results of the recent Australian Securities and Investments Commission (ASIC) shadow shop, which he described as a "fantastic piece of work".
The survey looked at 64 examples of advice, and only 3 per cent of the plans reviewed were rated as "good".
"One of the case studies ticked the boxes in terms of transparency," Bowerman said.
"The adviser disclosed that the investor would be tens of thousands of dollars worse off if they implemented the advice that was being recommended. So the transparency piece was absolutely fine," he said.
The Statement of Advice explained there were fewer features in the product being recommended than the product the client was currently in, and that the fees would be higher, Bowerman said.
"What was interesting was that when ASIC looked at it they found it was a poor piece of advice. But when they went back to the investor, the investor rated it highly - and had actually implemented it," he said.
The shadow shop found that 86 per cent of investors rated the advice they received as "good", even though only 60 per cent of the plans were rated as "adequate", Bowerman said.
"The investor's ability to judge what is good advice and what's good value for money is really difficult, because they don't have the technical skills to do it," he said.
"The challenge for the industry is to better differentiate and segment advisers, so that when consumers seek out a financial planner they can be aligned with the skill levels they want," Bowerman said.
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