Shadow shops fail the test drive
Shadow shops are comparable to taking a car off a production line and asking a panel how well it will drive, according to head of Lifeplan Funds Management Matt Walsh.
For Walsh, the problem with recent shadow shopping surveys conducted by the Australian Securities and Investments Commission is that they are not put into context.
"[They're] not based on peoples' long experience with their financial planners," Walsh said.
"Unfortunately they can be used to bash the industry when they should be seen for what they are: taking a car off a production line, comparing it to a blueprint, and asking a panel whether that car's going to drive really well," he said.
Instead, Walsh said a better shadow shop would ask long-term clients questions such as: 'Do you trust your planner?'; 'Is your planner reliable?'; 'Do they take into account your life circumstances?'; and 'Have they improved your outcomes?'.
Walsh chairs the advisory board of Adelaide University's International Centre for Financial Services (ICFS), which he said is devoted to providing research based on discussions with people who have been consumers of financial services for 15 to 20 years.
"Unfortunately financial services is one of the most under-researched parts of the economy. It's the largest part of our economy - it's bigger than mining - but it's chronically under-researched," he said.
"I'm pretty keen to see more evidence-based decisions by Government and industry … What [ICFS] is trying to do is get a body of research into the marketplace to ensure we get good decisions based on sound economic research," Walsh said.
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