You’re biased, advisers told
An allianceof high-net-worth investors has launched a stinging criticism of the quality of the financial advice they receive and accused financial planners of being tainted by their association to banks and funds management institutions.
The Australian Investor’s Association (AIA), an alliance of some 1,100 mostly high-net-worth investors, will release the inaugural survey of its members’ views on financial advisers this week, painting a largely unfavourable picture for a financial planning industry owned increasingly by big financial institutions.
The survey, conducted by polling 320 of the association’s members in June and July this year, found that 99 per cent believed financial planners who were owned by a fund manager or bank were more likely to recommend that institution’s products over all other investments.
An overwhelming majority of respondents, 95 per cent in fact, also believed the advice they received from financial planners was heavily influenced by ‘soft-dollar’ inducements paid by institutions to advisers.
The president of the AIA, Bob Andrews, says his members are experienced investors, with a strong history of contact with financial planners.
Some 68 per cent of the association’s investors have more than $500,000 in investable assets, excluding the family home, while 16 per cent have more than $2 million to invest.
“Our members have got a better and broader knowledge of investing than the average fellow on the street and this is what they are thinking [about financial advisers],” Andrews says.
Andrews says the growing link between financial planners and large financial institutions would make it increasingly difficult for high-net-worth investors to receive the financial advice they were looking for.
According to the AIA survey, up to 80 per cent of investors view independence as the most important factor in choosing an adviser.
However, AIA members saved some of their more cutting criticism for trailing commissions paid by product providers to planners.
Of those members surveyed, almost 60 per cent indicated they were unhappy with the trailing commissions advisers received.
“Our members are well aware of trailing commissions and their objection to them is not going to go away,” Andrews says.
“People are having great difficulties finding an adviser who they think is being honest and professional with them.”
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