The scandals at most of the big banks that stretch back more than a decade have often involved their financial planning arms.
That’s partly to blame for the fact that about eight in 10 adult Australians are not receiving financial advice, even though many would benefit.
They are also put off by the cost of face-to-face advice; though the cost is likely to be outweighed by the financial benefits of receiving good financial advice.
Other likely reasons for not seeing a planner include concerns that products would be pushed their way or a perception of a lack of independence within some parts of the financial planning industry.
Governments have responded to the scandals. They have introduced new laws and tightened others so consumers are better protected than when commission-based product flogging was rife.
Commissions are banned on almost all financial products and the Financial Adviser Standards and Ethics Authority is overseeing the professional and educational standards of financial advisers.
Yet, it seems that these reforms, and others, will take some time to work, before consumer perceptions of the financial planning industry change for the better.
The latest Roy Morgan Superannuation and Wealth in Australia survey, which includes surveys of what people think of financial adviser, shows trust in financial planners for ethics and honestly has shown no real improvement since the survey began in 2009.
In fact, after improving a little, financial planners’ trust factor declined 2 percentage points in the past 12 months to 25 per cent, which is where it was in 2009.
Trust is in short supply. Whether it is governments, media and “fake” news, multinationals avoiding paying their share of tax, there is real need for financial planners to gain a greater level of trust among Australians.
Independent, expert advice does set people up for a much more financially secure future than they would have otherwise.
Most consumers probably feel that just seeing someone called a financial adviser is not sufficient to ensure they will receive a certain minimum level of professionalism.
Consumers want planners’ professionalism to be validated by an independent party, which explains why in recent years websites have appeared that rate financial planners.
The Royal Commission into the banks and other financial services entities, announced by the government last week, will most likely be revisiting the scandals that have involved financial planners and the financial planning arms of the banks, stretching back many years.
Already, the banks have paid millions of dollars in compensation, settlements or refunds.
Who knows what the Royal Commission will turn up.
It could very well uncover other scandalous practices involving the financial advice operations of the financial institutions.
It’s likely the reputation, not only of the banks but of financial planning as a whole, is set to go lower.
But it would be wrong for consumers to avoid getting financial advice in the belief that many of the problems in financial planning industry have not been cleaned up – they have.
This story Administrator ready to work first appeared on Nanjing Night Net.