Australia's financial advice sector needed to provide realistic and client-focused communication about individuals' retirement prospects if it was to improve the level of advice, according to an ASIC report released today.
The report, "279 Shadow shopping study of financial advice", found over a third or 39 per cent of the advice examples were poor.
It also found only two examples (3 per cent) of good-quality advice.
The majority of advice examples reviewed, or 58 per cent, were adequate, the report said.
"The results of ASIC's shadow shopping research demonstrate that there is scope for significant improvement in the provision of good-quality retirement advice in Australia," ASIC commissioner Peter Kell said.
"Our research found there are several areas where the financial advice industry needs to lift its game.
"Advisers are important gatekeepers who have a key role to play in helping consumers plan and manage their finances. This underlines the importance for the industry to remove conflicts of interest and improve overall professional standards to ensure that their clients' trust is not misplaced."
Kell said too much poor advice provided to survey participants was "overly product focused and not strategic enough" to help clients develop a realistic and achievable plan for their retirement.
The research also found people had difficulty in assessing the quality of the financial advice they received.
"Consumers' difficulties in assessing advice quality are not surprising. People who thoroughly understand personal finance are less likely to need a financial planner," Kell said.
In January, Kell revealed interim survey figures at a public hearing of the Parliamentary Joint Committee inquiry into the government's advice reforms.
The full report can be found here:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rep279-published-27-March-2012.pdf/$file/rep279-published-27-March-2012.pdf
