97% of financial plans fail test: ASIC

[redwing]

You probably already knew it, but apparently 97% of financial plans fail the ASIC test

The financial planning regulator ASIC (Australian Securities & Investments Commission) released the results of its Financial Planners Survey.

From 64 financial plans obtained from various planners around the country, 36 % were poor and 61 % were adequate. Only 3 % (or 2 plans) were deemed "good".

A recent survey conducted by the corporate watchdog found that only 3% of financial plans were ‘good’ for clients.

The Australian Securities and investment Commission (ASIC) reviewed 64 financial plans targeted at retirees or pre-retirees and outlined their findings to the Parliamentary Joint Committee on Corporations and Financial Services last week, on the upcoming Future of Financial Advisor (FOFA) reforms.

“Retirement-related advice has produced disappointingly high levels of poor quality advice,” said ASIC commissioner Peter Kell.

So why did the industry rate poorly?

Mr Kell said planners failed to paint their clients a realistic picture of how supportive their retirement savings would be to their lifestyle.

Whilst 61% of the reviewed plans were deemed ‘adequate’, Mr Kell said that much of the advice given was too generic for clients.

Additionally, conflicts of interests continued to be an issue for the industry. “Often a client will go to see an adviser wanting to know when they can retire and instead leave with a new accumulation product,” Mr Kell said.

Cont...

Source

The survey results should be available via google as a PDF

 

[Aaron_C]

Once the government is involved there becomes too much red tape, paperwork and less actual useful advice. How sad.

 

[Peter_Tersteeg]

Try dealing with ASIC sometime.
* You can do everything right but the customer, then loose your licence, get fined hundreds of thousands and go to jail for a few years for not filling in a few forms.
* Fill in a document incorrectly that's deliberately designed to evoke the wrong answers and you'll get audited and fined for being mis-leading. A very expensive proposition.
* Ever tried filling in the ASIC form to notify them of a change of business address? If you don't notify them within 30 days of the move it's a substantial fine and the form is almost impossible to fill in if you haven't done it before.

There is already a cottage industry of lawyers who to little more than help businesses ensure they're compliant with their licences, interpret the laws and deal with ASIC. They're not cheap, but it's cheaper than getting in trouble.

I suspect ASICs statement is as much about how 'compliant' a statement of advice is, as it is about actual good advice. Before anyone throws stones at financial planners, feel free to try to put together an ASIC compliant plan that also contains good advice. They try to only charge $3k for it and run a profitable business.

 

[Macca]

And always remember to register all mail correspondence to ASIC and KEEP the receipt.

Always print and file any correspondence/emails etc from ASIC

 

[willair]

https://www.moneysmart.gov.au/tools-and-resources/publications

https://www.moneysmart.gov.au/media/275376/you-can-complain.pdf