The organisation’s annual ethics index has found Australians’ faith in businesses’ capacity to act ethically has dropped in the last year, with financial services and banking in particular taking a hit in the wake of the royal commission.
“Australians expect high standards from their financial institutions, but our research suggests that these are far from being met,” said Governance Institute chief executive Steven Burrell.
“The community’s faith in some of the country’s biggest corporations has been sorely tested, following a turbulent 12 months in Australia’s banking finance and insurance industry.”
The Governance Institute’s data showed that only 33 per cent of Australians believe the banks to be ethical, with 38 per cent perceiving the industry as unethical.
This placed financial advice ahead of banking, which was perceived by only 28 per cent of Australians to be ethical, while 55 per cent believed it to be an unethical industry, making it the lowest-rated industry in the index.
“Australians perceive life insurance companies and retail banks as unethical, arguably influenced by commissioner [Kenneth] Hayne’s hearings,” Mr Burrell said.
“In contrast, the education and health sectors continue to hold the highest perceived level of ethical behaviour.”
Mr Burrell said further scandals uncovered by the royal commission will only serve to diminish the public’s faith further.
“The message here is clear — those who are seen to be working selflessly for others are generally more trusted,” he said.
“If corporations like the banks and other financial institutions continue to be exposed for pursuing profit to the detriment of their customers, we can expect confidence in them to drop even further.”
Great opportunity in this environment to get on the front foot and provide more value.Simple things like being more involved in helping clients identify their broader needs and getting things fixed and financial position enhanced. Develops relationships and build trust
VERY SIMPLE SOLUTION ……FEES PAID BY RESULTS . not by the size of fish on the line.
easy peasy????? you all have had it tooooooo bloody good for tooooo long . now EARN it or f….. off.
Funny you say that… I partially agree but the problem is, when it comes to investment anyways, the only way to align interests is asset based fees as the adviser earns more the better the fund does… But everyone hates asset based fees.
Nobody knows what they want. We charge flat annual fees only but even then there is the argument that fees wont reduce if markets go backwards..
Was that a typo 35%? I thought it would be closer to 3.5% (will be at the next survey post this weeks royal commission hearings.
No. 3.5% is probably the tip added to the bill on the Industry Fund credit card at the Flower Drum. Just rounding up the amount I suppose.
Has anyone seen Steven? Probably fallen asleep looking out the window ……………
Steven, you are obviously on drugs because if you were a self employed planner, quite simply, you would be bankrupt and no longer a planner. Business does not survive on fresh air, $1k won’t cover costs so I guess you must be one of those “””planners “””from the so called not for profit tribe.
Given that less than 10% of Australians utilise a financial planner & actually understand the value the result means that 2 additional people for every 1 who is a customer believe financial planners are ethical.
A pretty good result considering the continual witch-hunt that financial planners face from the media, government & sometimes within our ranks.
This report is not rocket science. You continuously focus on an industries bad doing, dig, dig and you will find dirt. Even a Dr, solicitor, teacher, politicians or any other profession are not going to be squeaky clean. The media thrashes us but never acknowledge the good we have done for our clients. Very pathetic. You want to ruin an industry that helps clients with investments, insurance, Centrelink, Aged Care, super, tax and savings plan. You look with a microscope you will find dirt in any profession. Rubbish what this industry is going through. I certainly don’t deserve this and many other great advisors I know; as we have only helped clients in the good and bad times.
There is no way I could trust a financial planner with any of my family, kids or friends.
Sorry it’s the truth. Bang on all you like about service, quality advice etc etc….you can’t be trusted to charge a fair amount for what you deliver.
The amount of times a friend, colleague or relative have raised issues with $3000 SOA charges and ripoff ongoing service fees is appalling.
I’m so embarrassed to admit I’m in this corrupt, morally bankrupt industry.
Most of you should be ashamed of yourselves for what you charge. You know it and so do your clients.
It’s no wonder the banks are offloading this ridiculous industry from their business.
SOA’s and advice must be under $1000. Ongoing fees should be abolished altogether and meeting/advice fees charged as they are needed and NO, you don’t need a yearly review, that’s ABSOLUTE RUBBISH.
When this industry stops raping its clients is when credibility will return.
At the moment you are vampires in a blood bank.
Perhaps you should speak with the thousands of Australians who have benefited from great advice;
– Children of a deceased parent where an Adviser thankfully insisted that both their parents take out enough life insurance so the home would not be lost if something happended
– People with cancer who an Adviser insisted that they have trauma cover
– Older people whose super has lasted long enough only because they got advice
…and the list goes on. None of these people will be appearing at the RC. But hey, Elia gets to go to the Flower Drum from the pockets of working people right?
You obviously have never run a business in a overly compliance ridden industry then have you? It costs a lot to be licensed, to stay licensed, to be compliant with the red tape.
Hence the term “priced out of business”
SOA’s under $1000?
What’s your hourly rate, $5?
An SOA containing super, insurance, debt, cashflow and tax advice takes on average 25 hours to complete.
Outsourcing paraplanning (5-10 hours works) costs $500 alone.
There is NO WAY you can charge $1k for an SOA and remain in business…and if you are, you’re the real problem with the industry because you’r cutting corners.
Please don’t let the door hit you on the way out.
All that advice would only take a few hours on a half decent spreadsheet and a $1000 would be feasible, however we all sit back and bend over to ASIC and our local friendly compliance auditor who have no intention of working on solutions to alleviate these extra costs and lack of productivity. They are running a business also and the harder they make it for you, the more they get paid.
So exactly what is it you do that gives you the inside running on how much it costs to own and operate a financial planning business?
“I’m so embarrassed to admit I’m in this corrupt, morally bankrupt industry.”
So leave, … or better yet set up a business that competes with advisers and run it with your perception of what is a fair fee model. Given your passion & conviction surely all our client’s will flock to you.
Prove us all wrong. I dare you!
Cold hard stats still continue to say people are better off with a planner, Steven.
Nobodies fault if you arent a good one.
Steven, I think your rant highlights that your issues are clearly not about the industry as a whole, but a bad experience that either you, your family or your friend has experienced. It’s a bit like saying, all doctors cant be trusted because there are a number that rort the Medicare system or are negligent. You make rash, generalised statements, quoting figures on fees without qualification, rationale or consideration of the fact that advisers do not operate on a cookie cutter fee charging basis. Not all advisers charge over $1,000 for SOA’s as it depends on the level of advice required. I liken your statement to someone saying that doctors charge too much, especially when they could not cure my illness or lawyers fees should be less than $1,000 regardless of the work or advice required! If you want people to take you seriously, maybe read what you write before posting!
There are some truth to your misdirected statements Steven. We all should be ashamed of these numbers. I’ve been in this industry for 20 years and to have a Royal Commission now is disgusting and embarrassing. Steven I would just like to point out that your anger is misdirected. It should be directed at Government, Product providers and the red tape and over regulation [u]and not at planners[/u][b][/b]. A dealer group I was associated required myself to have a fee for service document whether ongoing or upfront signed by the client 3 times. How the hell can I relieved advice at $500 in that environment. I could do a new super fund in about 15 minutes but with regulation it becomes 15 days.
We all need to be focused on reducing over regulation and Government intervention as much as possible and that’s something all planners can be personally invested in whether it’s avoiding FASEA by doing some education or asking the FPA to cut it’s ties with Product manufacturers.
[b]” It should be directed at Government, Product providers and the red tape and over-regulation and not at planners.”[/b]
The government, product providers, red tape and over-regulation certainly play a part in these issues, but a belief that all planners can be absolved of blame is mere fantasy.
(BTW, Steve is clearly a loon, but I do think the practice of charging ongoing fees, for a promise of future services, will either be removed by competition or legislation in the future.)
That’s the way i see it. Ongoing service fees from super will be banned or capped. We’ll all have to convince clients of the benefits of having a review and charge accordingly at the time of the review. Remove yourself of FDS and Opt-in.
Hi Steven. I’m a financial planner and a financial planning business owner, and I take offence at your words – but not your exasperation. You are suggesting that every single one of the 26,000 or so planners in Australia is a morally bankrupt vampire, solely interested in raping clients (which may I add, is a revolting way of addressing any entire industry). However, your exasperation on costs and the provision of services, is shared by many planners – the FOFA updates were intended to reduce costs and increase access to financial planning. The opposite has transpired.
Providing personal financial advice is expensive. Very expensive.
You or I could cheapen it, simply by applying a “sausage machine” principle (usually applied in the name of “efficiency” or “productivity” or “commercial reality”) and by making sure that all advice is applied through a process-driven service model. For 30 years, our business has been visited by fund managers, management consultants and experts of this or that speciality, and all have told us that our process is inefficient, and that our profitability would increase substantially if we just did [insert standard forms of industry bias, such as: severely limited APL; single “platform”; white label a “platform”; market and provide services solely to wealthy or HNW; reduce time spent per client, etc, etc, etc]. Yet we have not done this. Instead, we have stuck to our core philosophies of long term relationships and planning based on people, not processes and not product. If you are not a planner then you have no idea just how hard it is to achieve this philosophy in practise.
I have trouble preparing a correct SoA in less than 6 hours of my time. Please don’t tell me that i’m inefficient (I am) or that you can do it quicker and therefore cheaper. I have no doubt that you, like me, could do so by applying prior-mentioned techniques.
As to ongoing fees – how about letting the various business models play-out in a financial planning world that has been in upheaval for years, and most likely still will be for a number of years yet. If you don’t like a particular model, it is your choice as a consumer to find another that does operate in your preferred manner.
I charge ongoing fees for most of my clients – hourly for some but for most, it is an ongoing fee. Not usually for an annual review but simply as a retainer for you to access my services. How much you choose to access those services is up to you – but it costs me money to be available to you, so I will ask you to pay that money regardless of how much you utilise my services.
In my experience – which I assure you is both lengthy and extensive – the vast bulk of financial planners are moral and principled individuals. Many long term advisers despair at the current processes being forced on our longer term clients – with the inevitable impact of increasing fees and costs. They fight against this, as I do. Yet many regulators and commentators are adopting your “rape and pillage” mentality, and forcing all advisers to follow a single business model – and here’s the thing, Steven. The model being forced on advisers is that of the legal fraternity. I have just one question for you on that..
Have you ever encountered a “cheap” lawyer? No, you haven’t. The transaction-based fee model is unforgiving for a professional’s time and business costs.
It could be that you are confusing product advice with financial advice. If you are – then I completely agree with you. Single product advice *should* be cheap and it should be possible for the adviser to provide it quickly, efficiently and cheaply. Yet the reality is that even this apparently easy response is anything but – single product advice of limited scope is a bit of a problem for we advisers, from the point of view of liability. If you do not understand that liability then you would need to walk in an adviser’s shoes for a time, in order to come to terms with just how deep and broad that liability is.
I’ve spent time on this for you Steven because it sounds as though you are in despair as to this industry and its participants. I want to assure you that the industry is going through turmoil but will emerge as a shining light within the community. To be a financial planner today is not an easy thing, and to be a financial planner tomorrow will be even more difficult.
If you are in the industry but not a planner then I would suggest you consider becoming a planner, and use your angst to set up a business modelled exactly as you think it should be. Then you will be able to offer friends and associates the services, advice and fees model that you seem certain cannot be provided by any of the 26,000 or so planners in Australia today.
Well said
This Guy! Clap,clap,clap,clap,clap.
Please run for the board of the FPA & get your message out loud. Sadly, good financial planners are in despair. Our industry needs some champions right now who actually get it.
Sorry, was supposed to be a thumbs up.
Steven, if you want SOA’s under $1,000, go to here: https://www.plenty.com.au/ where SOA’s are done for [b]FREE[/b]
For that kind of advice and price, I’m not sure how they demonstrate best interest duty?
That is everything wrong with our industry.
Their sample SoA does not even discuss their risk profile but makes investment recommendations, the fee section tells me nothing about my actual cost and the list goes on and on.
What a joke!
Steve, sounds like you’re a man who knows his stuff. You’re on top of things and that’s good for you.
Now remind me again, why you feel the need to rant this dribble?
(No, I mean the REAL reason).
Peace to you and the world.
Great responses people. I expected more of a torching than that.
The bottom line is my comments on what needs to be charged is 100% on point BUT I understand because of your greedy industry bodies destroying the industry via compliance and compulsory fees/course the cost of doing business is making it near impossible.
This cost shouldn’t be worn by the clients. You need to figure out a way to rid yourselves of these leeches you think are helping you.
Sack them. Destroy them by leaving their insane regime.
Start your own new industry body. The country can’t afford planning as it stands or at least won’t put up with it in the future.
Thank god I dont have to put up with the nonsense.
Steven and price deniers – Have you read Section 612B (2) a-g aka Best Interest Duty and ASIC’s guide to auditors? I’d love to sit with a client and provide advice in a 30 – 60 minute process and charge something more akin to what researchers are saying joe public is preparred to pay but I can’t do so and stay in business at the moment – I employ 4 staff, pay rent, pi, overheads and so on. For me to even get to the point where I can confidently tick all the boxes Im down a minimum of $1k. If I try to “streamlne – aka cookie cutter” advice I risk providing inappropriate advice. If joe public doesnt want to “play the game” and give all the required info to meet BID Im supposed to turn them away – where do they turn to? the path of least resistance which are currently general advice phone based services provided by banks, super funds or insurers. As to ongoing service fees – I have (and I know Im not the only one) a range of service offerings. The client decides. If they want ongoing advice – they pay for it. It’s cheaper if they go on an ongoing service plan than if they choose to use the same services for ad hoc advice review. The ongoing service plan includes a proactive service – the ad hoc arrangment is reactive. I have great clients on both payment options and sometimes they even chop and change based on THEIR wants and needs (fancy that). I can only hope that as a result of the RC product manufacturing and advice are separated – maybe then the over regulation (COST) burden can be lifted and the utopia of advice provided for cost that Steven Public believes is appropriate.
Or C) Puppets planted within the industry by lizard-people to trigger its downfall. My prophecy is coming true – call Mulder & Scully, the truth is out there!
Jape, spot on, the management are yet to be held accountable. Most advisers are honest and ethical, the various layers of leadership are dragging us through the mud- we are just collateral damage. None of the past enquiries, RCs or the regulators have the fortitude to implement the law. NO Ba$#S. CFS just bumped all regulations- 0ver 15000 offences and ZERO remedy. Next it will be all fake news and a waste of many millions with no justice.
…and about 90% of all Financial Advisers believe the “Industry Leaders”: are;
A) Not suitably or appropriately qualified or experienced in relation to superannuation and advice law, and
B) Morally bankrupt and/or completely inept
That’s how we got here. End of discussion.
And 90% of advisers seem to be completely happy with that position. Pay their FPA fees every year, whilst their AMP mates get a 10% discount, work under a licensee owned by a product provider of their own choice, refuse to become educated and can’t even be bothered to do a Cert IV in Insurance, should I go on? There are a lot of things advisers themselves can be doing or be saying that’s not acceptable.
My professional association getting payments from CBA/NAB/CFS/Bridges…that’s not acceptable.