Investors better off with financial advisers: KPMG

Wednesday 25th November 2009

Investors are a couple of thousand dollars better off every year if they use the services of a financial planner, according to a KPMG research report in Australia.

Australians who paid for financial advice were on average A$2,650 better off every year than those who didn’t, according to a KPMG Econtech survey which is based on the levels of contributions made in the 2007/08 financial year. New Zealand’s Institute of Financial Advisers said the findings can be translated across the Tasman.

“Good quality financial advice provides consumers with better savings and wealth management strategies,” said IFA president Lyn McMorran, in a statement. “I am confident a study in New Zealand would come up with a similar result.”

The financial adviser sector has come under close scrutiny in the past month after a Consumer Magazine mystery-shopper survey found only three out of 33 were good, with the rest either disappointing or rejected by an expert panel.

The findings resulted in the resignation of two members of the committee set up to draft the industry’s minimum requirements as part of ongoing regulation after Commissioner for Financial Advisers Annabel Cotton indicated their presence would continue to diminish public confidence in the sector.

The government has been working to overhaul the sector since it introduced legislation in 2008 to bring new regulations and competency requirements for advisers in 2010.

The regulations include a new code of ethics, minimum standards of competency and disclosure, an independent disciplinary body and will bring the sector under the regulatory eye of the Securities Commission. Consumer NZ chief executive Sue Chetwin said the far-ranging reforms were too little, too late, and called on policy-makers to protect the public immediately.

The KPMG survey found Australian investors with a financial adviser had an average total investment balance of A$42,559 compared to a balance of $34,346 for those people who didn’t take advice. Average savings with an adviser totalled A$6,991 compared to A$4,341.

Good advice gives people better investment strategies and can lead to reduced risk through a diverse asset portfolio and a better match to an individual’s risk profile, according to the accounting firm’s report. Still, the report noted the “advice provided by financial advisers/planners varies in quality.”

Businesswire.co.nz

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