The 2018 Financial Advice report by Investment Trends has revealed that over the last 12 months, trust levels have fallen most severely for banks and financial planners to below five out of 10, and into the “distrusted” range.
Banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8. On the other hand, accountants had a trust rating of 5.7, down slight from 5.8 in 2017.
“So far, the general sentiment has not been positive,” said King Loong Choi, senior analyst at Investment Trends.
“More than 40 per cent of Australians do not believe that the financial services and banking industry has met its obligations to everyday Australians, while half reject the notion that the industry has been treated unfairly in the media.
“The trust impact of the royal commission is real, and the financial advice industry must take proactive measures to rebuild trust among the wider population,”
In September, the royal commission released its interim report, following months of spectacular findings including fee for no service, charging fees to dead people, and inappropriate loan advice with devastating consequences.
The final report from the commission is due 1 February and will include the topics of the fifth, sixth and seventh round of hearings, which focus on superannuation, insurance and policy questions arising from the first six rounds, respectively.
While trust levels have fallen, there has been a strong and continued demand for financial advice among Australians, with Mr Choi earlier telling Accountants Daily that 51 per cent of Australians had indicated that they had unmet advice needs, with 33 per cent indicating that they would turn to their tax accountant, and a further 23 per cent who would turn to a licensed accountant to meet those needs.
“There’s an interesting dynamic in that there are a lot of people out there who will turn to an accountant for advice but the really interesting question that starts to raise is that if these accountants decide not go down the path of getting a full AFSL, then what are these clients going to do next?,” said Mr Choi.
“What you may find is that these clients may take two different routes, they may either turn to a financial planner or two, if they can’t turn to an accountant then perhaps they may not turn to anyone at all for their advice.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.