Adviser distrust not justified

22-May-2017

By Megan Tran

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The attitudes towards financial planners and advice were not reasonable as the industry has improved its education standards and do-it-yourself investing bore many risks, an industry executive has warned.

According to XTB co-founder and chief executive Richard Murphy, the global financial crisis (GFC) was a catalyst for industry distrust as many investors were receiving financial guidance pre-GFC.

However the take up of advice slumped post-GFC, Murphy said, labelling the apprehension as “overstated”.

“The GFC saw things fall in value. People were unhappy about global corporation, people lost their money and wanted someone to blame,” he told financialobserver.

He stressed that people who were investing were not getting advice, which was worrying particularly amid the diverse platforms investors sourced their information from.

“Through the 90s and 2000 it was DIY investing without the need for financial planner or stockbroker,” he added.

Murphy believed this distrust was not justified, with 20 years’ experience in the industry, he said the majority of advisers try to do the right thing by the client and have more experience.

He said novice investors should seek solid advice, adding that he “worries about someone who doesn’t know what they’re doing”, in particular those who have fixed income and corporate bonds.

“There needs to be education across the board, even advisers need education and there should be diversification,” he said.

Murphy also highlighted that older people wanted face-to-face advice while younger people were seeking robo-advice, which had become popular again with the trend for self-education, as investors had become confident again and were re-joining the market.

Last week, the Australian Securities Exchange and Deloitte Access Economics released its “2017 Australian Investor Study” which echoed this sentiment.

The study revealed that Australians had a DIY attitude towards investing, evidenced through the way they research and make decisions, with 48 per cent relying on internet searches for information but nearly two thirds don’t seek professional financial advice citing that they didn’t see the value in it.

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