You will no doubt be aware that Moneymax has attracted considerable attention in the media over the last two weeks as a result of two key events: the publication of the Consumer Magazine report on financial advisers and my resignation from the Code Committee, a Government Committee established to set standards for financial advisers.
The Consumer report was based on a mystery shopping survey which involved 11 mystery shoppers seeking advice from 33 financial advisers. Of the 33 advisers, only 3 were deemed to have given ‘good’ advice based on the Consumer assesment criteria. Moneymax was asked to prepare a pre-retirement plan for a mystery shopper. A pre-retirement plan is one that is prepared for a person who has a mortgage and little in the way savings but who wants to get ahead. I spend many hours giving free advice to such people and in some cases I prepare a basic written plan for $600-800 plus GST depending on complexity. The true cost of preparing these plans is at least $1,600. Detailed plans cost around $2-3,000 and this is beyond the reach of people with no savings. My plan for the mystery shopper was rejected on the basis that it was not sufficiently detailed.
To maintain public confidence in the work of the Code Committee, I offered my resignation from that Committee to the Chair, Mr Ross Butler. Mr Patrick Middleton of Westpac offered his resignation for the same reason. Both resignations were accepted and Ms Annabel Cotton, the Commissioner for Financial Advisers, has stated publicly that these resignations do not in any way reflect our competence or our contribution to the Code Committee. A copy of the media release from Annabel can by read by clicking here.
The Consumer Report has been condemned by the financial advice industry as flawed and sensationalised. You can read some of the industry response on two financial planning websites, Good Returns (click here) and Financial Alert (click here). I have written a letter of complaint to the Chief Executive of Consumer and you can read a copy of that letter by clicking here.
I was asked by Asset Magazine to write an opinion on the Consumer report. This will be published in the next issue of the magazine and you can preview the article titled ‘Why Consumer was Wrong’ by clicking here.
Support from Clients and Colleagues
I have been overwhelmed by the support I have received from both clients and fellow advisers over the last two weeks. I remain passionate about my profession and being able to help people make the most of their money. If you have any concerns about what you have read or heard, please contact me.