The Australian Securities and Investments Commission (ASIC) has confirmed that “shadow shopping surveys are here to stay” after it announced that it is poised to begin shadow shopping research focused on retirement.
“We are not out to ‘name and shame’,” says Delia Rickard, senior executive leader of consumer and retail investors at ASIC.
“We’ve very clearly designed this in a different way to previous shadow shopping surveys.
“We’re in the middle of major reforms to the financial advice sector through the FoFA [Future of Financial Advice] reforms so there would be no point in a ‘naming and shaming’ exercise.”
Despite being an unpopular method amongst financial advisers, Rickard says the research’s primary focus will be on retiring consumers.
“What we’re really interested in doing is understanding the consumer experience in seeking advice at the point of retirement, working with industry to really help define what good-quality advice looks like and ensure that across industry there’s an agreement that quality advice is being given at this very critical point,” she says.
Andrew Inwood, principal of research firm CoreData, says if a financial adviser thinks or suspects that a prospective client is a shadow shopper they should ask.
He says the “giveaways” financial advisers can look out for to determine whether a client is a shadow shopper is “they’re not very well-organised and they ask a lot of questions that aren’t specific”.
In previous surveys conducted by CoreData, the shadow shoppers used were people who genuinely wanted advice.
“If the adviser performed well, then they’d get the shopper as a real client. We had 440 shopping events and more than 50 per cent got the client,” Inwood says.
Rickard says ASIC was promoted to conduct the survey as the first of the baby-boomers are beginning to retire and “if there’s ever a time when consumers probably need advice, it’s at that point of retirement”.
“We know that about 20 per cent of retirement superannuation savings are in the deaccumulation phase right now,” she says.
“We predict that fairly soon that number will be doubled [to] 40 per cent by the end of the next decade. So it’s really a critical point for consumers in terms of advice.”
Rickard says the research needs to be seen as “one part of a boarder suite of work” that ASIC is working on in the retirement income sector.
“We’re putting together an expert advisory panel of respected elders amongst financial planners who have specific experience in this area to really help define what good-quality advice looks like,” she says.
“In addition, we’re working on a consumer guide about retirement income products. It’s really about having a good close look at the whole retirement sector.
“This is one aspect that will help us understand what the consumer experience is when they’re getting advice and the extent to which they understand the process.”
Rickard says the shadow shopping research is expected to start “in the near future” as the appropriate recruiting field agency, who will provide the people partaking as shadow shoppers, has not yet been confirmed.
“At this stage, we’re expecting the report to be issued in the first quarter of 2012,” she says.
This is the only shadow shopping exercise ASIC has planned over the next year.
I sincerely hope that the “expert panel” will be made up of a broad cross section of our industry, from the Retail FSL Reps, True Independant Planners, Industry Funds, Corporate Supers, Statutory Funds, etc and the relevant support newtorks of all.
My suspision is that it will be predominatley made up of retail’s and proprietry platforms.
But I live in hope.
Live in hope – of course wouldn’t it be great to have a totally unbiased panel, like all industry fund managers for example. They are there for the best interest of the client, right? They do everything for the love of it and not to make money, unlike those nasty retail funds, who are only in it for the money!
Why do you apparently not post comments which express a contary view to ASIC or industry funds?
The issue with the previous shadow shops is that there is no scientific method to. If you run a a program like this then declare in advance what would be deemed a good result. In the last version 80-90% of participants were happy with the experience and the advice they received. Rather than celebrating this, we found the FPA defending a whole raft of minor issues. We then had ASIC advising that the fact participants were happy with the advice was irrelevant as the consumer “doesn’t know what they don’t know”.
I put it ASIC that no-one knows what they don’t know! What nonsense. If I go to an architect or a lawyer I have exactly the same problem. 80-90% would be a good result in any profession.
If the regulator is genuine about this survey than I put it to the AFA and FPA that they need to make ASIC accounatble to some pre-set benchmarks. If the advice industry falls below them then bring on the criticism but if they don’t they should endorse the good work that is being done in the Australian Advice Industry.
I am 62 this year and work 4 days per week my husband is 68 and works part time. About 4 years ago we both transferred our super into the same super fund through one of the big banks. Our combined super was just over $700,000. We have not made one cent, however we have paid BIG fees and our super has gone backwards. Recently we changed financial advisers who changed most of our investments, after giving us his reasons for the changes,we also talked about a SMSF. I am happy with his advice and will have to see what the results are.
Judy, I note you are happy with the current advice but what happens if you again don’t make a cent? Of course, it’s the advisers fault!
What rubbish. We already know what ASIC’s agenda is as evidenced by their Smart Money website and their ‘advice’ to consumers not to use a planner who uses asset based fees.
It’s all political and has nothing to do with helping Joe average.