An executive at APN Property Group has equated the wide consumer trust gap between individual advisers and financial institutions with that of a spouse who trusts their partner but has little faith in the institution of marriage.
Speaking on a panel at a Forum presented by UK-based fintech Calastone, APN’s Head of Marketing and Distribution, Simone Newman, was questioned about the effect of the Hayne royal commission on the reputation of the advice industry.
She used an analogy to explain why consumers are much more prone to trusting the person, not the large business behind them.
“Innately, you’d rather trust your child’s primary school teacher than the Victorian education department,” she said. “And you’d trust your partner but not necessarily the institution of marriage. It’s an important distinction to make.”
The erosion of trust at the institutional level needs to be clearly distinguished from the trust at a human level, Newman said. While the royal commission further fragmented existing trust concerns for the big banks plus IOOF and AMP, Newman said they had existed “for a long time”.
For advisers at the coalface, the work remains the same.
“Advisers are still doing their jobs; they’re still setting their strategies, meeting their clients, holding their hands through complex and often difficult parts of their lives,” Newman told an audience of mostly asset managers and product providers. “The trust hasn’t been eroded at the individual adviser level.”
Last week Professional Planner reported that wealth outflows at AMP and IOOF – the last of the original ‘big 6’ that are still at least somewhat committed to advice – continued in the July quarter. AMP’s wealth business suffered outflows of $1.94 billion while IOOF reported $123 million of outflows from its advice business for the same period.
Adviser Ratings’ Head of Wealth, Mark Hoven, who also sat on the panel, agreed that any assessment of the royal commission’s effect needed to separate advice from the institutions that have licensed large groups of them for 20 years.
Hoven did note, however, that there was evidence to show trust had been eroded at an individual adviser level – partly due to cases of misconduct and partly as collateral damage in the institutions’ collective fall from grace.
“It was the institution that was demonstrated to have failed, not the adviser,” he said. “The adviser has been getting it in the neck for a long time – and for the cases where they have been proven to have done the wrong thing, appropriately so – but [the institutions] have sort of sullied the industry, unfortunately.”
Hoven referenced a CoreData study which suggested trust in the advice sector fell from over 60 per cent to around 35 per cent in the immediate aftermath of the royal commission.
CoreData’s head of Western Australia, Kristen Turnbull, noted that “financial planner bashing” has become a national sport in the wake of the royal commission
“The financial advice industry has battled consumer and media perceptions that advisers are a bunch of cowboys flogging products to line their own pockets,” Turnbull stated in an article related to the study. “But it’s time advisers were given a break.”