After the latest Fairfax Media revelations of dodgy advice at another major bank, investors must be wondering where they can get advice that they can trust.
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More than 30 advisers left National Australia Bank (NAB) during the past two years because of improper advice and compliance breaches. The bank has paid up to $15million to hundreds of clients over the past five years.
It is not known if the bank made any breach reports concerning the departing planners to the Australian Securities and Investments Commission.
It is likely the advisers are still working as advisers with other employers.
The emerging problems at NAB come after the financial planning scandal at Commonwealth Bank, where there have been allegations of fraud and cover up.
"People ask how do I find an adviser and it is not easy," says Christopher Zinn, co-founder of online referral service for consumers, Adviserratings.com.au. "Each time there is another scandal it becomes harder because there is less confidence in the [financial planning] market."
Various reforms have been brought in that should, over time, better protect investors from dodgy advisers. And, of course, the majority of advisers would never dream of doing the wrong thing by their clients.
However, just because a planner is licensed, suitably qualified and works for a big financial institution is no guarantee that the advice will be the best advice.
For years, authorities advised consumers to shop around for advice. They were advised to contact perhaps half-a-dozen planners. Then they were told to ask each planner more than a dozen questions over the phone to whittle down the list for face-to-face interviews.
That advice was always impractical. Few people would have the time to contact so many planners. And it is doubtful how much success someone would have in getting to talk to a prospective planner over the phone, let alone receive satisfactory answers to the questions.
That is why there has been the emergence of referral services that promise to do much of the leg work for consumers.
The Beddoes Institute, a consultancy to the financial services industry, is behind the Most Trusted Advisers Register referral service at mosttrustedadvisers.com. Only the best advisers are listed on the website, rather than trying to assess all advisers. As well as taking into account the credentials and experience of advisers, Beddoes interviews clients of planners to assess satisfaction levels.
Adviserratings.com.au was started last year by Zinn, the former director of campaigns and communications at consumer group Choice and Angus Woods, who was previously chief financial officer of Virgin Money.
Advisers are given a rating by Adviserratings that is based on their qualifications, experience and compliance. The customer-satisfaction rating comes from references from clients put to the website by the planners themselves.
All advisers listed must be licensed, never have been bankrupt or convicted of a crime relating to fraud or financial mis-dealings and never been banned or disqualified from advising. So far, about 2000 advisers have populated the site with their details.
However, there is much more to finding a good planner than simply going with the highest rating.
Advisers often have areas of expertise. Bruce Baker, a Brisbane financial adviser is not listed on any of these registers. He has enough clients for the moment, many of whom are engineers.
"Advisers will suit some types of clients and not others," he says. Baker likes engineers as clients because engineers want to know the details of what he is recommending and really understand the reasons for the recommendations.
And clients want different things from advisers. Obviously, a pensioner with little by way of private savings will have different needs from a self-funded retiree, for example.
Zinn agrees that referral services are not a panacea. "We think of it [Adviserratings] as just the first contact between a planner and a consumer where there can be an audition."
Zinn says it is consumer power, the power to give or take-away their business, that will drive reform of the financial planning industry as much as regulation and legislation.
