80% of financial advisers now 'owned' by the banks

Last night's 'Four Corners' documentary on ABC (watch video here) primarily focused on the shameful behaviour of a particular Financial Planner within Commonwealth Bank's planning division. But more importantly, the documentary also highlights a broader 'conflict of interest' issue with bank advisors generally, and possibly other institutions.

While I suspect that 'bad advisers' (in all professions) will continue to lurk in the shadows forever and a day, the problem highlighted in last night's report goes beyond a single 'rogue' adviser. Rather than a one-off event, the flaw appears to be systemic, possibly stretching across the entire banking wealth management model.

So with over 80% of financial advisors in Australia now directly or indirectly owned by the banks, as a customer, it's now prudent to question the motives behind that humble bank teller who subtly offers to introduce you to their friendly financial planner for a 'second opinion', the next time you review your home loan or term deposit.

And if you believe that your financial advisor is employed by an 'independent', non-bank aligned firm, you now have every right to ask whether that advisor's license is indeed owned by a bank - chances are it is.

Of course, following on from last night's Four Corners report it would be easy to conclude that you simply can't trust financial planners, or anyone else, to look after your hard earned money. That would be wrong (and sad). The reality is that there are more than enough high quality financial advisers out there, doing terrific work, helping clients achieve their dreams - I personally know many of them and wouldn't hesitate recommending these professionals to family and friends.

So expect the best, just ask plenty of questions and do your homework.

Rick Maggi