Updated: May 13, 2021
Have you been to a financial adviser in the last 10 years?
If so, you may have been paying fees and receiving no services for them. It has been found that many customers with financial advisers paid fees to receive ongoing financial advice that they never received. These fees were either deducted from customers bank accounts or superannuation funds.
Check your statements because you may not remember ever seeing an adviser, however, you might have been charged invisible fees which could have been deducted from your investment or superannuation accounts.
If customers did have an allocated adviser, many failed to deliver on their obligation to provide ongoing financial advice.¹ One meeting in six years is not good enough. One phone call or brief meeting per year also falls short of what is required. A thorough review of the customer’s financial needs must be conducted.
Customers were also charged fees when they did not have a financial adviser allocated to them and they did not receive any ongoing advice.² An example of why a customer would not have had an adviser allocated to them is if they retired or died and their account was not handed over to another adviser. Many institutions continued to automatically deduct fees from customer bank accounts.
Check your records for financial advice documents usually called an SoA - Statement of Advice and RoA - Record of Advice. Financial advisers are required to provide these on an annual basis. If you were provided with these reviews, there could still be problems with the insurance advice recommended. Many advisers encouraged customers to take out insurance policies such as life insurance that they did not actually require. Why does a single thirty-two year old with no dependents, mortgage or other significant debt require a $1 million life insurance policy?
It has now been estimated that in excess of $1 billion will need to be refunded to customers who were charged fees for no services.³
Some customers have been charged thousands of dollars per year and not received annual reviews.