Of Financial Advice and Advisors

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The Australia-New Zealand Shadow Financial Regulatory Committee releases Statement No. 11 exploring some of the challenges facing the financial advice industry in providing appropriate and quality  advice. The committee offer some suggestions to policy makers for mitigation, to reduce the impact of poor financial advice on future financial wellbeing.

Some recent high profile cases (e.g., Storm, Blue Chip and ING) have highlighted problems arising from poor financial advice and, as a result, prompted various legislative initiatives relating to advisor obligations, fee structures, and the like. In this Statement, we consider some of the challenges facing the financial advice industry and offer some suggestions for how these might be mitigated.


  • Aspiring financial advisors and planners should be encouraged to obtain education in finance or economics to at least the undergraduate degree level.
  • Ideally governments should aim to reduce the complexity of tax and welfare benefit arrangements and thus the need for such privately advantageous, but with little if any social value, financial advice. And, correspondingly, educational programmes for financial advisors should be less skewed towards knowledge of the tax and benefits system, and place more emphasis on investment theory and fundamentals.
  • The large parents of financial advice groups should consider using a range of monitoring and governance mechanisms such as “mystery shopper” techniques to assess quality of advice, as well as specialist internal audit/compliance arrangements focused on ensuring quality of advice and product suitability.
  • Governments should investigate the further development of such comparison sites, and that financial advice contracts include information on resources available  for clients to check risks and costs of advice by reference to such sites before the contract is finalized and advice implemented (during a required cooling off period).

Download the ANZSFRC Statement No. 11: Of Financial Advice and Advisors

Media contact details:

Professor Kevin Davis
Research Director, Australian Centre for Financial Studies &
Professor of Finance, University of Melbourne
+61 3 9666 1050
Professor Glenn Boyle
Economics and Finance, University of Canterbury
ph +64 3 364 3479

Following the example of the Shadow Financial Regulatory Committees in Asia, Europe, Japan, Latin America and the United States, a group of well known professors from Australia and  New Zealand, who are all experts in the fields of banking, finance, and the regulation and supervision of financial institutions and markets, set up the Australia-New Zealand Shadow Financial Regulatory Committee (ANZSFRC). The ANZSFRC had its inaugural meeting in Sydney in December 2006 when its first statement entitled “Managing Bank Failure in Australia and New Zealand: Rapid Access Matters” was issued during the 2006 Australasian Finance and Banking Conference. Co-chairs of the ANZSFRC are Prof. Glenn Boyle and Prof. Kevin Davis. Glenn Boyle is Professor of Finance at the University of Canterbury, Christchurch. Kevin Davis is Research Director of the Australian Centre for Financial Studies and Professor of Finance at the University of Melbourne.

For more information on the ANZSFRC click here