Consumer attitudes to how financial planners are paid will be exposed in an ASIC investigation of the $2.1 trillion retail investment industry.
ASIC chairman Tony D'Aloisio announced to the Financial Planning Association's (FPA) National Conference on Wednesday that he has charged his deputy chair, Jeremy Cooper, with the job of setting up a new retail investor taskforce.
It will scrutinise the different advice, disclosure and protection levels for consumers and give them a say on fee-for-service or commission-based remuneration of planners, D'Aloisio said.
"Ultimately consumer and retail investors should 'vote with their feet' on what models they will favour," he said.
He said it was not ASIC's job to try and pick winners but reiterated the regulator's previous warnings that "the greater the reliance on commissions, the greater the conflict which needs to be managed".
Planners who received sky-high commissions for selling Westpoint's failed investment products will be used as a case study on how planners deal with conflicts of interest.
The investigation was prompted by concerns about an imbalance in supply and demand, a growth in complex retail products, the accessibility of advice, a high proportion of retirees needing special consideration and property failures like Westpoint.
It also will investigate issues such as the extent of financial literacy, differing advice models, compensation arrangements, the role of fiduciary duties and the length and complexity of disclosure documents such as Statements of Advice.
ASIC has employed a chief economist and created a research unit to conduct the analysis.
It is also undertaking an investigation of high-risk investments.
FPA chief executive Jo-Anne Bloch said planners should be able to have a broad range of payment models, but admitted that the industry needed to do better to reach the four out of five Australians without access to financial advice.
"The fact is that many consumers don't seek advice because they are put off by commissions," she told the conference yesterday.
From 2001 to 2006 retail investors' assets grew by 70 per cent to $2.1 trillion.
