An industry survey of 300 advisers has shown four out of five practitioners believe the best interest duty was required to raise the bar on the provision of advice.
A Hub24 research paper, “The adviser’s best interests duty: creating better advice”, revealed advisers felt the formal structure of the compliance regime has improved processes around providing advice.
“Despite the widespread acceptance of the best interests duty, and a view that it has improved outcomes for clients, there is a strong view that it has not had a great impact on the quality of the actual advice provided,” the research paper said.
“It suggests advisers were already confident in the quality of advice given, but a formal compliance requirement has improved processes around the provision of advice and given advisers greater confidence or comfort.”
The study showed two-thirds of advisers agree or strongly agree the best interest duty has led to better outcomes for clients and 46.4 per cent of respondents disagreed the best interest duty is just further red tape and compliance for no real benefit.
In addition, it revealed almost four out of five disagree or strongly disagree it is a waste of advisers’ time and money.
In terms of education provided to advisers around the best interest duty, more than 80 per cent of aligned advisers received training and education from their licensee, while more than 80 per cent of non-aligned advisers received training from a specialist provider or from another source, including an industry association, it found.
But 70 per cent of all advisers surveyed said they most likely need additional training or information, which Hub24 suggested may indicate their desire to do their best in the face of rapidly changing market and community expectations.
The study also revealed licensees are actively testing advisers’ compliance with the best interest duty obligations, with 60 per cent of advisers reporting they have been asked by their licensee to provide compliance evidence within the past 12 months.
Hub24 managing director Andrew Alcock said: “At a time when there is increasing scrutiny on the quality of financial advice, it’s very clear from this research that advisers are focused on meeting the best interests of their clients.
“In our experience, advisers have always considered a range of factors, and not just price, when selecting financial products to help deliver outcomes for their clients both now and for the future.”
The research was conducted by CoreData in conjunction with the Association of Financial Advisers.