Independent ratings agency Adviser Ratings has upgraded the methodology it employs, which will give consumers access to an improved measure of the level of compliance with professional standards practitioners are achieving.
Qualifications, professional memberships, industry experience and the volume of consumer reviews will now be factors taken into account as part of the new procedure.
The organisation warned the change in process is likely to result in one-third of advisers having their Adviser Ratings Status badge downgraded, with another 25 per cent of practitioners set to receive an upgraded badge.
Adviser Ratings founder Angus Woods said the upgraded scoring system has aligned with the advice industry’s professional evolution.
“Consumers are increasingly demanding transparency from advisers about their education, professional commitments and experience, but it’s still hard to access that information in one place,” Woods noted.
“The Hayne royal commission showed all Australians how important trust is in financial advice, but unfortunately not all advisers are giving consumers an accurate picture of their professional memberships.
“While ASIC’s (Australian Securities and Investments Commission) Financial Advisers Register (FAR) lists some professional information, our analysis has shown an alarming number of advisers have out-of-date listings about their association memberships.”
To this end, the new rating algorithm will also address this issue of outdated information regarding industry body memberships.
According to Woods, currently 13 per cent of listed SMSF Association members were inactive and 9 per cent of advisers who claimed to be Financial Planning Association members were not current members.
Advisers will be afforded the opportunity to rectify any incorrect information contained on the FAR to improve their Adviser Ratings Status badge.
Completing a Financial Adviser Standards and Ethics Authority required qualification, satisfying continued professional development obligations and joining a tier-one professional association are other means by which advisers can improve their status.
