IDEAL ADVICE

Conclusion Conclusion

The financial advice industry has reached a critical phase where it must take serious and convincing steps to build and improve a weakened level of investor confidence and win back the status of trusted advisor. Although moves from individual players are praiseworthy, it is time for comprehensive collective action by the industry.The days of paying lip service to customer centricity are over. This will not only benefit investors but also enhance the long-term sustainable growth and profitability of the industry because high quality advice is integral to a well functioning and vibrant industry. Moreover, high quality advice that is fair to all will help to attract more investors and thus new assets to the sector. We believe that a series of industry-wide progressive moves towards ensuring a higher advice quality is required to achieve this goal. As illustrated in the following figure, the phased approach should start with the pledge to act in the best interest of the client under all circumstances, followed by greater levels of transparency in the nature of advice, product features and prices. Last but not least, a sound and consistent qualification of advisors as well as an improvement of financial literacy of investors is the ultimate way forward for this industry. This is not an option but a necessity for the industry because the alternative of little action or a lack of combined actions will mean that the industry will find itself confronted with increasing regulation and scrutiny as regulators move to ensure a higher customer protection.

Phased-approach to increasing the quality of advice

Increase nancial capability of investors and advisors

Provide greater levels of transparency

Quality of advice

Strengthen the duty to act in the best interest of the client

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2015

Figure 16

Figure 16