There is a lot of discussion in Australia about winding back the obligation of financial planners / advisers to act in the best interests of their clients, with a lot of discussion being about the costs to deliver such. But I notion that the costs of delivering this may be offset against the cost to the investor of not enforcing this.

Some thoughts… If anyone is offering services that are about a consumers’ financial future, and they are not working in the best interests of their clients, then this highlights to a ‘researching’ consumer that they may be encouraged to evaluate a range of possible service providers to see which of their service offers is most aligned to the consumers best interests (if the consumer actually knows what their best interests are…)

The need to evaluate each service provider then takes up both the consumers time (‘selection costs’) as well as the service provider’s time, and the marketing costs to attract them, ultimately adding to the cost of attracting the clients, which must be recovered some how in the cost of servicing them.

This also then places a burden on the consumer to make a decision as to which adviser / service provider to use which forces them to be to some extent their own ‘adviser adviser’ – which many would suggest most may struggle with as it is usually a rare occurance in one’s life to perform such a selection process…

So far, this is looking confusing and expensive for both the consumer and the providers pitching for the work….

I guess as being highlighted in the press recently about ‘buyer beware for financial planners’, like most industries I’d suggest that big brands are likely to be the beneficiaries, using brand equity to help overcome consumer confusion or lack of knowledge.

However if the alternative is where an adviser must act in the best interest of the consumer investor,  this increases trust, perhaps even advocacy, and theoretically this ultimately reduces overall costs through eliminating (or reducing) the ‘selection costs’ , and should improve both consumer outcomes, and long term savings outcomes…..perhaps in the best interest of society…