Consumer magazine Choice has warned consumers to be wary when it comes to the quality of advice provided by financial planners. The Australian Consumers' Association (ACA), which owns the magazine, wants financial planners reformed further, with the Australian Securities and Investments Commission (ASIC) given more resources to combat market failures.

Choice said too many planners “put their own interests ahead of those of their clients” by providing generic plans with careless errors and insufficient detail. It said they also “recommend investments without justification, seemingly to earn… commissions”.

The magazine details a survey it conducted jointly with ASIC, under which 53 people in all states – selected to meet specific demographics –were sent to three financial planners each to request a comprehensive financial plan. The resultant ACA analysis found 27% of the plans submitted “grossly inadequate”.

This is the third time in eight years Choice has looked at the quality of advice provided by financial planners, “and the third time we’ve found major problems”.

It said principal licence holders should take their roles as professionals more seriously, and they should ensure their representatives meet the standards of good practice. Planners will also need to make “major changes” to comply with Financial Services Reform Act standards. ASIC will be meeting principals of companies that submitted “very poor” plans.

Choice urged the Financial Planning Association to improve professional standards among planners and called on the Federal Government to halt the introduction of SuperChoice until consumers can be confident of receiving the best possible advice. It said that otherwise “that’s a disaster waiting to happen”.