We found many advisers relied heavily on the companies that provided managed funds and “wrap platforms” (see the jargon buster) for the information and recommendations that were then given to our shoppers.

This information was of poor quality. Fewer than half the advisers who recommended managed funds provided investment statements about the funds they were recommending.

Our shoppers also weren’t given info that could help them assess the quality of the advice: the historical performance of the recommended funds or investment portfolios wasn’t reported or discussed, or was incomplete.

Nor was information given to help our shoppers assess the value of advice about directly held investments. It’s likely the shoppers were recommended “off the shelf” (standardised) portfolios that had also been recommended to other clients. But the advisers supplied no information about the past performance of these recommended portfolios.

Investors not only need good information to decide on what recommended strategy to adopt. Once committed to a strategy, they also need good information to decide whether to stay there. Investors contemplating a “wrap platform” need to know the quality of its ongoing reports. Only one adviser provided a sample of such a report.

"Independent" advisers

Many advisers who provided investment plans implied that they could advise on just about any investment. But several of them then went on to recommend using just one provider for both the “wrap platform” and most or all of the managed funds. Was this advice really independent? Or does it show that the adviser has close remuneration links with the provider? With no rationale given for the choice of provider, who can tell?

Several shoppers paid for plans that seemed like personalised advice but were in fact carefully worded sales pitches for the “off the shelf” portfolios of a single provider. Some of this “independent” investment-plan advice cost more than $1200.