Morning Briefing: Consumers easily manipulated by financial advice, study reveals

Consumers easily manipulated by financial advice, study reveals
Many consumers are unable to tell the difference between good and bad financial advice, even for the most simple advice, a new study has revealed.

A major study conducted by the University of Sydney found that a large proportion of Australians are unable to gauge if they are receiving trusted financial advice from a professional financial adviser, even for the most basic decisions. 

“We found that people on the whole, were able to tell the difference between good and bad advice on the topics that were relatively straightforward such as paying off credit card debts,” University of Sydney Business School Professor, Susan Thorp, said. 

“But when it came to more complicated decisions, like superannuation investments, far fewer people were able to tell the difference between good and bad advice.”

The study, which has led to the university calling for a tightening of regulations to protect vulnerable clients, also found that trust in financial advisors was “easily manipulated”.

“We were able to show that if an advisor gave good advice on an easy topic, that formed a good impression in the mind of the client, and they continued to trust that advisor, even when they gave them bad advice down the track,” Professor Thorp said.