Financial planners lack term deposit knowledge, study finds

Monday 13 September 2010

Article by Mozo

Australian financial planners require more education on term deposits, new research has claimed.

Investment management firm PIMCO found that almost half of financial advisers had "little or no idea about the illiquid nature of term deposits" following a survey of 200 advisers in July 2010.

In addition, PIMCO revealed that 59 per cent of the survey respondents regarded their knowledge of fixed interest markets as average at best.

However, Julie Berry, chair of the Financial Planners Association of Australia, claimed that the research did not account for the scope of options that investors have when they come to compare term deposits.

"This report assumes that all term deposits are long-term, but they are not – you can have as little as 30-day deposits really," she told the Financial Standard. "If a client withdraws on this, it is really more an issue of lost interest, than lost capital."

Ms Berry also claimed that advisers are "well trained" to understand that balance is needed in an investor's portfolio, with the role of term deposits varying from client to client.

The news comes after a recent study by Canstar Cannex found that Suncorp offers the best value in term deposits while CUA is the best term deposit option for those who prefer banking with a credit union or building society.

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