Take online financial advice with a hefty dose of salt

More people are turning to the internet for financial tips and information on financial products.
By · 13 Nov 2013
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By ·
13 Nov 2013
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More people are turning to the internet for financial tips and information on financial products.

The big banks have a lot of content on their websites and industry funds have felt the need to do the same, pumping $3 million into an online finance and general news site.

Online comparison sites are also becoming more popular. But can consumers trust what they read?

The latest venture into sponsored online sites is the soon-to-be-launched The New Daily, which is backed by industry fund interests, including AustralianSuper.

While mainly pitched at industry fund members, it is also intended to have broad appeal and will include general news.

Industry funds veteran Garry Weaven said the site would include content from the ABC.

When asked about editorial independence of The New Daily, Mr Weaven told BusinessDay that the finance content would not be dominated by "guff" about self-managed superannuation funds.

Large superannuation funds are worried about members with large account balances leaving to start their own super funds.

Online finance news and views can certainly help educate consumers as long as they are aware there could be an agenda.

As for the comparison sites, they can help consumers compare products and save, but consumers need to use them with their eyes wide open.

Late last year, the Australian Securities and Investments Commission issued a warning about the comparison websites. The regulator said comparison websites with misleading or inaccurate information could steer consumers towards unsuitable or more expensive products.

Yet more people are searching the internet for information on financial products and financial tips. A poll of more than 1200 adults found that 56 per cent had reviewed at least one financial product during the past year, with many saying they switched as a result.

The poll, commissioned by life insurer TAL, found one in three had gone online to investigate or switch their bank and savings account, and home and motor vehicle insurance.

Consumers may not be aware of the limitations of these websites, said Katherine Lane, principal solicitor at the Consumer Credit Legal Centre NSW.

"The minute you get onto a website where they have got something to push, you need to be sceptical," Ms Lane said.

While some comparator sites are much better than others, even the better ones are not always telling consumers everything they need to know about the products.

ASIC's report on comparison sites found that some product providers pay comparator sites to be listed and also pay for their products to be "featured".

Online comparison websites are required to clearly disclose any links they have with the providers of products that are being compared, including disclosing any payments. They are also required to warn consumers if not all providers are included in the comparisons.

Another concern is that websites can lull consumers into thinking that they do not need financial advice, said Wayne Leggett, a financial planner and principal of Paramount Wealth Management. "You can get a quote on an insurance policy or a superannuation product or a loan but you do not know how it fits with the rest of your financial affairs," Mr Leggett said. "No website is going to tell you that."

TAL chief executive Jim Minto said consumers should not rely solely on the internet when making important financial decisions. He said while websites and comparison websites could be good tools to start with, it was always a good idea to seek the advice of a qualified financial adviser.
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