Inside Money: A message for all concerned parents

Mums and Dad investors - you're being looked after. Photo / Thinkstock

"Many mum and dad investors have lost large sums of money because of the poor investment advice they've received," blurted Simon Power as he gave his blessing to the Code of Professional Conduct for Authorised Financial Advisers (AFAs) this week.

Power liked the phrase so much he used it again the next day: "Many mum and dad consumers have lost large sums of money because of the poor financial advice they've received."

That subtle change of emphasis from 'investment advice' to 'financial advice' in his later statement is telling because here Power is giving all those advisers who were exempted from the AFA regime at the last minute (mainly insurance and mortgage specialists) the opportunity to join it.

"Today's announcement clearly sets out the Government's aim of encouraging all financial advisers to aspire to be authorised," Power said.

But will many advisers choose the path of more resistance - opting for authorisation above mere registration? Angus Dale-Jones, the Securities Commission executive who has spearheaded much of the regulatory development for financial advisers, thinks yes.

Dale-Jones says he expects the number of registered-only financial advisers to drop steadily over the next few years as they either opt-in to the AFA rules or decide to operate under the auspices of a qualifying financial entity (QFE).

QFE businesses take responsibility for all financial advisers, or adviser-like people, who operate under their imprimatur. According to Dale-Jones, demand for QFE status is higher than expected with the number of accredited entities now picked to be well over 200.

The next trick, though, will be how to spot your good QFEs from your bad AFAs or vice versa. Don't ask mum and dad, they won't know.