Most Aussies hesitate to trust their brokers

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November 22 2021
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If you’re uncomfortable with the idea that your broker could be benefiting from your financial mistakes, you’re not the only one.

Most Aussies hesitate to trust their brokers

Despite reforms made following the royal commission into financial services, Aussies remain sceptical that brokers have their best interests at heart.

According to research published by Global Prime, as much as 69 per cent of Australians believed that brokers either are “not trustworthy at all” or “somewhat trustworthy”.

A further 28 per cent cited a belief that brokers profited off the losses of clients as the rationale behind their distrust.

Global Prime director Jeremy Kinstlinger said that many CFD brokerages directly profit from client losses, describing them as “ a glorified casino operation”.

“What this research clearly shows is that an overwhelming majority of Australians are in the dark about these activities, and agree with this sentiment, believing that regulators should consider proper disclosures for brokers to let their clients know that they are indeed profiting from their losses,” he said.

Global Prime’s research found that 89 per cent of Australians believed that brokers should be made to disclose whether they make money from client losses, with 86 per cent of those surveyed finding fault in the current level of transparency.

Thirty-seven per cent said that they would be shocked to learn that their broker was benefiting from their financial losses.

Eighty-eight per cent of Australians said that they would avoid working with a broker who directly profited from their losses, with 80 per cent going as far as to suggest that it should be made illegal for brokers to profit from client losses at all.

“Even in today’s age, large, regulated brokers have been busted for taking advantage of clients by using high-pressure sales tactics to entice them to deposit more money towards unprofitable strategies,” Mr Kinstlinger said.

Calling on more brokers to adopt a model that doesn’t profile losing clients with the intent to profit off their losses, he suggested that investors looking to trade avoid brokers who flaunt super high leverage and offer incentives like deposit bonuses.

“We want to see more brokers adopt a model that doesn’t profile losing clients with the intent to profit off their losses, and instead actually be on their client’s side,” he added.

“Unfortunately, in our industry, this is not the current status quo.”

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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