“If you receive an unsolicited phone call asking you to switch your investments, superannuation or banking services, hang up,” said Vanessa Walker, managing editor of Money magazine.
That’s the simple message Money magazine is encouraging Australians to follow in the wake of ASIC launching a review into financial advice licensees that use lead generation services.
“Almost every professional letter or email you receive from your super fund or bank tells you that they will never call you unexpectedly and ask for personal information,” said Walker.
“It’s best to use this as a rule of thumb, and encourage family and friends to take the same approach.”
So what is a lead generator?
A lead generator is a business marketing tool. To consumers it will appear as an opportunity – often on social media - to do a short survey, questionnaire or input some numbers in a comparison site and will promise to use this information to find better-performing alternatives. At the conclusion it will request personal contact information in order to access a personalised report.
Unbeknown to people, they have now joined the lead generator’s database,and are now considered a “lead”.
It’s important to note that lead generation can be a legitimate marketing tool. But it is now under the regulator’s scrutiny. In announcing its review ASIC’s concern is that when financial advice firms purchase a list of leads, or in fact run the lead generating business, they use this contact information to encourage “leads” to sign up as a client, and potentially switch their super with disastrous results.
“We’ve seen a very unfortunate result for customers of First Guardian, with many of the 6,000 clients who lost their money having signed up to a self-managed super fund through a lead generator process,” said Walker.
What are the red flags?
As ASIC stated in its review notice, some key signs to look out for are being pressured to act urgently, firms offering services that can be provided for free, such as finding your lost super, poor disclosure and product information, promises of unrealistic returns and of course, communication over the phone.
There is further due diligence that Money encourages Australians to do when considering submitting personal details.
“Firstly, visit the ‘Contact us’ page on the website. If there is only a ‘Contact us’ form and no address, email or phone information, that’s an early warning sign,” said Walker.
“Second, read customer reviews through independent searches. If the reviews are poor, or there are no ways of finding this information, then it might not be in your best interest to trust them.”
“Is the service available elsewhere through a more reputable provider? “Finding your lost super,” for example, can already be done in your MyGov account.”
“If you have reservations, trust your gut and look elsewhere for trusted information.”
“Being pressured to transfer your super is a sign to end the contact right away, and it is worth reporting such instances to ASIC,” said Walker.
Another early warning sign is if an online form asks for your phone number.
“If you are after a free report or educational resources, there is no need for a website to request your phone number in the first place. If there is no need for you to be followed up with a call, there’s no need for you to give them this contact information.”
When looking to compare super, Money magazine has a free superannuation comparison service, and moneysmart.gov.au is also a trusted place to start with your financial research.
“We’d also suggest reviewing any financial advice firm that contacts you on the ASIC Financial Advisers Register,” said Walker.
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