Institute of Financial Advisers Chairman Phillip Meyer said the research further undermined the public's perception of financial advisers and was another blow the industry.

"The report is extremely disappointing and doesn't reflect well on the industry," Meyer told Good Returns. "From the point-of-view of the public, it doesn't inspire confidence and is a concern for the adviser community."

Consumer NZ mystery-shopped 33 financial advisers and had an expert panel assess the quality of 17 investment plans, seven of which were pre-retirement plans. Only three were rated good by the panel, with the rest either disappointing or rejected.

Meyer said the research reiterated the need for advisers to get on the pathway to proving their competency and urged those who are not yet affiliated with an association to do so.

The government has been working to overhaul the industry since it introduced legislation in 2008 to bring in new regulations and competency requirements for advisers late next year. The regulations include a new code of conduct for advisers, introduce a new disputes resolution service and will see the Securities Commission take on a regulatory role for the sector.

Commerce Minister Simon Power said Consumer's findings "are very much aligned to anecdotal issues that continue to be raised" with him, though he is confident the new regime will be embraced by advisers.

"I have every confidence that the industry will play its part in supporting this reform," he said.

AXA chief executive Ralph Stewart said the Consumer investigation showed "a couple of clear weaknesses," though it was unfortunate that the research was done during the early stages of adviser training.

"Industry knows that something has to be done, and this reinforces the view that we have to invest time and effort in training," he said. "We're all aware of the need to improve the quality of advice and regulation is helping do that."

The IFA's Meyer said the research highlighted the two positions for advisers between those whose pay is tied to the sale of a particular product and those whose pay is determined by the client, and that customers should expect to receive relevant disclosure.

Still, Meyer said it is up to the client to ensure they understand what they are taking on and if there is any hint that they are not aware of the risks, they should not proceed.

"If a client gets advice and isn't comfortable to take the risk, they should not go any further," he said. "They need to understand the risk involved, even if they are given the best advice."