# Where does one get "good" financial advice?



## Tom Ronalds (28 May 2008)

Originally posted by CAFA1234 here:

https://www.aussiestockforums.com/forums/showthread.php?t=11094



> Serious question - where does one get 'good' financial advice?
> 
> The average qualified financial planner will give you
> average, often 'big 4 bank' sourced, generic plans focused on diversification by use of various mutual funds. They are SO risk adverse that it is almost a joke.




This same observation, in only a slightly different form, was raised relatively recently by tech/a on the "House prices to keep rising..." thread. It deserves the same answer I gave then, so let me repeat it.

If you are a qualified FP yourself (as you have indicated at the end of your post), you would know that what an FP can and cannot do is largely determined by the compliance departments of the Australian Financial Services Licence holders (also sometimes called "Principal Dealers").

These guys have two missions in life: First and foremost to be risk averse, because they don't want any court cases against their Authorised Representatives, and second to keep it all as simple as possible, so they don't confuse the most feeble-minded, computer-illiterate ex-life insurance agents still found amongst their Reps. ;-)

This is why trading/fast churn is essentially not allowed at any time and also why they tend to frown on any direct investments (shares etc) which are outside the Top 200 and/or not covered by their preferred research house. Many will not even allow instalment warrants (outside of a Telstra float) or similar instruments. 

Similarly, placing all your bets into property (as tech/a was saying everyone should have done back in early 2000's) or any other single asset class is a no-no in any circumstances and generally pretty silly anyway - no matter how smart it may look in hindsight. The fact that you can use ridiculous gearing levels in property speculation is not a justification - you may be comfortable with that level of risk, but a prudent adviser should not be.

There are two main reasons here for using managed funds: The first one is that in this way, financial planners do not have to get too involved with the actual investments. This is important, because sadly, many financial planners have little idea about investing or even about what it is they are recommending. I know it sounds strange, coming from a practising CFP, but hey - let's be honest here - this is how so many FPs kept recommending the Basis Yield Fund as "international fixed interest" fund and sold it to risk-averse investors as such! 

Secondly, because the major institutions typically make most of their money out of funds management rather than the cut they take out of their Reps' income for services rendered, they much prefer if those Reps act as salesmen and just stick to recommending products from a narrow product list. This is how you get so many advisers placing SMSF clients money into a platform and then in managed funds, thus adding another 2% or more in totally unnecessary costs. It makes life easy for the advisers and makes money for the licence holders. Shame about the clients, but most of these advisers know no different, so they would be genuinely surprised if you told them they are not doing the right thing.

If you want better than that, you need to go to someone who preferably has their own AFS licence, charges on a *true" fee for service basis and is not in any way linked to the majors. Even the word "boutique" has been abused sufficiently now in this country that we have the likes of Hillross (fully owned by AMP - and check out their Financial Services Guide for the pages and pages of product-related conflicts of interest!) calling themselves "boutique"...




> I had hourly paid planners from 2 of the large bank planning groups create plans for me back in 2004/6 and although interesting reading...




I'm not surprised - if you went to the banks, you should not expect technical proficiency from those planners. Their job is to sell you the bank products, period.



> And if you go for a specialty financial planning house then be very careful - much of the mezzanine finance for house developments (and now lost money) was sourced via financial planners.




True, but interestingly enough, the vast majority of those planners were linked to the main stream dealer group anyway.

Besides, the dodgy schemes invariably pay upfront commissions of up to 10%. My opinion has always been that if anyone wants to/can afford to pay so much to the salesmen of their product, then the product probably cannot stand on its own merit/is dodgy and it should be avoided.

If you go to a fee for service planner, you are unlikely to encounter these type of products. 

Having said that, you can still lose money - even the best planners rely on research and you just need to look at the likes of Centro, Allco, MFS and ABC Learning Centres to work out it's easy to get burned. Every one of these was on the "Strong Buy" list of most reputable analysts even when their share price had halved. If your licensee stops you from having hard stop losses on your clients' portfolios (because invoking those could qualify as "trading"), then you will still suffer losses.



> ...neither could plan in different income streams kicking in at different times within the pension phase.]




That should not be a problem. It is possible to model such scenarios without any difficulty. For example Coin Financial Software (not really appropriate for home use though - too complex, with many modules relating to client management etc, plus the annual licence costs close to $8,000 per user) can model as many strategies, entities and income streams as you can throw at it.



> Like accountants or lawyers, average planers are two a penny, but good ones are very difficult to sniff out.




Very true, but hey - isn't that the case with anything? ;-)



> Serious question - where does one get 'good' financial advice?




You'll just need to do the hard yards and find someone who knows what s/he is doing.



> Does anyone know of a sophisticated software model e.g. excel spreadsheet to model lifestyle financial planning?




I don't think a spreadsheet, even if you could put one together with all of the necessary parameters, would be a viable way to do this. Keep in mind you need to cater for legislative changes on a regular basis (i.e. at least annually) as well.



> Declared Interest:- qualified financial planner DPF 1-8 inclusive.




Did you only do the theory, or did you actually have any practical work experience in FP? -- I guess going through the study course and then writing a plan (presumably without the experience or the right tools) would have been a lot of work for little use, if you did not intend to use it eventually.

Cheers.

Tom R


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## Julia (28 May 2008)

Tom, your remarks are less than reassuring for any inexperienced person seeking FP advice, so I hope they are heeded.

I'm always especially surprised that anyone would expect unbiased advice from any FP employed by a bank!


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## Tom Ronalds (29 May 2008)

Julia said:


> Tom, your remarks are less than reassuring for any inexperienced person seeking FP advice, so I hope they are heeded.




My comments were not intended to be reassuring; rather to answer some questions that have been raised by others.

I think that it is very important to remember that by the very nature of this forum, most subscribers here would be at least reasonably sophisticated as investors. This is in stark contrast to the general public, where the level of financial ignorance is absolutely woeful.

Most financial planners do not get to work much, if at all, with sophisticated clients. Some financial planners even specialise in areas like Centrelink assistance. In some cases, this work can resemble financial counselling rather than planning.

What this means is that it is not necessarily important that not every FP is an absolute technical guru. Many clients' needs are rather basic and involve things as simple as setting up a budget, regular investment plan and some insurance. 

Their long term financial situation will improve immensely just by taking these few simple steps and this is where an FP should be able to add value. At that level, investment products often tend to be of secondary importance, too - the regular savings and investment plan will be more important than whether the managed funds used are run by AMP, Vanguard or Colonial First State.

Some technical gurus, on the other hand, cannot relate well to people, so even their most sophisticated strategy is unlikely to be taken up by the prospective clients.

This is what some posters here seem to have trouble with - to realise that they are not average investors. And because they are such a minority, some of them may well find they know more about the actual investing than the institutional financial planner they've just talked to.

That still does not mean the institutional financial planner is useless - s/he just covers a different market segment, that's all.

Sophisticated investors are relatively rare, so then one can't be surprised the same can be said about sophisticated financial planners (or accountants etc).



> I'm always especially surprised that anyone would expect unbiased advice from any FP employed by a bank!




Exactly - you can't expect an ANZ bank teller to tell you the CBA term deposit pays a higher rate of interest either!

But then again as I said above - for many clients, this may not be the most important consideration. If the planner can get them motivated enough to get started on their wealth building adventure, then that planner has done them a large favour.

Cheers.

T. R.


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## Temjin (29 May 2008)

Extremely well written there Tom! That is why I am changing my career into becoming a financial planner. (I come from a mechanical engineer background)

This is why sophisicated technical guru investor such as Tech/A will gain very little from an "average" financial planner out there. He would be better off to find extremely sophisicated financial advisors who specialise in selecting and modelling different PUBLIC managed futures / commodity trading systems from professional CTAs. And to my knowledge so far, I only know of one place in Australia that have only "intermediate" knowledge in such specialised knowledge.   



> I think that it is very important to remember that by the very nature of this forum, most subscribers here would be at least reasonably sophisticated as investors. This is in stark contrast to the general public, where the level of financial ignorance is absolutely woeful.




I agree 110%. A majority of subscribers here are on a total different level than the average mums and dads in the general public. They don't want to know how to select the best undervalued stock or when to time entry/exit, they just want to make sure their basic financial goals are achieved so they could focus on something they considered more important in their life. 

I really need to get a print out of this and save it for future reference.


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## tech/a (29 May 2008)

Why cant F/P's show people who ask.

(1) How to invest profitably in the stock market.
(2) How to make a strategic trading or share investing plan.
(3) How to invest in an IP and be positively geared.
(4) How to invest in proferty and be negatively geared to their benifit.
(5) How to do a profitable housing developement. With little or no cash down.
(6) How to gear a commercial developement.With little or no cash down.
(7) How to turn vacant land into a money spinner with little or no cash down.

My veiw is that a very large majority have no idea themselves.
Thats why they simply DONT KNOW.
They dont want to know---because there is no money in it for them.
If they DID know they would be doing it themselves.
Then THEY'D KNOW.


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## wayneL (29 May 2008)

tech/a said:


> Why cant F/P's show people who ask.
> 
> (5) How to do a profitable housing developement. With little or no cash down.
> (6) How to gear a commercial developement.With little or no cash down.
> (7) How to turn vacant land into a money spinner with little or no cash down.




In fairness, these particular points are well outside the remit of an FP.


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## tech/a (29 May 2008)

Why?

If I had no idea about these things and I had the capital either in cash or equity and I had heard of success in these areas I'd be thinking a Financial Planner would have the answers.

I wouldn't be seeking out a mechanic.

Theoretically where would most people think they would go to learn about these things?

Id be thinking a financial planner knows everything about investment of my money,no matter how diverse. At least a basic understanding of the Pro's and Con's plus where to go for specific in depth application of those points. Not simply buy these off plan from XYZ developements.

What then about (1) to (4).


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## Andy_aus (29 May 2008)

Where did u go, or what resources did u study to learn about these things tech/a.  Point me in the right direction mate.


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## wayneL (29 May 2008)

tech/a said:


> Why?
> 
> If I had no idea about these things and I had the capital either in cash or equity and I had heard of success in these areas I'd be thinking a Financial Planner would have the answers.
> 
> ...




1 to 4 sure, I agree with you, but 5 to 7  is not "investing". It is a business/project.

Should I expect an FP to advise me on buying and restoring vintage cars for profit? Should I expect advice on building a real estate agency?

No! These are specific business activities. An FP is not a business adviser or mentor; see below.



> Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
> financial planning
> –noun
> 1.	the devising of a program for the allocation and management of finances and capital through budgeting, investment, etc.
> ...


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## Insan3 (29 May 2008)

If I may add my 2c worth...
I currently work as a Planning Assistant while I complete my Financial Planning Diploma. It's been interesting, I joined them on the belief they were boutique... they are aligned very strongly with one of the Big 4.

Tom has made several good points. Not all of them are glowing praise for FinPlanning, but are true. The problem in the litigious society is that if a planner does go outside the ASX200 or outside of the Approved Funds List and it goes pear-shaped, the clients are likely to sue and the planner has 0 protection. 

Not many jobs were the final product may be out of your hands. Mechanic - car runs or it doesn't. Gardener - grass is mowed or isn't. A Planner can do everything with best intentions, research, etc and it can collapse. They diversify, they get criticised. They stock pick, they get criticised. Research companies also get it wrong. Our planner was telling me 2 years ago, LEI was a Red-light - Sell Immediately at $20. Now it sits nicely at $53.

We deal with high net worth clients, and we charge a fair chunk in fees. For ease, most are placed into a Wrap product incurring fees, then incur fees on the funds. It cuts our Admin work down by a huge amount... would the client prefer to pay by the hour, if 2/3 times the manpower was required? 

As far as the double up in fees, that is because of 2 separate processes. How many people complain about extra fees for separate processes in other industries? Do builders cop a hard time for passing on the Architect and Engineers fees? Why can't planners pass on fund managers fees?

I do believe that sophisticated investors can do it themselves, cheaper and more suited for themselves. But most don't have time/choose to spend time in other activities. It would be tough to monitor and act on a Corporate Action if you have a large portfolio - constantly needing to check if anything is announced. We get the details, planner decides if it suited for client, we prepare ROA's, documentations, ensure funds are available, and then simply call the client for a simple yes/no. The client gets interupted for 30 seconds, we spend 3-4 hours doing the work.

The public seem to expect FP's are these magic finance people who know all accounting matters, legal matters, stockbroking, real estate matters and can always pick stocks and provide advice about buying houses or running businesses. They are just part of the team, and people forget this. To do all of the above, you need Accountants, Solicitors, RE Agents, Business Advisors and the FP to bring all the parts together.

That's my part - for what's it's worth, I'm looking to specialise in average-joe's. The people who don;t expect miracles, but the people with 2 kinds and 40hr week jobs who just need help with advice. Much the same way we view Accountants - they do their job, nothing fancy, no major miracles.


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## Insan3 (29 May 2008)

tech/a said:


> Id be thinking a financial planner knows everything about investment of my money,no matter how diverse. At least a basic understanding of the Pro's and Con's plus where to go for specific in depth application of those points. Not simply buy these off plan from XYZ developements.




A planner will generally shy away from Direct Property, two reasons.

- No Commission, No ongoing business.
- It whacks the diversification/asset allocation strategy out of whack.
Need to hold a large portfolio to keep property within recommended guidelines of 20% of investment portfolio!

Also, lack of partial liquidity, low yields, low gains (compared with well-run High Growth portfolios) etc, etc


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## robots (29 May 2008)

Insan3 said:


> A planner will generally shy away from Direct Property, two reasons.
> 
> - No Commission, No ongoing business.
> - It whacks the diversification/asset allocation strategy out of whack.
> ...




hello,

thats interesting,

it is so blatant that because no commission or ongoing commiss direct property is out full stop, amazing

i would say the actual amount down is minimal and maybe a very small part of investment portfolio,

typically, the difference in return between equities and property is a couple of percent,

thankyou

robots


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## Temjin (29 May 2008)

tech/a said:


> Why cant F/P's show people who ask.
> 
> (1) How to invest profitably in the stock market.
> (2) How to make a strategic trading or share investing plan.
> ...




I agree with WayneL, point 5 to 7 is definitely out of a FP's merit. How could anyone expect the "average" FP could do all the things above?? Do you actually believe every FPs in the market should be trained to teach how everyone be able to create these kind of wealth? Do you actually believe the average mums and dads would require such advices anyway? 

It's already been explained quite clearly, any average FPs are not suitable for you Tech/A because you seem to know just about anything related to investment. But it does not mean they aren't suitable to 99.99% of the population.


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## Tom Ronalds (29 May 2008)

tech/a said:


> Why cant F/P's show people who ask.
> (1) How to invest profitably in the stock market.
> (2) How to make a strategic trading or share investing plan.




Of course a good planner can do that. Keeping in mind that nobody can ever guarantee that your investment will at all times be profitable.



> (3) How to invest in an IP and be positively geared.




Most planning practices are prohibited by the terms of their licence to advise on direct property.

Outside of that, given the current massive property bubble, it is pretty much impossible to be positively geared unless you have a very substantial deposit.

My advice at this stage would be to get the hell away from property; full stop.



> (4) How to invest in proferty and be negatively geared to their benifit.




Not a hard thing to do, but given the absolutely atrocious short to medium term direct property metrics, you'd have to be mad to enter a loss-making investment into that asset class right now.



> (5) How to do a profitable housing developement. With little or no cash down.
> (6) How to gear a commercial developement.With little or no cash down.
> (7) How to turn vacant land into a money spinner with little or no cash down.




If you had read my previous posts, you would realise that these points do not make sense.



> My veiw is that a very large majority have no idea themselves.




What do you call "no idea"? -- There's a lot more to putting together a decent financial plan outside of property speculation.



> Thats why they simply DONT KNOW.




Or maybe it's just not relevant to their job.



> They dont want to know---because there is no money in it for them.




Possibly in some cases, but not as a rule. It simply is not relevant to most planners - just like most accountants do not know anything much about complex superannuation - or even tax reduction - strategies; they really are just number crunchers. Have you thought to complain about that?



> If they DID know they would be doing it themselves.




But of course they wouldn't. Not everyone wants to engage in property speculation or share trading; for all sorts of reasons. Most people, including most planners, are not speculators or traders.

It may well be that when the a**e falls out of the property market here in a similar fashion to what's been happening in the US and now also in Britain, NZ and Spain, you may well be reminded of the lesson you've apparently already learned once before in the late 80s.



> Then THEY'D KNOW.




Well, history tends to repeat itself.

Cheers.

T. R.


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## Tom Ronalds (29 May 2008)

Insan3 said:


> A planner will generally shy away from Direct Property, two reasons.
> 
> - No Commission, No ongoing business.




That may to some extent be the case with commission based practices, but ultimately the terms of your licence will not allow you to offer specific advice on direct property; full stop.

This is a federal government regulation. 

If you are only a trainee or a junior planner, you may not be aware of that, but this is definitely the case.

Other than that, personally I think that the "no trailing commission - no advice" argument is symptomatic of all the bad things that are wrong with this industry. Either you are paid for advice, independent of product - in which case you can call yourself a professional - or you are paid by product providers for selling their product - in which case you are nothing more than product flogger and an agent for that product provider.

Unless and until the link between product and advice is decisively broken once and for all, this industry (financial planning) will continue to attract criticism. And very justifiably so.



> - It whacks the diversification/asset allocation strategy out of whack.
> Need to hold a large portfolio to keep property within recommended guidelines of 20% of investment portfolio!




Recommended by whom? Be careful using arbitrary figures like that; they will be wrong at any given time for the majority of investors.



> Also, lack of partial liquidity, low yields, low gains (compared with well-run High Growth portfolios) etc, etc




Those are all subjective points and will depend on the individual client's circumstances.

Really the only relevant issue here is that you cannot make recommendations on direct property outside of general advice.

Which practice do you work for in Cairns? 

Cheers,

T. R.


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## Tom Ronalds (29 May 2008)

robots said:


> hello,
> 
> ...
> 
> ...




Robots, it is not the "actual amount down" that is important; it is your overall commitment. Ultimately there will be debt to the bank that you will need to repay at some stage, or that will bankrupt you. That same debt also tends to impact on your cashflows somewhat...!

I would have thought that a sophisticated property guru like you would know such basic things...! ;-)

T. R.


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## 2BAD4U (29 May 2008)

My personal belief is that people who NEED to see a financial planner only require basic advice, they wouldn't be looking for the more advanced information.

There are people out there who simply can't work out that if they spend more than they earn then they're on the road to ruin.  This is the type of clientele that I think most FP's are there for. Most people who own properties or shares maybe started off with help from an FP and now deal with more sophisticated advisors or even went off and got educated themselves.

Financial planners have their role but it probably doesn't suit a lot of people on this forum, that doesn't mean they are useless, incompetent, etc.


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## robots (30 May 2008)

Tom Ronalds said:


> Robots, it is not the "actual amount down" that is important; it is your overall commitment. Ultimately there will be debt to the bank that you will need to repay at some stage, or that will bankrupt you. That same debt also tends to impact on your cashflows somewhat...!
> 
> I would have thought that a sophisticated property guru like you would know such basic things...! ;-)
> 
> T. R.




hello,

no guru here just a punter who saves his money and reports on current situations,

i am in direct shares and property, and are amazed at the such strong comments towards property as a no go zone by financial planners,

similarly, managed funds and stocks have had a major bull run over the last five years and many think this has ended yet I will guarantee these are on the top of many fp's list when the client gets their report,

thankyou

robots


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## tech/a (30 May 2008)

Hmm some good stuff to reply to here.

*Insan3*

There is a saying I learnt many years ago.
"Go where the Money is and Go there OFTEN" while your motivation may well be noble in helping the little guy your own financial future lays with the big fish.

Personally I think you all (Financial Planners) should be paid for performance---if I hand over X$ for you to grow for me. If I want specific advice then I'll pay an Hrly rate.--but that's me.

*Tom*


> Of course a good planner can do that. Keeping in mind that nobody can ever guarantee that your investment will at all times be profitable.




And so can over 50% of posters here,but very very few will be able to give you the blueprint you need to be successful in ALL market conditions---I'm not talking about being right all the time but Profitable year in year out---something FUNDS dont and cant do. There are people who have taught me and a few here how to achieve this and they arent F/Ps.



> Most planning practices are prohibited by the terms of their licence to advise on direct property.
> 
> Outside of that, given the current massive property bubble, it is pretty much impossible to be positively geared unless you have a very substantial deposit.
> 
> My advice at this stage would be to get the hell away from property; full stop.




In the middle 90s All of my F/A friends (I have 3) warned me in no uncertain terms about Property investment. In 2001 I vividly remember a barbeque arranged where I chatted to all 3 and 4 of their cashed up mates about my own story. Seems in your circle its no different!

My advice would be to UNDERSTAND how you can profit from Property in these times---at ANY time. Think outside of the domestic home.There are quite a few---opportunities.
But as a savvy financial man this should be child's play.

I just cant fathom the lack of *DEPTH* in wealth creation *ability* ---TRUE wealth creation ability displayed by people who have been trained by people who are supposedly experts in the field.



> What do you call "no idea"? -- There's a lot more to putting together a decent financial plan outside of property speculation.




I love this!!
There are more millionaires created from property than ANY other investment yet after the biggest boom seen in our lifetimes F/P's are bellowing out all sorts of warnings.---So why wasn't Property at the top of the list over the last decade? No idea---I call NO DAMNED IDEA. How many F/Ps do you know that have 10--IP's in a diverse range of property holdings taking advantage of the massive demand out there and the massive capital appreciation which is still and will still go on!!---of course you know of which areas I'm speaking of.?

*Tom Let me ask you a question.*

How can I recognise the precursor to the next boom in Property---DOMESTIC? It sticks out like a wart! Has done so 3 times in my life time.


> Or maybe it's just not relevant to their job.




I cant honestly believe this. How can the single most valuable wealth creation vehicle over ones lifetime not be relevant to an F/P's job?
Regardless of property Market conditions---at sometime people will want to know just like Andy_Aus.

*Andy_Aus.*
I searched out people who were involved in development over the years I have spent many lunches with.
(1) Speculators--people who flip property---some from options to buy.
(2) Long term investors in multiple property holdings.
(3) Developers of Apartments,Commercial and Industrial complexes.
(4) Land developers experts in subdivision.
(5) Renovators.
(6) Wrappers--and not IcedT

All have demonstrable hands on experience in these fields--in other words this is what they do!

Look I know there are times when each asset class comes into its own.
I also know (as I have friends in the industry) That they want the "Whales".
The guys who have millions to park in trailing commission packages. They don't want the struggling couples who don't have a 5 grand bank account.

*The truth is F/Ps can service the clients they don't really want but have little to offer the clients they do want.
*

95% of F/Ps want to have the wealth their Whales----- and should be spending more time learning from their whales than attempting to "Help" them.


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## Tom Ronalds (30 May 2008)

tech/a said:


> There is a saying I learnt many years ago.
> "Go where the Money is and Go there OFTEN" while your motivation may well be noble in helping the little guy your own financial future lays with the big fish.
> 
> Personally I think you all (Financial Planners) should be paid for performance---if I hand over X$ for you to grow for me. If I want specific advice then I'll pay an Hrly rate.--but that's me.




Well this may surprise you, but this is exactly how the practice I work for charges.

You can opt for an annual service package, where you pay a fixed dollar fee for a fixed level of service. In some cases, there may be a performance fee; in other cases, where it's only about advice and not about investment management, you just pay the package fee.

Or you can pay by the hour.

We're not the only ones who work like this and the fact that you are not aware of it doesn't mean it doesn't exist. You just need to ask around to find what you prefer.

You're still unlikely though to get the type of advice you obviously seek (see below).



> And so can over 50% of posters here,but very very few will be able to give you the blueprint you need to be successful in ALL market conditions---I'm not talking about being right all the time but Profitable year in year out---something FUNDS dont and cant do.




That's great, but so what? There is no such thing as a universal "blueprint", so your point is moot. You consistently keep forgetting that most people are not like you, and what may be a "blueprint" for you won't work for most others. 

If you are as successful as a trader/investor as you are essentially stating, you would well know that the majority of people do not even possess the psychological make-up to consistently apply a trading/investment strategy, let alone be able to implement some kind of a magic grail.

Truly, you surprise me that you'd even come up with something like such a suggestion.

Even the most successful investors are not "always" profitable; even on a year-in/year-out basis, as you state - they just manage to keep losses to an acceptable minimum. Have a look sometime at the track record of the likes of Jerry Parker of Chesapeake Capital, one of the original Turtles. Even Warren Buffet has recently written off a fair bit of money on his options speculation - but when you're as big as Buffet, you can still come up in front overall, as you can move the markets by yourself. 



> There are people who have taught me and a few here how to achieve this and they arent F/Ps.




Well that's great and I say good on them, but it still is not relevant to the majority of the population, because they are not at your level and never will be. 

Does this still not make sense to you?

I'm sure Buffet does not seek help with his investment strategies from financial planners either; does this mean nobody else needs financial planners then?



> In the middle 90s All of my F/A friends (I have 3) warned me in no uncertain terms about Property investment. In 2001 I vividly remember a barbeque arranged where I chatted to all 3 and 4 of their cashed up mates about my own story. Seems in your circle its no different!




Yes, you have mentioned this particular anecdote before. 

Given that property did essentially nothing throughout the 90s, if this happened in the middle of that decade, then their advice was sound, as the opportunity cost over the next 5-6 years would have been pretty large.

According to you, an impending boom was obvious to anyone at the end of that decade, so taking out the maximum possible amount of leverage and shoving it all into property was the appropriate and prudent way to go.

You know, I have to say again that for a sophisticated investor, you surprise me with statements like this. On one hand, you very correctly pointed out to someone elsewhere on the forum that technical indicators have the bad habit of looking fantastic in hindsight; and yet they more often then not fail when applied to new trades.

Despite this, you clearly do not see that in this example, you are engaging in just the same error: You are speaking with the benefit of hindsight.

While it may have been clear to you that property was about to take off, by taking out maximum leverage into a single market segment, you could just as easily have been wiped out if the Asian crisis had hit as hard here as it did in many Asian countries. The subsequent property boom was due to several factors, many of those would not have been easy to predict - like the relatively loose monetary policies here and especially in the US, or the first home owner grant and so on.

You could not have predicted the eventual outcome, because you'd have no way of knowing any of this at the time - and yet you, an experienced investor, had placed a risky bet on an illiquid asset, which had the potential to return big, but also to wipe you out for good.

You don't seem to be able to comprehend that no FP will give this sort of advice; no matter that that level of risk may be acceptable to you. It won't be acceptable to the adviser's PI insurer. And it will be a breach of most AFS FP licences.

To put it simply and to repeat: You're missing the point in what financial planners can and cannot do in their professional capacity, just like you're missing the point of what a financial planner's job actually is in this country.



> My advice would be to UNDERSTAND how you can profit from Property in these times---at ANY time. Think outside of the domestic home.There are quite a few---opportunities.




That's great that there are plenty of opportunities. However these'll typically not be within the realm of your average investor, who is struggling to even understand the concept of net yield; s/he just knows that negative gearing into property is a sure way to riches.

At this time, investing in direct property is for most investors not a good idea, because the property market is heading for a crash.

If you were so prescient about the coming booms, surely you can now see the writing on the wall just as clearly?



> But as a savvy financial man this should be child's play.




Most would-be investors are not savvy. However, be assured that their lawyers are...!



> I just cant fathom the lack of *DEPTH* in wealth creation *ability* ---TRUE wealth creation ability displayed by people who have been trained by people who are supposedly experts in the field.




Well obviously - just like you clearly can't fathom the actual job description of an average financial planner and the legislative/legal constraints under which s/he must work.



> I love this!!
> There are more millionaires created from property than ANY other investment




Have you got any hard data that supports this claim? 

And please don't include owner occupiers in this; those asset-rich, but income poor, struggling oldies who now cannot afford to pay the rates on the beach shack they've lived in for the last 50 years, in an area that has suddenly been taken over by urban speculators!



> yet after the biggest boom




You mean the biggest bubble, surely?



> seen in our lifetimes F/P's are bellowing out all sorts of warnings.




There is a reason for that: Bubbles tend to burst. Going by the size of this one, when it goes it won't be pretty.

Incidentally, the vast majority of people are a lot happier taking lower returns along the way, as long as they reduce the chance of losing their capital.

Clearly you don't believe that it is the duty of an ethical adviser to advise his/her clients to steer away from an impending property crash?



> ---So why wasn't Property at the top of the list over the last decade?




How do you know it wasn't?



> No idea---I call NO DAMNED IDEA. How many F/Ps do you know that have 10--IP's in a diverse range of property holdings




I don't know any that would be quite as silly so as to park all or even the majority of their wealth into one highly illiquid asset class and gear themselves up to the eyeballs when the writing is on the wall for the whole Ponzi scheme to fall over. 

I do have clients in that situation, but they are worth many millions of dollars, they have very low relative levels of gearing (some have none) and own plenty of other assets outside of property as well.



> taking advantage of the massive demand out there and the massive capital appreciation which is still and will still go on!!---of course you know of which areas I'm speaking of.?




No, as a matter of fact I don't know. What I do know is that of the two major property developing companies here in FNQ, one has had its shares downgraded recently by several margin lenders from 40-45% to zero, both of their share prices have essentially collapsed, they are selling assets wherever they can and I have spoken to people who have done contractual work for them and have been paid late (some are still waiting to be paid).

I am also aware that property for sale inventories are going through the roof nation-wide and that prices are now dropping by double digits in many places - yes,  including Adelaide by up to 15% in places; see here and disregard the usual REA spin:
http://tinyurl.com/3q57z9

Furthermore, commencing from June, substantial numbers of fixed rate mortgages will start re-setting to variable, implying an increase in monthly repayments of hundreds of dollars for many borrowers, who are already stretched by rising prices of fuel and food. When unemployment starts rising and the credit crunch hits here in earnest, then you can remind me how great the opportunities in property are and how you can't cope with demand.

Cheers,

T.R.


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## robots (30 May 2008)

hello,

thats right tom r, the shares in the development companies have dropped and margin loans have gone to zero lvr, 

but that direct property (house/unit) wouldnt have dropped to zero would it? plenty of useless share certificates around in people's draws but you couldnt show one property that has gone to zero?

are you serious when you say direct property cannot be recommended?

all for diversification

thankyou
robots


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## sails (30 May 2008)

Tom Ronalds said:


> Well this may surprise you, but this is exactly how the practice I work for charges.
> 
> You can opt for an annual service package, where you pay a fixed dollar fee for a fixed level of service. In some cases, there may be a performance fee; in other cases, where it's only about advice and not about investment management, you just pay the package fee.
> 
> ...





Hi Tom,

We have had absolutely no luck with financial planners so far except for one with Qsuper - this was a paid appointment.  We wanted a retirement plan and included "what ifs" such as upgrading our unit, etc.  We received a detailed report (by memory about 25-30 pages) - just what we wanted.

We have tried three other F/Ps and ALL wanted our funds under their management. No more than a cursory glance at any sort of retirement planning and that was the prime reason we went. 

We saw one of these F/Ps not long before the market fell over.  She not only wanted our funds, but was recommending that we heavily mortgage our unit to put into her managed funds.  Said we should double our money in 7 years.

Rather dubious claims anyway, IMHO - especially when taking into consideration annual management fees of around 4% + increasing interest rates on the mortgage.  Please correct me if I'm wrong.

Fortunately, we politely left - never to return. Her whole "retirement" planning was based around that mortgage and definately not the sort of advice we were looking for.

Do you have any suggestions on how people without access to Qsuper can find a real F/P that has the training/ability/software to actually help with real financial planning for the future rather than simply a sales person for managed funds with $ signs of trailing commissions gleaming in their eyes?

Cheers


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## Tom Ronalds (30 May 2008)

robots said:


> hello,
> 
> thats right tom r, the shares in the development companies have dropped and margin loans have gone to zero lvr,
> 
> but that direct property (house/unit) wouldnt have dropped to zero would it? plenty of useless share certificates around in people's draws but you couldnt show one property that has gone to zero?




That's correct, robots - your investment house/unit will not have dropped to zero value, but your personal wealth will, and rather quickly, if you have borrowed/paid too much and the prices have subsequently dropped.

You will then find yourself in a position that millions of Americans (and now even many Brits) are experiencing, where you'll owe the bank a fair bit more than what you can sell your property for. And you'll have to continue servicing that debt, unless you decide to sell and crystallise the loss.

Given the size of the current property bubble, if prices drop to their long term trend line, it will take you many years before your property recovers back to what you paid for it in the first place. Over all that time, you will be making repayments with real dollars, only to hopefully find yourself making it back to square one eventually; unless of course for some reason you cannot make the repayments and the bank will repossess and then bankrupt you. 

This is what too much debt can do, hey. ;-)
Because property investments typically represent a very large commitment to your average investor, when they go bad the losses are large as well. At least with shares you can invest in smaller amounts...!

Think of it the same way as "position sizing". 

Those repayments could have been put in the bank instead, earning over 8% in a simple term deposit. Over the years, they would add up to quite a bit of money - which you have effectively lost through your property investment.

This is called "opportunity cost".

Does it make sense now?



> are you serious when you say direct property cannot be recommended?




But of course it can, where appropriate. Even now there are clients who come across an opportunity where the numbers do add up. Based on what else they have in their portfolio and the size of the overall commitment, a good planner would have no reason to say not to buy the property.

What we cannot do is advise on a specific property - like saying "I think you should buy No15 StKilda Road". This is prohibited by the licensing laws.

The problem is that too often the would-be property investors we see are people who:

- Still have a large mortgage themselves
- Have little savings or even saving history
- Have no other investments
- Don't understand what they are getting into & can't do the cashflows and other relevant figures
- Don't understand what "negative gearing" actually implies
- Believe they will be definitely be rewarded by large capital gains, without sometimes even doing much, if any, due diligence on the property.

I'm sure you get the idea.

Cheers.

T. R.


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## Temjin (30 May 2008)

robots said:


> hello,
> 
> thats right tom r, the shares in the development companies have dropped and margin loans have gone to zero lvr,
> 
> ...




No, they could recommend unlisted property funds, which are basically in the category of DIRECT PROPERTY but not in the sense of outright ownership like most of you are aware of. (i.e. They can't recommend in their SOA to their client to go and buy this house on this street, etc) The main differences are that they mainly invest in commercial/industrial buildings, managed by professional managers and diversified amoung several properties. And not to mention a bit less gearing level and enjoy a lower cost of borrowing. Unlike residental property "speculators" who can play with gearing level of even up to 80-110%.

This is still an excellent thread.  But let's not go too deep into the merits of direct property investment because all of us got locked out in that previous "house prices always go up" thread. Let's focus on what financial planners can do and cannot do. 

Tech/A. Let me ask you a question. If one of your friend (average mum and dad), come and ask you for financial advise, would you recommend them to go all out on property investment or learn how to trade the market? That is, regardless of their education level and psychological makeup? I totally understand where you are coming from, but can you seriously try to view this from a "big picture" perspective? I know that with proper education and sufficient experiences, one could build wealth a lot FASTER and BIGGER than ANY financial planners would be capable of advising. But it does not mean everybody has the motivation to do so, and can't gain from a more "general" financial advise just to maintain their status quote. 

Perhaps creating wealth is a low priority for a lot of people out there?


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## robots (30 May 2008)

hello,

thats ordinary tom r,

so someone putting 300k into bell resources would be better off than someone putting 300k into a house at the same time (direct ownership)? funded or not funded

why do you only reccommend a "product" or "fund" etc for property?

it seems that you only associate debt with property, maybe someone puts down enough to positive/or neutral gear the investment does this tick the box for direct prop or is commiss the underlying issue here?

goodluck bro, i can understand it must be difficult accepting opportunity cost as many put it

thankyou
robots


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## tech/a (30 May 2008)

> Tech/A. Let me ask you a question. If one of your friend (average mum and dad), come and ask you for financial advise, would you recommend them to go all out on property investment or learn how to trade the market? That is, regardless of their education level and psychological makeup? I totally understand where you are coming from, but can you seriously try to view this from a "big picture" perspective? I know that with proper education and sufficient experiences, one could build wealth a lot FASTER and BIGGER than ANY financial planners would be capable of advising. But it does not mean everybody has the motivation to do so, and can't gain from a more "general" financial advise just to maintain their status quote.




OK
Both Tom and I have made our own points each valid in their own context.
There is much Tom has said which I agree with but I am taking the stance for/those in my position or similar. 

What I really want people to get a grasp of is that SERIOUS wealth only comes about from *Entrepenurial Innovation*. It doesnt and wont ever come from that which everyone else does. F/A's wont ever show you that path.
(A) Because even if they could they cant.(Regs).
And or
(B) They're searching for their OWN Entrepenurial Innovation themselves!

To your question.--and from time to time I'm asked.
Answer is always the same. (Go see a Financial Planner!!!---No No only kidding!).
Firstly that which Ive written above.
But secondly,learn to recognise opportunity and its out there in many many forms.
Learn all you can about risk,how to mitigate it and how to apply its calculation in every Entrepenurial Innovation Opportunity you come across.
Lastly---then DO IT.

Not what they expect--but what they need to know.



> Perhaps creating wealth is a low priority for a lot of people out there?




Hell not perhaps but most definately.
This is the greatest of all tragedies,here we are in a country which offers so much filled with apathy. The average dole cheque would keep a village in Africa from death!
This discussion isnt for those you refer to---.
Life is so so good here--you and I are extremely lucky--grab it with both arms out wide and ENJOY.Lifes what you make it---in this country---not what your given!

I reckon you get one shot!
Dont stuff it up.


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## Tom Ronalds (30 May 2008)

sails said:


> Hi Tom,
> 
> We have had absolutely no luck with financial planners so far except for one with Qsuper - this was a paid appointment.




I'm sorry to hear that.



> We wanted a retirement plan and included "what ifs" such as upgrading our unit, etc.  We received a detailed report (by memory about 25-30 pages) - just what we wanted.




This is precisely what we do here. Much of my work involves this kind of "what if" modelling of several different strategy approaches. This is delivered as a comprehensive written Statement of Advice, with a visual presentation using the detailed spreadsheets, charts etc on a computer.

The clients pay a fee for the Statement of Advice which is based on an adviser's hourly rate and is generally agreed before hand. In many instances, no product recommendations are made; where products are to be recommended, this is generally done once the relevant strategy has been agreed on, the clients have appointed us to assist with implementation of that strategy and a dollar-based implementation fee was worked out & signed off on.

We then prepare a Record of Further Advice document as part of the implementation process, which lists the recommended portfolio.

For most of the clients I deal with, the product recommendations will generally consist of direct ASX listed products, without the use of a wrap/platform. Doing so saves the clients ongoing management fees that apply to unlisted managed funds and/or administration platforms.

Having said this, I personally generally only deal with HNWI (high net worth individuals); for smaller sized portfolios managed products/wrap services tend to be more appropriate for diversification/investment access purposes.

The clients are then presented several levels of ongoing service packages, with different levels of service. These are based on flat annual dollar figures, not on percentage of FUM (funds under management). Or they can walk away and only call us when they need us, at which stage they will pay an hourly fee.

No commissions are taken and where we cannot dial those down, they are rebated.

This is not a common charging/operating model, unfortunately, but there are practices who do work that way.



> We have tried three other F/Ps and ALL wanted our funds under their management. No more than a cursory glance at any sort of retirement planning and that was the prime reason we went.




Yes, unfortunately to most planners the FUM determines the resale value of their practice. Also the majority of main stream licensees compel their Reps to put all clients' money into their preferred wrap platform, from which they tend to get all sorts of kickbacks. Always read the Financial Services Guide which the planner is obliged to give you and look for product-related conflicts of interest!



> We saw one of these F/Ps not long before the market fell over.  She not only wanted our funds, but was recommending that we heavily mortgage our unit to put into her managed funds.  Said we should double our money in 7 years.




Yes, I'm sad to say that we have had several planners like this in this area - even advising to withdraw any unpreserved component from super and using it towards a margin loan!

It did work reasonably well when the market was going up and up; it has now reversed with a vengeance.



> Rather dubious claims anyway, IMHO - especially when taking into consideration annual management fees of around 4% + increasing interest rates on the mortgage.  Please correct me if I'm wrong.




No, you are exactly right. Furthermore, using managed funds for margin lending tends to be a lot less tax effective than many of these advisers make out - because the actively traded managed funds (which pay the highest commissions and cost the most in MER charges) realise and distribute most of their capital gain in any given year, thus depriving the investor of any tax planning opportunities based around time-targeted asset disposal.



> Fortunately, we politely left - never to return. Her whole "retirement" planning was based around that mortgage and definately not the sort of advice we were looking for.




Yes, those clients who have listened to this type of advice are probably now discovering that the "retirement plan" really involved retiring a lot later, due to lack of funds, than what they had originally planned!



> Do you have any suggestions on how people without access to Qsuper can find a real F/P that has the training/ability/software to actually help with real financial planning for the future rather than simply a sales person for managed funds with $ signs of trailing commissions gleaming in their eyes?




You can try here for starters:

http://www.independent-advice.com.au/index.asp

Depending on your location, try to google for "Independent Financial Planners". 

Having said that, there are some financial planning practices who do not qualify as "independent" (the use of that word is extremely restrictive in Australia, so most can't use it), and yet they provide ethical, high quality service along the lines you seek. Have a read through your local Yellow Pages and apply the following filters:

- Eliminate all banks & those who are clearly big product providers-affiliated practices (AMP, Hillross, MLC, CBA, AXA etc).
- Look for the phrase "fee for service"
- Then call those who qualify or look up their website and request & download their FSG (Financial Services Guide). 
- Re-apply previous filters once more.
- Call these guys and ask them straight out how they work & what tools they use.

Yes, I know it shouldn't be this hard...but at least things are changing slowly!

Cheers,

(Note: I am not associated with the above website in any way, nor are my comments here at this forum intended to be in any way an advertisement for the practice I work for).


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## sails (30 May 2008)

Thanks for the informative reply, Tom.  

I will print out your filters and keep them on file next time we are looking for advice or even to get a second opinion.

Cheers


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## Tom Ronalds (30 May 2008)

robots said:


> hello,
> 
> thats ordinary tom r,




Life often is. Get used to it. ;-)



> so someone putting 300k into bell resources would be better off than someone putting 300k into a house at the same time (direct ownership)? funded or not funded




No, someone who only has $300K and puts *all* of it into one stock is stupid and deserves everything s/he gets.

However, even if you only have $300K, you'll be able to easily put together a portfolio of 15 stocks, spread across a broad spectrum of industry, resources, property etc. So if one of those goes bad, you'll still be relatively OK.

Furthermore, if the sharemarket starts going wobbly, you can be all out within minutes, at a total transaction cost for in/out of around $1,500. 

On the other hand, if you only have $300K, you will only be able to buy *one* property; maybe not even that. If the market starts getting wobbly, you may not get out for months. Even if you do, your total in/out cost will be at least $15,000.

How do the figures stack up now?

Ever heard of all your eggs in the one basket?



> why do you only reccommend a "product" or "fund" etc for property?




"Product" is a generic term (as in "investment product") that is widely used by financial services professionals.



> it seems that you only associate debt with property, maybe someone puts down enough to positive/or neutral gear the investment does this tick the box for direct prop or is commiss the underlying issue here?




No, commission is not the underlying issue here. If it were, we'd all be working as real estate agents! ;-)

Even if you are positively geared, if you buy for too much, your investment will underperform; especially so in comparison to its risk-adjusted peers. Meaning that if you had instead invested that cash elsewhere, you would have done better, so in that case your property investment would not have been a very good one.

In other words, you may not go broke, but you won't make any money for a long time.

Cheers.

T. R.


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## Tom Ronalds (30 May 2008)

tech/a said:


> What I really want people to get a grasp of is that SERIOUS wealth only comes about from *Entrepenurial Innovation*.




That's true, but *the vast majority* of people are not entrepreneurs.

If they were, then everyone would work for themselves. Yet they don't.



> It doesnt and wont ever come from that which everyone else does.




But most people are not after what you would call "serious" wealth. 

Many can't even manage basic financial security. The majority could not survive for more than a month without a job.

Many others just want to be "comfortable". Amazing as it may sound, in most cases this means as little as:

- Owning their home, car etc with no debt;
- Retiring on $40,000 or so p.a. in after tax income, without having to worry about how long their money will last;
- Not having to worry about all that complex financial stuff. ;-)

Rest assured that the financial planner who built his/her practice with the aim to solely provide the type of advice *you* would consider as worthwhile, would go out of business very quickly for lack of takers...!

Cheers.

T. R.


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## tech/a (30 May 2008)

> Rest assured that the financial planner who built his/her practice with the aim to solely provide the type of advice *you* would consider as worthwhile, would go out of business very quickly for lack of takers...!




Yes see your point.


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## TheRage (30 May 2008)

This thread seems somewhat like Dejevu. 

Tom your decription of the industry we work in and the problems associated with it is quite good. 

Tech the whales that you refer to do sometimes infact need financial planning. A lot of wealth in this country is held in land and farmer's retiring are not exceptionally savvy with their reitrement planning. Moreover the underinsurance for business owners in this country is appaling. Personally you should trust the fee for service adviser's recommendation over the insurance agent who tells you that he will get paid from the insurer. He sure will get paid probably over 100% of the first years premium and on the renewal date he will find you a better deal and will get the same little kick year in year out.

Not many financial planning companies can actually claim to be truly independant. It would almost be impossible for a company to achieve complete independence as we all rely on someone. For instance you can have your own AFSL but use a broking house for research. If the broking house has several ASX listed companies paying a premium to be listed, is this independance? I believe though that Tom has hit the nail on the head with Fee structure and Funds under management.


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## theasxgorilla (31 May 2008)

Temjin said:


> Tech/A. Let me ask you a question. If one of your friend (average mum and dad), come and ask you for financial advise, would you recommend them to go all out on property investment or learn how to trade the market? That is, regardless of their education level and psychological makeup? I totally understand where you are coming from, but can you seriously try to view this from a "big picture" perspective? I know that with proper education and sufficient experiences, one could build wealth a lot FASTER and BIGGER than ANY financial planners would be capable of advising. But it does not mean everybody has the motivation to do so, and can't gain from a more "general" financial advise just to maintain their status quote.
> 
> Perhaps creating wealth is a low priority for a lot of people out there?




Good questions Temjim.

I think Robert Kiyosaki told a really interesting story in one of his books about his 'rich dad' giving him the assignment to go out and get a financial plan for each  financial level  (poor, middle-class, rich...his terminology, not mine).  He said each group has their own financial planners.  And if I interpreted his message correctly he insists that you should still have the poor and middle plans in place, before embarking on the plan to become rich.


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## Tom Ronalds (1 June 2008)

theasxgorilla said:


> Good questions Temjim.
> 
> I think Robert Kiyosaki told a really interesting story in one of his books about his 'rich dad' giving him the assignment to go out and get a financial plan for each  financial level  (secure, comfortable, rich...his terminology, not mine).  He said each level/group has their own financial planners.  And if I interpreted his message correctly he insists that you should still have the secure and comfortable plans in place, before embarking on the plan to become rich.




I'd be careful about Robert Kiyosaki. There's plenty of evidence the guy's a fraud whose "rich dad" never existed.

Here are just two examples:

http://johntreed.com/Kiyosaki.html
http://www.ripoffreport.com/reports/0/226/RipOff0226341.htm

Cheers.


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## robots (1 June 2008)

hello,

thats right tom you cant take people at face value anymore!

all the more reason to get your own share and property titles

thankyou
robots


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## tech/a (1 June 2008)

I have one word I'd like to bring up.

*RESCOUCES*

Now I'll bet thats not a word used by F/Ps in the context I have in mind.


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## nizar (1 June 2008)

tech/a said:


> I have one word I'd like to bring up.
> 
> *RESCOUCES*
> 
> Now I'll bet thats not a word used by F/Ps in the context I have in mind.




LOL actually i havent heard of that word at all in any context


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## josjes (1 June 2008)

Tom Ronalds said:


> Depending on your location, try to google for "Independent Financial Planners".
> 
> Having said that, there are some financial planning practices who do not qualify as "independent" (the use of that word is extremely restrictive in Australia, so most can't use it), and yet they provide ethical, high quality service along the lines you seek. Have a read through your local Yellow Pages and apply the following filters:
> 
> ...




TR, Interesting threads. 

I would like to add my personal experience of using 'Fee for Service' FP. This FP that I talked to, recommend a 'Diversified Financial Portfolio' using Dimensional Index Fund.  I would say he is just one of the many fee for service investment advisors these days continue to promote a nice pie chart which is broken down into easily understandable slices. Typically, these slices include Aussie stocks, international stocks, bonds, listed/unlisted properties and cash. Along with the slices, the advisors provide us with percentages, usually indexed to the investors age  and on the clients Risk Profiles. . Common advice might be something like: 40% Aussie shares, 20% international equities, 20% bonds, 10% properties and 10% cash. This is simply an example, but you get the idea.

Pretty standard, right ? Pick up any financial publications, Money magazine, investment publications from Vanguard, or articles by the lead economists at AMP, BT etc. you will still see a common theme: advice from money managers to have a well diversified portfolio. Well I am telling you that this is good advice for them, but terrible advice for you. 

Why ? Double Digit Inflation. (Forget about the official 4% inflation figure bandied about by the Government).

"Tim Bond, head of global asset allocation at Barclays Capital" sum this up very well. And what more it is freely available from the web.  

• To invest successfully in inflationary conditions, portfolios need to be narrowly focussed on the handful of assets that cause – or benefit from – inflation.
• Portfolio diversification is deadly, destructive and will diminish wealth.
• Bonds of all types – aside from index-linked – have no place in portfolios at current yields.
• Even index-linked bonds’ ability to protect wealth from inflation is currently hobbled by very low real yields.
• Equity exposure should be narrowed to energy, basic resources, industrial goods & services and – once the write-offs are complete – financials. During inflationary periods, these are the only sectors that deliver positive real returns.
• Maintain an overweight position in physical commodities.
• Accept that much higher-than-normal portfolio volatility is the price to pay for positive real returns when inflation is high.

PS: Sorry, I did not hire him as my FP in the end.


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## tech/a (1 June 2008)

Haha Nizar

Its obviously swahili for *Resources*

I spell checked that page too obviously it didnt recognise it!


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## theasxgorilla (1 June 2008)

Tom Ronalds said:


> I'd be careful about Robert Kiyosaki. There's plenty of evidence the guy's a fraud whose "rich dad" never existed.
> 
> Here are just two examples:
> 
> ...




Yeah, yeah, seen it Tom.  Rest assured I'll be among the first in any group to promote thinking for yourself.

It doesn't really matter.  The question is, is that a good idea?  IMO; yeah, it's a great idea 'cos I know from countless nearby examples that there are soooooo many "never-wases" piled up in the fallout of the 'dot-com' boom because they were swinging for the fences.  Can you say, "I'm a multi-millionaire on paper" and "worthless out-of-the-money options"?

I know a number of people who neglect their superannuation because they presume that they will be making countless gazillions from some venture...but I don't understand that...why not do both?  What if the venture fails?  Better to have a slow-and-steady wins the race backup plan in place to secure your future, eh?


----------

