# Do bank financial planners behave better today?



## helpme (6 August 2016)

https://www.youtube.com/watch?v=-xoZLzgH8pQ

Watch this documentary. Commonwealth's financial planners' behavior is absolutely appalling. Is it better today? Is regulation tighter today? I don't know because I manage my own money.


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## luutzu (6 August 2016)

helpme said:


> https://www.youtube.com/watch?v=-xoZLzgH8pQ
> 
> Watch this documentary. Commonwealth's financial planners' behavior is absolutely appalling. Is it better today? Is regulation tighter today? I don't know because I manage my own money.




Thanks for that.

Strange how these kind of stuff never surprises us, but each time it happen it always pizzes us off.


Watch this about CommInsure... even worst than their FP.


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## helpme (6 August 2016)

luutzu said:


> Thanks for that.
> 
> Strange how these kind of stuff never surprises us, but each time it happen it always pizzes us off.
> 
> ...




Even more surprising is the evil-doers continue to be very rewarded financially which means evil begets more evil.


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## luutzu (7 August 2016)

helpme said:


> Even more surprising is the evil-doers continue to be very rewarded financially which means evil begets more evil.




The way it works is that those with a conscience tend to get fired.

So it's not so  much that evil and reckless conduct get rewarded; it's the case of the system only rewarding work that are reckless and evil - that's the incentive the people at the top designed: push as much product as you can, get as much money out of them as you can... and if they claim or sue, we'll see if they have the time or the money to think about taking us on.

Like that CommInsure video showed... a guy with a conscience find himself without a job.

A third investigation ought to be into lawyers: see how many them lawyers would want to take on the big boys. Unless the client have spare cash, and plenty of it... most lawyers would either be too scared so raised a hefty fee just to write the first letter... or they flat out refuse the case and let the little people go fend themselves.


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## Knobby22 (7 August 2016)

Joe Hockey's Mum got ripped off by Combank. That was fixed for obvious reasons but we havent all got relatives in powerful places.


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## Hodgie (8 August 2016)

luutzu said:


> The way it works is that those with a conscience tend to get fired.
> 
> So it's not so  much that evil and reckless conduct get rewarded; it's the case of the system only rewarding work that are reckless and evil - that's the incentive the people at the top designed: push as much product as you can, get as much money out of them as you can... and if they claim or sue, we'll see if they have the time or the money to think about taking us on.
> 
> ...




It's free for any client to go to the Financial Ombudsmen service (FOS) if they have an issue with advice received.

Whether or not the complaint is successful the financial service provider has to cover the costs associated with the claim so there would be no reason to hold back if you think an FP has done something wrong. You can do this with or without representation, and representation does not need to be a lawyer. In fact most of the time no lawyer is involved.

Also, of the claims received that went to FOS in the 2016 financial year, CBA and it's subsidiaries settled over 80% before FOS even made a decision which means that they aren't really fighting them very hard if they know they are in the wrong.

It's very common for a deed of settlement to include a clause which states that the terms of settlement remain confidential so people don't often go to media when they get payouts and we wont hear about them. It doesn't mean that it's not happening. 

I agree completely that the banks are all about pushing their own products. I know planners that work for ANZ and CBA, they can only recommend products owned by their respective companies. They have to hit targets which is a percentage of salary in commissions before they receive any bonuses so they want to pump as much into those products as possible. 

I think a huge company like CBA with a vertical integration model simply sees claims as a cost of doing business which they are comfortable to wear. In the end they still come out well on top even if they payout a certain percentage in claims each year.


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## Ijustnewit (8 August 2016)

Hodgie said:


> It's free for any client to go to the Financial Ombudsmen service (FOS) if they have an issue with advice received.
> 
> Whether or not the complaint is successful the financial service provider has to cover the costs associated with the claim so there would be no reason to hold back if you think an FP has done something wrong. You can do this with or without representation, and representation does not need to be a lawyer. In fact most of the time no lawyer is involved.
> 
> ...




The Financial Ombudsmen Service is basically a toothless tiger , even if they find in your favour the old saying 
" you can't get blood from a stone " stands. Very few Advisers will have any insurance to cover their clients losses , as with Storm Financial the insurance level was not sufficient and when the poo hit the fan the insurer voided the cover anyways.  As we have all seen and if others are not familiar see the Storm Financial Thread on this Site. 
In answer to to this threads question , no I don't think things have changed and we will see another Storm like debacle.


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## Hodgie (8 August 2016)

Ijustnewit said:


> The Financial Ombudsmen Service is basically a toothless tiger , even if they find in your favour the old saying
> " you can't get blood from a stone " stands. Very few Advisers will have any insurance to cover their clients losses , as with Storm Financial the insurance level was not sufficient and when the poo hit the fan the insurer voided the cover anyways.  As we have all seen and if others are not familiar see the Storm Financial Thread on this Site.
> In answer to to this threads question , no I don't think things have changed and we will see another Storm like debacle.




The Commonwealth bank would have to make the payment not the individual adviser.

The whole point of working for a bank is that they hold the Australian Financial Services license and are therefore liable for the advice.

Whether the professional indemnity insurance covers the claim or the bank the client will get paid for a successful claim unless the CBA wants to close down.

Storm failed completely which is why people were left stranded, as you said you cant get blood from a stone but it is comparing apples with orange because a major bank isn't going to fail from client claims. 

Also as I said before less than 20% of the claims are even going to an Ombudsmen decision which means the bank is already prepared to settle.


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## Junior (8 August 2016)

The ethical standard has been constantly improving since 2009.  

This article on the FPA website outlines some of the changes which have occurred in recent years.  



> Mr De Gori went on to say that the financial planning profession has been subject to 54 inquiries, reviews and consultations since 2009. This has led to the introduction of five major legislative regimes and increased regulation to address industry issues and provide better consumer protections.




AMP are the biggest adviser network in Australia, and they are mandating that all advisers hold relevant post-graduate qualifications by 2019.  The CBA already have similar measures in place.  NAB are making sure that their advisers have a Masters of FP.  There is draft legislation in the works which will mandate similar requirements across the whole industry.

The banks are not exactly stoked about having to back-pay compensation to 1,000s of customers for poor advice.  They also hate the damage this is causing to their reputation.  Thankfully they are being forced to change and at least attempt to water down the conflicts of interest that exist in their model.

Recently ASIC launched action against a dodgy group of advisers for failing to meet the Best Interests Duty.  This is the first such case as BID was legislated just a few years ago.

The industry is improving.  It will take time to weed out all of the unsavoury characters, but it is happening.


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## helpme (8 August 2016)

Junior said:


> The ethical standard has been constantly improving since 2009.




Is it because the regulation is getting tighter or the financial advisers are getting more ethical?


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## Junior (8 August 2016)

helpme said:


> Is it because the regulation is getting tighter or the financial advisers are getting more ethical?




The GFC exposed major flaws in the industry.  Regulation has been getting consistently tighter, employers (in general) are looking for their advisers to operate at a higher standard - particularly in the past year or two as everyone can see that education standards WILL be raised.

The banning of commissions on all investment products, and the ban on asset-based fees for geared investments has helped to drive many spruikers and dodgy operators out of the industry.  Comms on insurance products will be wound back, as well.  This means the incentive to SELL PRODUCT rather than sell good advice is being eroded.


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## helpme (8 August 2016)

Junior said:


> The GFC exposed major flaws in the industry.  Regulation has been getting consistently tighter, employers (in general) are looking for their advisers to operate at a higher standard - particularly in the past year or two as everyone can see that education standards WILL be raised.
> 
> The banning of commissions on all investment products, and the ban on asset-based fees for geared investments has helped to drive many spruikers and dodgy operators out of the industry.  Comms on insurance products will be wound back, as well.  This means the incentive to SELL PRODUCT rather than sell good advice is being eroded.




Come to think of it. The root cause is really bad regulation and bad incentives set up by the top people. The evil financial advisers are the result of the above. Reward evil and what do you expect? Evil.


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## luutzu (8 August 2016)

Junior said:


> The GFC exposed major flaws in the industry.  Regulation has been getting consistently tighter, employers (in general) are looking for their advisers to operate at a higher standard - particularly in the past year or two as everyone can see that education standards WILL be raised.
> 
> The banning of commissions on all investment products, and the ban on asset-based fees for geared investments has helped to drive many spruikers and dodgy operators out of the industry.  Comms on insurance products will be wound back, as well.  This means the incentive to SELL PRODUCT rather than sell good advice is being eroded.




How much of those changes are genuine and how much just marketing... don't need to guess right?

Honest to god financial advise wouldn't take more than 5 minutes to do. And the advisor would only need to do it once - not once a year.

You just buy an index fund or three with a reasonable amount of your capital; put some in property if you have the cash; buy an insurance policy or two. Done.

If the advisor start to get smarter than that, they better make sure they know in depth all the products they're recommending - and not merely the star rating or the "risk profile" those fund manufacturer label their picking style.

For instance, if the client want low risk with some upside.... the proper financial advisor would need to examine if products being pitched and rated as Low Risk Growth, or whatever, are really that. To do that, they'd need to examine the funds capital allocation - where and what are those money invested in; are those investment sound etc.

How many financial advisors have the ability and the incentives to do that kind of leg work?

Any who...


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## banco (9 August 2016)

I don't see how there's any money in providing advice on a fee for service basis (without the commissions etc.)?


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## Junior (9 August 2016)

luutzu said:


> How much of those changes are genuine and how much just marketing... don't need to guess right?




Much of them are geniune, because the changes are legislated.  Failure to comply results in penalties or loss of AFSL.

Of course, the banks will continue to try and find ways to sell their own products, but at least they will have property qualified advisers, rather than glorified salesmen.



luutzu said:


> You just buy an index fund or three with a reasonable amount of your capital; put some in property if you have the cash; buy an insurance policy or two. Done.




A simple task for many on this forum.  A very complicated proposition for a large %% of the population, or just simply something many wish to outsource rather than figuring it out for themselves.



luutzu said:


> If the advisor start to get smarter than that, they better make sure they know in depth all the products they're recommending - and not merely the star rating or the "risk profile" those fund manufacturer label their picking style.
> 
> For instance, if the client want low risk with some upside.... the proper financial advisor would need to examine if products being pitched and rated as Low Risk Growth, or whatever, are really that. To do that, they'd need to examine the funds capital allocation - where and what are those money invested in; are those investment sound etc.
> 
> How many financial advisors have the ability and the incentives to do that kind of leg work?




Not difficult at all for an adviser with proper quals, experience and ethics.


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