# Use of financial planners



## Ghetto23 (27 April 2009)

I recently paid $2750 to have a financial planner to create a Statement of Advice for me in terms of setting up a long-term financial plan.

The cost of implementing it will be somewhere in the region of $10K - and I'm baulking at it a bit. Plus $5K annually to keep reviewing it and making sure that it suits me.

I like the fact that they aren't trying to flog me any products to get comissions etc but it is a lot of money. I know that the benefits that they can pick out in terms of income protection and tax benefits will probably end up paying for itself - it's just that I'm a bit put off by the initial amount.

I just wonder whether I can do this myself and save the money...

Thoughts?

For some background I'm 29 with a high income ($150K+)


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## beamstas (27 April 2009)

Ghetto23 said:


> I recently paid $2750
> 
> The cost of implementing it will be somewhere in the region of $10K. Plus $5K annually to keep reviewing it.
> 
> *I like the fact that they aren't trying to flog me any products to get comissions etc but it is a lot of money. *




Looks like they don't need to do that, as they have already flogged you on fees 

That's one heck of alot of money to be paying someone who probably isn't going to outperform the index  

The question you really need to be asking yourself is whether or not you have the time to trade for yourself, if not then stick with the fund/whatever. But if you do it is something you should really consider

That is my opinion anyway..

Cheers, 
Brad


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## alwaysLearning (27 April 2009)

man what a joke...that's so expensive 

I hope they are giving you your money's worth.


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## weird (27 April 2009)

Ghetto23 said:


> I recently paid $2750 to have a financial planner to create a Statement of Advice for me in terms of setting up a long-term financial plan.
> 
> The cost of implementing it will be somewhere in the region of $10K - and I'm baulking at it a bit. Plus $5K annually to keep reviewing it and making sure that it suits me.
> 
> ...




Income is one thing, savings you currently have for your trading/investment is another ... all expenses will have drag on your overall performance.

If you currently only have 100K , and 5K drag you are already down 5% ... I assume there are other expenses if trading shares directly such as brokerage, or are you going to be put into different managed funds ? I guess there is a time saving benefit, where you write a cheque each year, and everything is done for you ? So the next suggestions I have will be more hands on, and will require your involvement and commitment time wise than the other.

With any investment endeavor, and coming from a place of knowing nothing, checking forums or friends that are successful in that endeavor can be very useful.

For shares, I have no problem recommending Nick Radge from the Chartist, and have also heard good things about Gary Stone, from Sharefinder. I would be surprised if the initial and ongoing fees from either are not significantly less than what you have quoted.

For property education, I have heard very good things about Jan Somers.  In her last book, she has a very interesting write up on her thoughts towards Financial Planners.


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## Ghetto23 (28 April 2009)

I'm with you guys - I though what they spelled out in the SoA would be really smart stuff that will really help me avoid paying so much tax.

What they recommended was pretty much:
-Borrow against my current homeloan to invest in Blue Chip shares with a high div/share (free capital growth)
-Get income insurance (already have it)
-Get a will
-Salary sacrifice some more super
-Start investing a certain amount per month in the Black Rock platform to put it in the sharemarket.

Now I'm already putting a lot of money into the sharemarket, and have been doing quite well lately (in terms of capital growth), and all of the above looks like pretty simple stuff to me...

Call me crazy, but I can just do all of this myself.

I used these guys to do my tax last year and they found me a lot of extra money. I was impressed with their job.

I'm think that having a long-term plan is important, but can't justify spending the money for what I can see is very little return (that I can't do myself).


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## Ghetto23 (28 April 2009)

Does anyone have experience with these type of planners i.e. pay for a SoA to work out how much you want to have at retirement? Implement and review the plan as you go forward?

Has it been worth it?


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## Julia (28 April 2009)

Ghetto, from what you say they offered you for the $2750, it seems very expensive indeed.  I'd have thought that stuff was automatic to most people.
Do you feel they suggested anything there that you hadn't already thought of or were doing?

What would the "Plan" costing $10K include?   Would they completely take over all your investments, monitor everything, and just send you a report?  Would it include all brokerage?
Would you want that?  I surely wouldn't. 
Not saying these people wouldn't make you money, but handing everything over was what got the Storm investors into trouble.

Re working out how much you will need for retirement, there are plenty of calculators on the net that will do this for free.   It's not something you need to pay anyone to do!


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## nomore4s (28 April 2009)

I agree with Julia it all seems a bit expensive for pretty basic advice (on the surface at least). I'd be at least going to see another financial advisor to get another quote & opinion (but not paying another $2750).


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## The_Bman (28 April 2009)

I think it comes down to your financial Intelligence. 

I went to a FP about 10 years ago who put me on a path to financial freedom and I haven't looked back. I needed help.

Sure, you don't know what you don't know but if they're going to tell you something you already know is it money well spent? And if they tell you to put cash into agribusiness and mortgage trusts is it money well lost.


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## kincella (28 April 2009)

sounds a bit like Storm...taking commissions of 7% upfront....
my 2 cents worth...on an income of 150k...there is quite a bit of employer super that is going into investments currently....do you own a property...your own home ??? paying rent or a mortgage  ???
salary sacrifice some into a good superfund.....or plan a budget where you buy shares for the long term, or trade xxx amount per month...
use the strategy of 33% into each asset class, ie shares, property and cash..
I like to manage everything myself...so I am not inclined to pay others
for advice or management of my assets....
you have the freedom to do different things....I think you have enough going into super now....so would not advise tying up too much into super at your age.....plenty of time later....


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## Ghetto23 (28 April 2009)

Yeah their plan was to put an extra $12500 a year into super - for the tax breaks and to bolster it so I can go into self-managed super sooner rather than later (I'm told I need 100K+ to do this?).

It's not a Storm thing as far as I can tell - they charge a fee because they don't take commissions - they refund commissions back to you off future bills - it means that they have your interests at hand rather than trying to get commission.


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## Ghetto23 (28 April 2009)

The sharemarket platform that they invest through is called Blackrock Sperately Managed Account Service - ever heard of it?


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## Kez180 (28 April 2009)

Have you raised these concerns with your financial planner? 

Did they work the fee out on a charge per hour basis? Did they increase the fee because you have a substantial income?

I get the impression that the same firm does your accounting work? Were they open about how the fee structure would be applied when you had that work done?

Also you are liable if the accountants have dodged up the tax return, you signed it... Just be careful, the biggest deductions might not always be legitimate....

Most of the cases where financial planners have been acting dishonestly have involved large fees....

If you explain to them that while you are willing to pay, you need value for your money, you might find you wind up with either a more experianced planner or reduced fees!

Here is one of the MAJOR problems with financial planners... it is too easy to become one...


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## Ghetto23 (28 April 2009)

Kincella - to answer your question, I am paying off the mortgage of the unit I live in.

I split my money up (about 50/50) between the mortgage and shares


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## Ghetto23 (28 April 2009)

Thanks for the reply Kieran.

Actually no, they weren't clear about the fees when doing my tax, however the guy who did my tax is a former tax lawyer for the ATO and that's how he built the business. The business has a good reputation, and I was happy with the job they did on my tax.

Don't they sometimes say 'You have to spend money to make money'? It makes sense that quality advice/help costs more - that's why I paid the $2750.

I have a meeting with them next week to let them know my concerns, I am looking for some outside opinions so I can go in there and have a productive (for me) meeting.


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## Timmy (28 April 2009)

I had a mate who studied to become a financial planner.  He was working full-time (60+ hours per week) and studying evenings.  Finally completed the course and went to work for a big firm of financial planners.  The head honcho who owned the business had his face on TV every second day doing interviews telling people to go to financial planners etc.  Anyway, took my mate about five days to realise that for about 95% of the people coming to see him the absolute best advice he could give them was to pay off their mortgage first.  Paying off the mortgage is not what people want to hear… not sexy enough.  No commission for the advisor either.  He lasted another couple of weeks in the job and then left, pretty disillusioned with the whole thing.   

Anyway … I have been known to rail against the lack of ethics (IMHO) involved with the commission/ trailing-commission business model employed by most planners, but Ghetto your posts show why it is the most-used model.  Very few people want to pay for the service.  

On a more practical front – ask what are the expenses involved in setting up your plan that involve an initial outlay of 10k.  Get these expenses itemised.  And then 5k to review each year … again get this itemised and ask what their hourly rate is, sounds like its going to be a lot.

Kez180 has shown how you can get qualified to do the job for as low as $1997.  Might be worth going down that route so you can DIY?

Oh, and pay off your mortgage first.


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## Mr J (28 April 2009)

At the end of the day, many of the jobs in our society are just sales. If someone is trying to sell you something, they shouldn't be trusted until they prove otherwise. That doesn't mean completely ignoring what they say, but just take it for what it is - an opinion.

Some sales people are very good and honest, but many are biased, poorly informed, incompetent or just dishonest. I think this can be faily applied to any sales occupation, including the one we're talking about here.



> Kez180 has shown how you can get qualified to do the job for as low as $1997. Might be worth going down that route so you can DIY?




I doubt there's anything they'd teach that one couldn't learn on the internet.


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## Timmy (28 April 2009)

Mr J said:


> Some sales people are very good and honest, but many are biased, poorly informed, incompetent or just dishonest. I think this can be faily applied to any sales occupation, including the one we're talking about here.




Agree with you Mr J, I would only add that it needs to be made clear to the punters out there that fin. planners ARE salespeople.


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## kincella (28 April 2009)

its been good advice so far on this thread....so far you have paid 2750...can you get it back if you change your mind ???

at one stage surveys found the advice given by the ATO was wrong 50% of the time...they were playing the game of the fox, as the protector of the chickens...
but apart from that...the financial planning industry has been a pretty easy profession ??? not the right term imo...to get into with easy money as the spoils
I am against tying up your money into super at such an early age....look at 2007, the olds could dump a million dollars into super in one lump sum that year....
you may want to go into business in the future...and need funds for a start up, or a buy in...so two ways to go there, have substantial equity in your own home to tap into, or liquid assets...the cash and the shares etc....
the main thing you need to do...is have a budget and a regular savings plan...

I would not be paying anyone 5k or 10k a year...to review or monitor...my investments.....I know people who do, but they have still lost 50- 80% just like everyone else  in the recent fiasco...


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## nomore4s (28 April 2009)

Timmy said:


> Agree with you Mr J, I would only add that it needs to be made clear to the punters out there that fin. planners ARE salespeople.




I also agree with this.

The big problem is alot of them are "brainwashed"(for lack of a better word) into believing the products they are selling really are the best for the client when in fact it is only best for the company they work for - think Storm financial and how many of the planners actually got caught up with their own money.

I also have a friend who became a fin planner and after a few conversations with him about the market and economics in general I couldn't believe just how little he actually knew and more importantly understood. He was told what to sell and his outlook was distorted by the company he worked for and the companies whose products he sold.
He is a top bloke who would never intentionally mislead anyone but he just didn't know any better.


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## tech/a (28 April 2009)

MR J has it in one.

Financial planning is pretty simple.

Minimise risk.
Minimise gearing.(In these times)
Identify opportunity (Real opportunity the type your Financial planner is looking for himself!).
*THEN*
Minimise Risk
Maximise gearing.

Seek out those who can help you in this search---and their not generally F/Ps.

When it comes to the Markets Radge is damned good.

*Remember* most F/Ps can only dream of the wealth most of their clients have.
Those with REAL wealth wont need an F/P.
They dont have anything to offer the well heeled.

Frankly your better off in my view seeking those with real wealth and learning of their tricks.


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## Mr J (28 April 2009)

I'm partly amazed at how many people don't seem to care much about their financial management. They're happy to pass it on and remain reasonably ignorant. I've spoken to a few people about this, and they'll just repeat that it takes too much time and that they'd never be able to do it themselves. To me it sounds like a trader who doesn't practice money management. I don't understand how people are so preoccupied with earning money, but then completely uninterested in how they then use it. Then, when they take a big hit, they're out for blood and complain about how they're hard done by.

Obviously that is a generalisation and many people are do take an interest, but certainly not enough and not to a reasonable extent.


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## Ghetto23 (28 April 2009)

I really do think that if you were a high income earner that didn't care about learning that this might be a way to go.

Unfortunately for them that's not me. I'm always trying to learn more - that's why I spend so much time looking around these forums


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## Julia (28 April 2009)

nomore4s said:


> I also have a friend who became a fin planner and after a few conversations with him about the market and economics in general I couldn't believe just how little he actually knew and more importantly understood. He was told what to sell and his outlook was distorted by the company he worked for and the companies whose products he sold.



Yep, I've experienced this too.   When I first became interested in shares I went to a full service broker in the belief that he would know a lot more than I would.  A year or so later, when 10 of their 12 recommendations had lost me money in a decent market, I changed my mind and told them why.
Out of the blue a few months ago an email arrived from them offering me a free "financial health check up".   Curiosity saw me accepting.   Spent half an hour with one of the most clueless idjits I've ever encountered.
When I said I'd preserved my capital by moving to cash January 2008, he delivered the spiel about asset allocation being disproportionate!!
Well, yes, that was the damn point until the market stops falling.
It was quite obvious he'd been taught a parrot-type delivery and had no real comprehension of anything else.  Even when I asked if they had recommended clients exit Allco, BNB, ABS etc., he very defensively said no one could have known they would fail.





Mr J said:


> I'm partly amazed at how many people don't seem to care much about their financial management. They're happy to pass it on and remain reasonably ignorant. I've spoken to a few people about this, and they'll just repeat that it takes too much time and that they'd never be able to do it themselves. To me it sounds like a trader who doesn't practice money management. I don't understand how people are so preoccupied with earning money, but then completely uninterested in how they then use it. Then, when they take a big hit, they're out for blood and complain about how they're hard done by.
> 
> Obviously that is a generalisation and many people are do take an interest, but certainly not enough and not to a reasonable extent.



I've noticed the same thing.   e.g. someone who has investment property just won't consider shares because "property is safer".


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## helicart (28 April 2009)

At the end of the day there's only so many variations on a theme G. 
It is a lot of money to pay for generalist advice.

I've got at least 7 friends who are CEO or CFOs of medium to large enterprises who took a bath on their super last year because their financial advisors didn't see the **** hitting the fan. These guys all lost at least 40% of their super because of it, and they were margined up just like you have been recommended to do. 

I have seen two FA in my time and I didn't come away impressed. The guys above could have preserved their super by using a very simple investment indicator 

- get out when the 6mth ema crosses down on the 10mth EMA and in for vice versa....
OR 
- get in when 20wk crosses above 50wk EMA
get out when 20wk cross 1% below 50 week.
check once per week

Both these do a reasonable job of capturing bull markets and avoidng bears, with minimal whipsawing. 

What's the point of them advising you to have income protection insurance and making higher super contributions if they don't know the risk your super is exposed to and how to manage that?





Ghetto23 said:


> I'm with you guys - I though what they spelled out in the SoA would be really smart stuff that will really help me avoid paying so much tax.
> 
> What they recommended was pretty much:
> -Borrow against my current homeloan to invest in Blue Chip shares with a high div/share (free capital growth)
> ...




keep educating yourself.....unless these guys can talk to you with depth of knowledge and personal experience about the stock market, property development, bonds, and gold, then you aren't reaching high enough....


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## helicart (28 April 2009)

Blackrock performance 

http://www.blackrockadviser.com.au/cms/public/mlim001126.jsp

always a good idea to compare a fund's performance against STW


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## Ghetto23 (28 April 2009)

helicart said:


> Blackrock performance
> 
> http://www.blackrockadviser.com.au/cms/public/mlim001126.jsp
> 
> always a good idea to compare a fund's performance against STW




Holy crap. Thanks for that heli - has opened my eyes a little.


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## prawn_86 (28 April 2009)

Ghetto,

Members here are not allowed to give financial adive etc etc but if you are being advised to take out a margin loan what %pa will that be charged at? Wouldnt you be better off paying off your mortage asap and then focusing on shares? 

Work out what return you will need to achieve once you take your margin loan into account and then work out how much you will save by paying off the mortage.


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## Ghetto23 (28 April 2009)

prawn_86 said:


> Ghetto,
> 
> Members here are not allowed to give financial adive etc etc but if you are being advised to take out a margin loan what %pa will that be charged at? Wouldnt you be better off paying off your mortage asap and then focusing on shares?
> 
> Work out what return you will need to achieve once you take your margin loan into account and then work out how much you will save by paying off the mortage.




The LoC would be at 5.69%. Their plan is to have the interest covered by dividend (they mentioned ANZ shares would do this), and then get free capital growth.

I agree with the paying off of the mortgage thing - which is why I am 50/50 mortgage/shares at the mo.


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## prawn_86 (28 April 2009)

Ghetto23 said:


> The LoC would be at 5.69%. Their plan is to have the interest covered by dividend (they mentioned ANZ shares would do this), and then get free capital growth.
> 
> I agree with the paying off of the mortgage thing - which is why I am 50/50 mortgage/shares at the mo.




Remember that divs can be cut also. And that you could get the capital losses as opposed to growth 

I agree with what most others have said that if you are interested it would be better to educate yourself.

Im not normally the biggest advocate for property, but if it was me i would try and pay it off asap so then you are debt free. Perhaps personally use 10 or 15% of your money to invest yourself to learn how the market really wants.

At your meeting i would ask your FP what will happen if the divs are cut? and why they think that you are better off taking out another loan as pposed to paying off the one you already have.


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## Ghetto23 (28 April 2009)

prawn_86 said:


> Remember that divs can be cut also. And that you could get the capital losses as opposed to growth
> 
> I agree with what most others have said that if you are interested it would be better to educate yourself.
> 
> ...




Thanks for the advice prawn - def food for thought


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## helicart (28 April 2009)

prawn_86 said:


> At your meeting i would ask your FP what will happen if the divs are cut? and why they think that you are better off taking out another loan as pposed to paying off the one you already have.




especially considering ANZ just priced itself out of the fixed rate resi mortgage market. you have to ask why, and it will hit their revenue. 

word is they expect their credit rating to be lowered shortly, and that would make them uncompetitive with the other banks in seeking foreign wholesale funds for fixed loans. 

if blackrock don't know this, they really are behind the 8 ball.


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## Smallprofits (28 April 2009)

Ghetto23 said:


> Holy crap. Thanks for that heli - has opened my eyes a little.






Pretty good returns.... they seem to have outperformed the index by about 15%


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## Smallprofits (28 April 2009)

Ghetto, I would be very interested to know how you ended up going with this.

Did you proceed with the recommendations. 

I tend to agree with both points of view presented on this topic. It is difficult to distinguish between an adviser out for the $$ and someone who cares, problem is that trust takes time to develop. 

The plan fee doesnt seem overly expensive but the intial implementation of $10,000 does... 

and like others opinions, you are too young to be putting AN ADDITIONAL $12,500 into super. Sure, there is no doubting that super is the best structure in which to invest but age age 29 you have 31 years until you are able to get your hands on that.... in the meantime you need cash for you home, children, boat, car, travel etc.... 

Look after super - make small additional contributions but in my opinion keep this to a minimum and focus on mortgage before putting too much up in super.

just my thourghts.


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## helicart (28 April 2009)

Smallprofits said:


> Pretty good returns.... they seem to have outperformed the index by about 15%




think I'd rather have listened to this bloke....he might wear a polyester tie, but at least he said this:

"The preservation of capital is more important than the return on capital in a bear market."

Though he could have said preservation of capital is more important in every market.


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## Mr J (28 April 2009)

Smallprofits said:


> and like others opinions, you are too young to be putting AN ADDITIONAL $12,500 into super. Sure, there is no doubting that super is the best structure in which to invest but age age 29 you have 31 years until you are able to get your hands on that.... in the meantime you need cash for you home, children, boat, car, travel etc....




It's too bad that they have an age limit. Screws the 45 year old retiree, but I suppose they want us to continue paying taxes.


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## Lone Wolf (28 April 2009)

G'day,

Just to add one more opinion for the record.

I was with a financial planner until recently. They charged 10% up-front on every additional investment plus an ongoing fee of 0.66% on the total portfolio. Their policy was buy and hold while using margin lending to increase your market exposure. On the way up it was buy whenever you had money to spare or if you were in a position to borrow more money. Of course their 10% fee was also added to the margin loan (It's almost like it's free!). On the way down it was simply "Don't sell unless you have to." 

If I asked anything about the state of the market the reply was always "We don't have a crystal ball, you can't beat the market, just buy and hold." Because of this standpoint I've been long the ASX200 right from the top. I soon came to the conclusion that I don't need to pay someone thousands of dollars every year to buy and hold.

But I must say that they are not to blame. They made it quite clear from the start that this was a buy and hold investment and that they "Don't have a crystal ball." They presented me with an investment strategy and I said sign me up. I guess I thought at the time that I don't know what I'm doing so I'll pay someone who does know to look after things. Please don't do this, if you want to use a financial planner then go ahead, but never assume they have your best interest at heart. Some might, I'm sure they're not all bad... But as others have said, most financial planners are sales people. They have a product or strategy in mind and they want to sell it to you. You have to ask, is what they're selling right for you? I'm sure you could do the same thing yourself for less. Do you have the time and motivation to do this yourself?

The good thing about having a financial planner was having someone to explain various things that I don't understand. Due to a lack of experience in the area, legal and financial documents always confused me, I didn't understand the system or the terminology. I can still remember trying to work out the difference between franking credits and imputation credits. So having a FP was good in that I could ask questions and they could run me through the documents, give me an understanding of the system and point out tax savings and such. But personally I don't feel this service is worth thousands of dollars a year.

The fact that you are here asking questions is a good start. If you do use them, keep an eye on them.

My experience with a financial planner is a bit like - You ask a mate to watch the oven for you while you duck down to the corner store for a couple of minutes. When you get back there's smoke billowing out the oven door and your mate is sitting there looking at it... "It's not looking too good." Thanks mate, but I guess it's true that I never actually asked you to stop it from burning.


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## alwaysLearning (29 April 2009)

helicart said:


> especially considering ANZ just priced itself out of the fixed rate resi mortgage market. you have to ask why, and it will hit their revenue.
> 
> word is they expect their credit rating to be lowered shortly, and that would make them uncompetitive with the other banks in seeking foreign wholesale funds for fixed loans.
> 
> if blackrock don't know this, they really are behind the 8 ball.




And just to add in that I think many of the other banks did their capital raisings already but I don't think ANZ did one yet?


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## long88 (29 April 2009)

Moral of the thread is:

Dont leave your financial future in the hand of someone that you havent seen their financial result. 

It doesnt matter how good he/she, if there is no result, he will lost your money. reason is: No crystal ball seeing to the future.

So educate yourself, take this matter in your hands, after all it is your hard earned money that you traded your time, skill and concentration.

Cheers


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## Ghetto23 (29 April 2009)

Lone Wolf said:


> The good thing about having a financial planner was having someone to explain various things that I don't understand. Due to a lack of experience in the area, legal and financial documents always confused me, I didn't understand the system or the terminology. I can still remember trying to work out the difference between franking credits and imputation credits. So having a FP was good in that I could ask questions and they could run me through the documents, give me an understanding of the system and point out tax savings and such. But personally I don't feel this service is worth thousands of dollars a year.




Thanks mate, that was my thinking in the first place. I want to keep hearing from them, and I still want their advice, but I don't need someone to hold my hand through it all.

As far as learning the difference between franking/imputation credits and all that - is there a book that you can recommend?


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## Kez180 (29 April 2009)

Ghetto23 said:


> Lone Wolf said:
> 
> 
> > The good thing about having a financial planner was having someone to explain various things that I don't understand. Due to a lack of experience in the area, legal and financial documents always confused me, I didn't understand the system or the terminology. I can still remember trying to work out the difference between franking credits and imputation credits. So having a FP was good in that I could ask questions and they could run me through the documents, give me an understanding of the system and point out tax savings and such. But personally I don't feel this service is worth thousands of dollars a year.
> ...





http://www.ato.gov.au/nonprofit/content.asp?doc=/content/17149.htm&page=3&H3

EDIT: That thread that Sir O started is very good... It is stickied in the beginners section.

If you have any specific questions you can send me a pm... I can't give you 'advice' but I can explain processes for you...


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## helicart (29 April 2009)

helicart said:


> especially considering ANZ just priced itself out of the fixed rate resi mortgage market. you have to ask why, and it will hit their revenue.
> 
> word is they expect their credit rating to be lowered shortly, and that would make them uncompetitive with the other banks in seeking foreign wholesale funds for fixed loans.
> 
> if blackrock don't know this, they really are behind the 8 ball.




Need I say more about FAs of the ilk of Blackrock........their ANZ dividend strategy just got shredded......but don't rely on hearing it from them first.....so what's their plan B today?

*ANZ shares tumble as H1 profit misses market forecasts*


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## jono1887 (29 April 2009)

helicart said:


> their ANZ dividend strategy just got shredded......but don't rely on hearing it from them first.....so what's their plan B today?
> 
> *ANZ shares tumble as H1 profit misses market forecasts*




Hahaha


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## prawn_86 (29 April 2009)

I would be interested to hear what the FP does say in response to your question Ghetto. Please let us know once you have had the meeting


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## Ghetto23 (29 April 2009)

Will do mate, the meeting is on Tuesday.


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## Lone Wolf (29 April 2009)

Ghetto23 said:


> Thanks mate, that was my thinking in the first place. I want to keep hearing from them, and I still want their advice, but I don't need someone to hold my hand through it all.
> 
> As far as learning the difference between franking/imputation credits and all that - is there a book that you can recommend?




No, I don't know of any good books on learning how to speak the language. For me It's something I pick up as I go along. If I come across a term or process I'm not sure about these days I just google it. That or use the search feature on this site. If all else fails you could always ask the question here.

Best of luck.


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## Kez180 (30 April 2009)

http://www.anz.com/edna/dictionary.asp

Thats a pretty useful resource as a first stop for research....


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## Gerkin (30 April 2009)

Kez180 said:


> Have you raised these concerns with your financial planner?
> 
> Did they work the fee out on a charge per hour basis? Did they increase the fee because you have a substantial income?
> 
> ...




Keiran,

How long did it take you to become an Accredited Mortgage Consultant?
It took me 15 Hours with a course run by AAMC. No outside work or anything of the like. And then to get accredited with banks you just rock up to the banks BDMs and sign a bit of paper.

Why are you even stating your title anyway?? Looking for business from this forum?


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## Sir Osisofliver (1 May 2009)

Ghetto23 said:


> I recently paid $2750 to have a financial planner to create a Statement of Advice for me in terms of setting up a long-term financial plan.
> 
> The cost of implementing it will be somewhere in the region of $10K - and I'm baulking at it a bit. Plus $5K annually to keep reviewing it and making sure that it suits me.
> 
> ...




Ghetto,

Here's something for comparison purposes for you.

(Insert disclaimer about no advice here)

I'm RG 146 compliant and I produce fee for service financial planning..

A plan from us (depending upon complexity) will cost you between $1800 and $10,000 *up front*. (Only rarely do plans cost more than $5k) There may be additional fees associated with analysis if you have extensive equity holdings (more than 50 lines) or need multiple and complex structural analysis (I.E you have 15 different company and trust structures with multiple trustees) which is charged at $100 per hour. (once again this rarely occurs)

If you use our services to set up the plan and buy the equity and or property (no Managed Funds and no trailing commission) you are charged between 1.8 and 0.6% of the portfolio - and the same on an annual basis if you want us to manage the portfolio on your behalf.

(By the way for everyone reading this...no I'm not looking for more clients... please don't contact me)

Cheers
Sir O


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## Jack Payback (2 May 2009)

I know I'm probably opening myself up to abuse here but I am also an FP.

One thing that someone thinking of using an FP should keep in mind, is that it is ultimately the licensee that is responsible for the advice given, not the adviser, although they are still held accountable.

The firm I previously worked for had a set of strategies and parameters of advice for advisers to work in. If I gave out any other advice, it could come back to haunt them more than me, although I would probably have been sacked.

That was my biggest frustration, in that I had to give the advice that fitted within that advice structure, whether I thought it was the best advice or not.

Advisers are accountable to their licensee, for those that don't know, an adviser can only give advice as a representative of a financial services license (AFSL). The advice parameters are also guided by the public indemnity insurance policies held by the licensee.

Another point people should know is that the financial planning industry evolved out of the life insurance industry. I remember back in the early 80's my father went to see one. Anybody calling themselves a financial planner back then was really just a life insurance salesman, ie planning for your family's financial future if you died. And that "sell,sell,sell" philosophy has remained in place, even though the advice has become much more sophisticated. There are still a few "lifeys" in the industry but what they sold back then - risk policies and insurance bonds are nearly obsolete now.

Having said that, in terms of the fee structure we worked with, we only charged a client if we were able to make them some money, if we could not find a way to make them any money, no charge. 

Initial plan fees from $900 up to a cap of $25K. Yearly fees were capped at $3500 regardless of the time spent working with the client.

Financial planning is not brain surgery, you can do it yourself if you put in the time, effort and expense to educate yourself, like most of the users of this site.

Most of my clients were people who had no inclination to take the effort but knew they should be doing something, or time poor professionals, even sophisticated investors, accountants and I even had one professional trader who wanted a second opinion.

I was surprised by the large amount of people who would put their absolute trust in someone right from the first meeting. Ironically, that was the reason I got in to the industry, because I did not trust advisers!

Well, I've got my headgear on and groin protector in place, let me have it!


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## pilots (2 May 2009)

The best advice I ever got was ask your planner what he is worth, if it is less than you have, he should take advice from you.


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## prawn_86 (2 May 2009)

pilots said:


> The best advice I ever got was ask your planner what he is worth, if it is less than you have, he should take advice from you.




I dont agree with that. What about high paid sports stars or people who have inherited money etc etc.

Just because you have a lot of money doesnt mean you know how to put it to best use...


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## Jack Payback (2 May 2009)

pilots said:


> The best advice I ever got was ask your planner what he is worth, if it is less than you have, he should take advice from you.




Yes I used to get asked that by one client, every time we met "So are you a millionaire yet?" I thought it was hilarious. 

And yes, the client was worth more than me - he was a coal miner!


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## pilots (2 May 2009)

prawn_86 said:


> I dont agree with that. What about high paid sports stars or people who have inherited money etc etc.
> 
> Just because you have a lot of money doesnt mean you know how to put it to best use...



P86, my beef was that when we retired I went to 6 or7 FP, most was under 30 years old, the worst was West pack, I has a young girl who would not have been twenty years old. We have now done it on our own, and thank god we did not buy shares.


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## tech/a (2 May 2009)

> Financial planning is not brain surgery, you can do it yourself if you put in the time, effort and expense to educate yourself, like most of the users of this site.
> 
> Most of my clients were people who had no inclination to take the effort but knew they should be doing something, or time poor professionals, even sophisticated investors, accountants and I even had one professional trader who wanted a second opinion.
> 
> I was surprised by the large amount of people who would put their absolute trust in someone right from the first meeting.




An understandable summary.

The "Are you a millionaire" question to me isn't about the literal sense in have you made a million but more so ---- if you had and preferably much more---how then did you do it and that's the sort of advice I want.

*Application of Financial planning in their own back yard*

If I could find an F/P who could answer practical questions with practical solutions rather than the canned "Managed Fund---its not timing the market but time in the market" party line then perhaps I would have more respect for them.
They may well be out there but I just haven't met one.

3 Mates are Financial Planners. 
I have taken control of my own destiny and as you can imagine have quite some discussions with my mates.

In 1996 I started buying houses and asked them what they thought.
"Good long term investments but good funds were out performing Property"

in 1998 after buying 2 Esplanade Apartments I remember clearly calling 2 of them and telling them of the deals and that 3 were left of 15---that they were an no brain-er (They never asked why) and get into it!--they didn't.

*See the point* 
In the above is THEY had no idea what constituted a "NO BRAINER" in a Property deal. It still remains a set of conditions which are rarely seen in a lifetime in the property market ---  Ive seen them together twice in 55 yrs. The best in 1998 but they remained true in Adelaide until 2003.


In 2007 I sold all my long term share holdings (A little early in July). It was and still is a sizable sum. My mates thought I was a nutter. China/India Booming emerging economies a resource boom that would never end--you've heard it.

*See the point*
Not one saw it coming. But more than a few here including Mr Toxic (Me)-- did.

Next we have economic meltdown.
We now seem to be going to BBQ's rather than restaurants.
One topic is 
"How will you grow your business in this economic climate"
The response is and all three I may add.
*GROW? You mean survive!!!!*
No I mean Grow.---Yes this F/Y we will grow again and are employing new people AGAIN.
They have no clue as to what to do to grow their companies.
This is the greatest opportunity they are likely to EVER see.

Their competitors are being crucified yet they don't have a clue of how to take advantage of the pressure the economy has placed on their competitors.

*See the point*
They see themselves as Victims not Predators.

I'm a Builder---Civil Works---what do I know?

If I had the need for an F/P Id want one with *PRACTICAL PROVEN *experience in *HIS* Financial affairs and *NOT* the Porsche on *LEASE* a rented office and an 80% mortgage 2 credit cards and the trophy bimbo.

Yeh he knows how I feel---and still a good mate.


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## Mr J (2 May 2009)

prawn_86 said:


> I dont agree with that. What about high paid sports stars or people who have inherited money etc etc.
> 
> Just because you have a lot of money doesnt mean you know how to put it to best use...




The point is more important than the packaging. 



> I went to 6 or7 FP, most was under 30 years old, the worst was West pack, I has a young girl who would not have been twenty years old.




I imagine she'd be like the others, just selling the bank's package.


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## pilots (2 May 2009)

Mr J said:


> The point is more important than the packaging.
> 
> 
> 
> I imagine she'd be like the others, just selling the bank's package.




Yes at the time we had three rental properties, the first thing she wanted was for us to sell them.


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## helicart (2 May 2009)

tech/a said:


> *See the point*
> Not one saw it coming. But more than a few here including Mr Toxic (Me)-- did.




Tech, what specifically gave you the confidence to sell your whole portfolio?


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## Jack Payback (2 May 2009)

tech/a said:


> An understandable summary.
> 
> "How will you grow your business in this economic climate"
> The response is and all three I may add.
> ...




I agree 100%,  I have been saying this to my colleagues, with the same answer you get. It seems I'm pushing it up hill. The thinking is "our revenue has halved, we better go in to our shell", the same as any investor after the downturn, when it should be "now is the time to be active for a long term return."

It's bad economic times like this when an adviser should be their most active, this is when a client needs their adviser the most, the good times are easy, it's now when the adviser really earns their money. The reality is most advisers don't know how to handle a situation like this.

But it seems like advisers are just people who like to go with the crowd. If everyone else is doing it - it must be right.


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## Mr J (2 May 2009)

Jack Payback said:


> If everyone else is doing it - it must be right.




Natural human behaviour.


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## tech/a (2 May 2009)

helicart said:


> Tech, what specifically gave you the confidence to sell your whole portfolio?




The consensus of opinion of those who I respect as traders was that this (The Bull run) could not go on forever.
Started thinking seriously about the possibility of a sustained bear market at around 5000 but by around 6000
My own analysis which is here on ASF if anyone wants to have a look---suggested that at around 6400 that this was the top. That's when I sold. The power of the Bull Market did continue and was followed in analysis.
My View wasn't held alone but certainly not by most.

https://www.aussiestockforums.com/forums/showthread.php?t=6211&page=2

Which at the time I was considered a nutter as the thread shows. The eventual top was 6880 so was 450 points off

Bugga!

Not long after the same people were suggesting that a new high may not be reached for 7 yrs.
That too went down like a lead balloon.

*So you'll be a long time "IN the Market!"*

But even now your hearing about such amazing bargain 70% off their highs
Incredible.

Really!
Ever though that *NOW* that's all the stock is worth?
That a return to yesteryear is not really on the cards.
That all sorts of drastic measures maybe needed just to keep a float!
Parts may be sold,extra capital may need to be raised.

Basic stuff but do you hear your F/A spruiking any of it?
Nah! Didnt think so


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## helicart (3 May 2009)

tech/a said:


> Basic stuff but do you hear your F/A spruiking any of it?
> Nah! Didnt think so




I got out just over 6000, in April 07. Fundamentals guys I respect in the US were starting to warn of how big a problem sub prime was. (James Grant, Barry Ritholz, Bill Gross, John Mauldin, Roubini, Shiller, Faber, Rogers etc.) Credit would tighten in the face of higher rolling CDO tranche refinance or bad debt write downs.

So I couldn't see significant capacity for the US consumer to take on higher debt....ergo global consumption had to plateau or fall. The China decoupling thing was pixiesville back then imho. Will take another decade for that.

I missed a lot of profit on commodities, but risk/reward didn't justify it. 

Built a couple of duplexes on two lots put under contract in Feb07 in Brissie instead...and decided to flick them in March08 when I saw no further growth in property for years.

Since 2001, I have tried to understand the source of the capital behind the cheap credit that has fueled Australia's property boom. Maybe 3-5% of finance people I have spoken to have any idea.

Even now, few understand how reliant Australian property prices are on foreign sourced credit, and how associated growing net foreign liabilities impoverish us.... I cannot see property prices maintaining late 07 values in real terms for at least 10 years. 

I sat in cash until gold started to move up strongly aug08 and rode that until TA got me out in march09. 

I spend a lot of time reading global fundamentals and capital movements these days and that has driven my trading of this bear rally as much as TA. 

But difficult to get an intelligent discussion about this stuff with an FA.


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## Jack Payback (3 May 2009)

helicart said:


> But difficult to get an intelligent discussion about this stuff with an FA.




That is because most of the analysis an FA gets, comes from fund managers, and they don't want you to sell 

Most FA's concentrate on prospecting, conducting seminars etc, to generate new clients. If they've got between 1000-2000 clients to look after they don't have the time to do that sort of in depth analysis, they just buy it from a research house, and no research house I came across saw it coming either.

Having said that, in terms of predicting a downturn in the market, I saw a much simpler way of predicting it. We were in the best bull market ever, 4 consecutive years of +20% growth on the ASX. It had to let off some steam, and usually when a market rises quickly it corrects quickly too.


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## Julia (3 May 2009)

Jack Payback said:


> t between 1000-2000 clients to look after they don't have the time to do that sort of in depth analysis, they just buy it from a research house, and no research house I came across saw it coming either.
> 
> .



This is beyond belief imo.   It didn't take any 'in depth analysis' to see it coming.


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## Calanen (3 May 2009)

Ghetto23 said:


> I recently paid $2750 to have a financial planner to create a Statement of Advice for me in terms of setting up a long-term financial plan.
> 
> For some background I'm 29 with a high income ($150K+)




You're certainly helping the financial planner hit the goals in his own financial plan.

The only thing you might need to do is buy a book from Dymocks and read it, keep it simple. Don't get into US denominated junk bonds with a leveraged warrant stock option set up in a shelf company in the Bahamas with a twist of lemon. Just buy a unit somewhere and negative gear it so you pay less tax. If those financial planners really knew, they wouldnt be advising you, they'd just be investing themselves.

Loads and loads of people who told me, oh you'll miss out on the market..you need to borrow and buy shares..all that capital is wasted in property..you're a fool....almost to a man are now regaling me with tales of how they lost hundreds of thousands even millions. 

I've lost nothing, and I don't owe a penny to anyone. And now I can buy whatever I want, cheaply. But of course I was the 'fool' for not buying into the bubble on borrowed money.


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## Jack Payback (3 May 2009)

Julia said:


> This is beyond belief imo.   It didn't take any 'in depth analysis' to see it coming.




Like I said....

I saw a much simpler way of predicting it. We were in the best bull market ever, 4 consecutive years of +20% growth on the ASX. It had to let off some steam.

And I think the previouse posts were about picking the top of the market.


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## Mr J (3 May 2009)

Regarding the arrogant complacency, it's just basic human psychology. Part of it is out of sight, out of mind: we don't worry about problems until they're problems (i.e. causing us harm). There's the herd mentality: if everyone else is ignoring it then it can't be that much of a problem. There's the part telling us that it won't happen to us: we're different. There's the intelligence factor: if the experts don't see a problem, why should I expect one?

Of course these are mostly rational thoughts, but only at a most basic level. 



> I saw a much simpler way of predicting it. We were in the best bull market ever, 4 consecutive years of +20% growth on the ASX. It had to let off some steam.




I agree. Balance is required, and therefore a correction should be expected at some point. I really dislike the description that is "the Global Financial Crisis", as if it is some sort of disease. But then "correction" isn't egotistical (remember, the need to feel special), and not dramatic enough for the media and governments.


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## helicart (3 May 2009)

Julia said:


> This is beyond belief imo.   It didn't take any 'in depth analysis' to see it coming.




In light of the damage done, I don't agree. 

Central banks, ratings agencies, the world's major investment banks, businesses continuing with a strategy of nonchalant even aggressive debt financed acquisitions or growth (MacBank, B&B, Centro, ABC Learning, ANZ, NAB, Fortescue, many Aussie miners,  etc etc), others not reducing their DSRs, most of the world's equity funds, LGAs, State Govts, SWFs........they all suffered severe losses because they didn't see it coming.....

The right questions were not being asked by the research houses and analysts.... Trust was implicit and it had been broken. There had been a lot of doom sayers around saying "eventually" things would fail based on an Austrian Economics perspective alone.....The D&G titles in Borders and Dymocks were on the rise from 2003.  

But Bill Gross' Pimco was the first tangible and reliable research that warned me in 07 that things would blow up very soon. And I didn't want to take the chance of having the ASX gap down 15% one morning rendering stops useless. Gross started to get suspicious of the ratings given to the sub prime and alt a stuff, and eventually realized they needed to do their own research into who was being lent all this sub prime money for property....what they saw shocked them.....


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## tech/a (3 May 2009)

Soros Wrote a book about the impending issues and spelt out what they were 12 mths before the whole thing hit.


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## It's Snake Pliskin (3 May 2009)

tech/a said:


> Soros Wrote a book about the impending issues and spelt out what they were 12 mths before the whole thing hit.



Tech what is the title because he wrote a couple, one after it I think.


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## Julia (3 May 2009)

helicart said:


> I got out just over 6000, in April 07. Fundamentals guys I respect in the US were starting to warn of how big a problem sub prime was. (James Grant, Barry Ritholz, Bill Gross, John Mauldin, Roubini, Shiller, Faber, Rogers etc.) Credit would tighten in the face of higher rolling CDO tranche refinance or bad debt write downs.
> 
> So I couldn't see significant capacity for the US consumer to take on higher debt....ergo global consumption had to plateau or fall. The China decoupling thing was pixiesville back then imho. Will take another decade for that.
> 
> I missed a lot of profit on commodities, but risk/reward didn't justify it.






helicart said:


> In light of the damage done, I don't agree.




Your two comments above are contradictory.  If you saw the problem coming why didn't research houses?


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## helicart (3 May 2009)

tech/a said:


> Soros Wrote a book about the impending issues and spelt out what they were 12 mths before the whole thing hit.




Soros was one of the guys I thought had been D&Ging for quite a while. 
He even admits so......

Soros' 2008 book, _The New Paradigm for Financial Markets_, describes a "superbubble" that has built up over the past 25 years and is now ready to collapse. This is the third in a series of books he's written that have predicted disaster. As he states:I have a record of crying wolf…. I did it first in _The Alchemy of Finance_ (in 1987), then in _The Crisis of Global Capitalism_ (in 1998) and now in this book. So it's three books predicting disaster. (After) the boy cried wolf three times . . . the wolf really came.[19]
​Which of his books did you have in mind?

Though he is one of the guys I pay attention to these days.....


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## helicart (3 May 2009)

Julia said:


> Your two comments above are contradictory.  If you saw the problem coming why didn't research houses?





Because the research houses, central banks, et al don't respect Mises and Hayek as much as I do.


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## Julia (3 May 2009)

helicart said:


> Because the research houses, central banks, et al don't respect Mises and Hayek as much as I do.




Surely the above were not the only clue?   I don't know anything about them and I sold out in January 08.  Certainly gave back some profits by waiting until then.


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## helicart (3 May 2009)

Julia, the two guys I mentioned are famous elaborators of the Austrian School of Economics' perspective on recessions, depressions, and the cause of credit bubbles. Much of what the other guys warned the world of is derivative of that school....

If you google "Minsky Moment" it encapsulates how the Austrian's views explain so much of the last few year's events (though Minsky wasn't an Austrian).

I've never met a FA or investment banker or stock broker (including my brother the broker) who is well versed in the above.


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## Julia (3 May 2009)

helicart:  thank you.  I will google as you suggest.

However, my point was rather that no one needed to do any indepth analysis to recognise that the market began to tank significantly after the highs of November 2007.   This was combined with ever increasing bad news globally and the worsening of the US sub prime situation.

  Simple capital preservation would have surely indicated the need to sell if the basic principle of stop losses was used.

So don't we have to conclude that the continued admonitions of the financial services industry to "hold on - it will all be OK'" were motivated by their own best interests, rather than any genuine advice to their clients.

I don't really care:  it's all history now.  But it should be a lesson to all those who continue to place their trust in the so called financial advisers.


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## helicart (4 May 2009)

Julia said:


> helicart:  thank you.  I will google as you suggest.
> 
> However, my point was rather, that no one needed to do any indepth analysis to recognise that the market began to tank significantly after the highs of November 2007.   This was combined with ever increasing bad news globally and the worsening of the US sub prime situation.
> 
> ...




Agree.....two things you shouldn't outsource 100% - the decision for brain surgery, capital preservation.


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## tech/a (4 May 2009)

It's Snake Pliskin said:


> Tech what is the title because he wrote a couple, one after it I think.




I've had a better look at my copy and in it he says that he wrote the book at the end of 2007. So things were on their way.
It was published 2008.

The title was pretty gutsy had the market reversed like it did in the late part of 2007,would have looked pretty silly had it just kept going.

"The New Paradigm For Financial Markets
George Soros
The Credit Crisis of 2008 and what it means."
ISBN978-1-58648-683-9


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## jono1887 (7 May 2009)

tech/a said:


> The title was pretty gutsy had the market reversed like it did in the late part of 2007,would have looked pretty silly had it just kept going.




Well he isnt just an average everyday trader... he been doing it for most of his life and highly successfull at it too! of coarse he's gonna  be confident in his predictions...


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## tech/a (7 May 2009)

When you can cause a countries currency to be under pressure then you command respect.
Soros used to move markets on his own.

Thats why I bought the book.


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## ChilliBlue (12 May 2009)

*Should I use a Financial Planner?*

My husband and I have paid off the house and have a spare $4K a month to invest.

Being in our early 30's we thought it might be best to start looking at getting advise from a Financial Planner to better minimise taxes paid and get a better idea where we should invest.

What does everything think about uses a FP services and what should be be looking out for?


----------



## jono1887 (12 May 2009)

*Re: Should I use a Financial Planner?*



ChilliBlue said:


> My husband and I have paid off the house and have a spare $4K a month to invest.
> 
> Being in our early 30's we thought it might be best to start looking at getting advise from a Financial Planner to better minimise taxes paid and get a better idea where we should invest.
> 
> What does everything think about uses a FP services and what should be be looking out for?




You'd probably get better advice from this forum than from paying several thousand to see a financial adviser : 
 Although we're not meant to give out financial advice on these forums...
IMO i would minimize taxes through neg gearing of a property and use the other half rest on the stock market, maybe with a margin loan geared at 40-50%


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## Julia (12 May 2009)

If you have read through this thread from the beginning you will have a fair idea about what most of us think about financial planners.

Might also be a good idea to read the Storm Financial thread to understand what can and has happened.


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## Jack Payback (13 May 2009)

*Re: Should I use a Financial Planner?*



ChilliBlue said:


> What does everything think about uses a FP services and what should be be looking out for?




If you want to see an FP, try and avoid ones that are aligned to an institution, such as a bank or AMP etc, as they will steer you towards their products, i.e there is a conflict of interest. 

Look for independence and fee for service payments, not a commission based adviser, as they will sell you a product that gives them the highest commission which may not be the best investment for you.

Go and see at least three of them and go with who you are most comfortable with. You don't buy the first car you see when you are shopping for a vehicle, don't put your financial future in the hands of anybody.

If you see a stockbroker, they don't earn product commission, but the danger is they churn (buy and sell) your portfolio frequently as they can charge you for advice per transaction.

There are good advisers out there, but you have to search for them. Ask your friends and family if they use anyone, and see if they are happy with the service, would they recommend them?


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## Kez180 (13 May 2009)

*Re: Should I use a Financial Planner?*



Jack Payback said:


> Ask your friends and family if they use anyone, and see if they are happy with the service, would they recommend them?




Going back to the storm example... I think a lot of their business was through referrals... do your own research, ask too many questions... if you are going to pay someone thousands... make sure they earn it.

Don't do anything that you don't understand... if the adviser doesn't want to explain, go somewhere else...


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## Sir Osisofliver (13 May 2009)

*Re: Should I use a Financial Planner?*



ChilliBlue said:


> My husband and I have paid off the house and have a spare $4K a month to invest.
> 
> Being in our early 30's we thought it might be best to start looking at getting advice from a Financial Planner to better minimize taxes paid and get a better idea where we should invest.
> 
> What does everything think about uses a FP services and what should we be looking out for?




Chilli it seems pretty obvious what most people here on this forum think about planners..we are a bunch of parasites and salespeople who don't have your best interests at heart.

Chilli right now from what you have said you are not particularly attractive as a client for *most* planners...you want advice on how to minimize your tax and what structures may be useful for you to invest through such as discretionary trusts, corporate trustees, corporate beneficiaries etc etc. But the payoff for most planners doesn't exist. You don't have a large sum of money to invest from which most planners can draw a trailing commission. Any corporate entities or trusts should be cheaply set up by your accountant, they don't charge by the hour like a taxation lawyer, the only way they get their money is if they can *con*vince you to use a product from which they can draw a fee. 

The only way to do *that* will be to gear your House and free up a significant amount of funds. If you are not prepared to do that then most of them will tell you that they cannot "add value" - which is planner speak for "You're not worth my time". 

Gearing or not gearing the house may or may not be appropriate for you. I myself would _probably_ suggest that the asset is being underutilized towards your long-term financial security and having no debt (whilst envious to most people) is probably not the best idea if you are on a high income.  (NOTE THAT THIS IS IN NO WAY TO BE CONSIDERED PROFESSIONAL ADVICE TO YOU...don't make me quote disclaimers at you). The difference between myself and the sort of planners and financial advisers that most people here refer to is that a) I charge fee's up front not trailing commissions b) I know how to do these things safely so that you don't get Stormified.

If any planner suggests double gearing IE drawing on your PPOR and then using a Margin Lending facility to "double up" (and there is nothing intrinsically wrong with the product of margin lending or concept of double gearing if used safely) examine what *risk management and optimization strategy* that the planner has put in place. S/he should have in place a reserve that is appropriate to your risk tolerance (and depending upon your risk tolerance this strategy of gearing your PPOR may not be appropriate for you at all), a cash flow analysis that takes into consideration what the effects of following such a strategy will be for you, an exit plan or longer term strategy to gradually achieve a) paying down the PPOR borrowings and/or b) paying down the Margin Lending facility; Hedging or risk minimisation strategies (and an estimate of cost of such "insurance").

You are far,far better off going directly to a reputable planner that will charge an up-front fee and not wasting your time with those that will charge you a commish in my opinion.

P.S. I'm not looking for clients - don't ask.

Cheers
Sir O


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## Jack Payback (13 May 2009)

*Re: Should I use a Financial Planner?*

"the only way they get their money is if they can *con*vince you to use a product from which they can draw a fee."

I like that.... (and I'm an FP!!!)

Seriously, if you don't feel comfortable with an adviser's recommendation, just don't do it. End of story. Keep your cash in the bank, it's your money not theirs.

If you go with an adviser's advice, make sure you read _everything_ you are given. It's the same as a mortgage contract, everyone with an issue gets caught out cos they never read the fine print.


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