A Betrayal of Trust

[MrBurns]

Name one I'm interested

 

[McLovin]

That's true and the key is value for money, so ask the financial adviser to demonstrate why you should pay them?

And how will he/she demonstrate that?

 

[Andrew Newman]

Name one I'm interested

Well me of course.

 

[Andrew Newman]

And how will he/she demonstrate that?

This will be different for each client.

For example, recommending a strategy to save $5,000 per year in tax that the client wasn't aware of.

Another example, recommending a portfolio that outperforms the market to provide $20,000 of value.

The list goes on....

 

[Andrew Newman]

Just going back to the Four Corners documentary "A Betrayal of Trust", if each of the people followed the 3 criteria I provided for conflict free advice, they could have avoided those investments.

 

[gav]

I don't believe getting rid of AFSL's would fix the problem. Just because something is not working, does not mean you have to get rid of it. Financial advice in Australia needs to be fixed starting with better regulations. The process has started and will take some time.

I can appreciate why the public has distrust for financial advisers. However, there are some, although not many honest financial advisers, who provide value for money and conflict free advice.

For conflict free advice, your financial adviser should satisfy the following 3 criteria:

1. They don't have ownership links or affiliations with any product manufacturers. (I have read that about 80% of the financial planners in Australia are affiliated with a product manufacturer)

2. They don't receive commissions or incentive payments from investment products. (can be rebated)

3. They don't charge a percentage of your assets. (this is really a commission disguised as a fee)

Personally I'd prefer the financial advisor have what Nassim Taleb refers to as "skin in the game". Instead of just benefiting from the upside, the advisor should also personally suffer from any downside for their recommendations.

Otherwise, you may as well just watch Jim Cramer.

 

[tech/a]

I don't believe getting rid of AFSL's would fix the problem. Just because something is not working, does not mean you have to get rid of it. Financial advice in Australia needs to be fixed starting with better regulations. The process has started and will take some time.

I can appreciate why the public has distrust for financial advisers. However, there are some, although not many honest financial advisers, who provide value for money and conflict free advice.

For conflict free advice, your financial adviser should satisfy the following 3 criteria:

1. They don't have ownership links or affiliations with any product manufacturers. (I have read that about 80% of the financial planners in Australia are affiliated with a product manufacturer)

2. They don't receive commissions or incentive payments from investment products. (can be rebated)

3. They don't charge a percentage of your assets. (this is really a commission disguised as a fee)

Got my vote.

Most Financial Planners aren't as wealthy or financially savvy as some of their clients.

Those that are are so hog tied by regulation that they can't really advise---forever aware of possible litigation at best and failure of their advice and hen failure of business at worst.
Can't think of a worst profession!

 

[inyaface]

Got my vote.

Most Financial Planners aren't as wealthy or financially savvy as some of their clients.

Those that are are so hog tied by regulation that they can't really advise---forever aware of possible litigation at best and failure of their advice and hen failure of business at worst.
Can't think of a worst profession!

Just met my first financial advisor. He was honest enough that he probably won't be able to come close to what I have been achieving myself. Had a wonderful chat though for 1.5 hour about possible share options and his and my own choices we made so far.

 

[princeplanet]

My FA caused me and many others to lose much of their life savings. Some of the others got in first and sued, ending in a payout from the insurance company. By the time I put my hand out the funds had run out and the company pulled a "Pheonix". A couple of law firms said it'd be too risky to try to get compensation.
I always thought that any FA would not dare do anything unconscionable, and that regulators like the ASIC would keep them in line, I don't care how common the problem ended up being, it's WRONG.

When I think of the tens of thousands of hours I worked hard to save for my retirement and realise that a shrewd FA threw it away carelessly whilst still profiting from my huge losses, it naturally makes my blood boil. The fact that it happened to many others doesn't make it any better...

There should be a regulator I can take this complaint to that has the time and resources to compensate me and punish the FA. If someone stole my wallet, even if I walked down a risky dark alley at night, there is somewhere I can go to try to find and punish the offender, and maybe get reunited with my money. What my FA did was 1000 times worse, and he walks free..... What, you wanna defend him?

 

[lusk]

In that 4 corners report it talks about LM investments using new clients money to
provide returns for current clients. Isn't that a PONZI

 

[Andrew Newman]

Personally I'd prefer the financial advisor have what Nassim Taleb refers to as "skin in the game". Instead of just benefiting from the upside, the advisor should also personally suffer from any downside for their recommendations. Otherwise, you may as well just watch Jim Cramer.

If the financial adviser, his family, friends and clients all had a similar portfolio, would that be reasonable?

Those that are are so hog tied by regulation that they can't really advise---forever aware of possible litigation at best and failure of their advice and hen failure of business at worst.

That is exactly why conflict free advice is so important.

 

[Andrew Newman]

In that 4 corners report it talks about LM investments using new clients money to
provide returns for current clients. Isn't that a PONZI

I was thinking the same thing when I watched the documentary.