The comments are 100% accurate. If only more people would accept the reality instead of continuing to imagine all financial advisers and fund managers have the clients' best interests at heart.
(As always, I absolutely acknowledge that there are decent, honest people in these roles. The problem is that, without any basic financial literacy, it's very difficult for the average person to discern the competence or otherwise of these advisers).
On the Storm Financial thread, it has repeatedly been claimed that "we should be able to trust absolutely the advice of any licensed financial planner/adviser". Yes. In a perfect world, we should all be able to trust that anyone with a qualification in any field will be competent, have integrity, and act in our best interests.
But we do not live in a perfect world and need to deal with the reality that shonky operators abound in all fields, including that of finance, and take this into account when making financial decisions.
I'm still incredulous that it was considered necessary to legislate that "advisers must act in the best interests of their clients" in the wake of the enquiry. That said it all imo.
I understand the anger at losing money, and the reaction to cry for more legislation, but truly, a superior response is to encourage more people to take personal responsibility for their own financial outcomes.
There is, I think, a misconception that this is far more complicated and difficult than it actually is, perhaps due to such an esoteric notion being promoted by professional advisers in order to protect their own position.
Congratulations, k.smith, on deciding to take charge of your own financial situation. Absolutely no one will have a greater interest in its success than you.
The problem is we thought we WERE in charge. And I wonder how many SMSF investors at the moment who haven't suffered loss believe they are in charge?
I bet a lot of investors at Banksia thought they were in charge until a month or so ago.
So how do you think you should sell financial literacy to people who think that they are "in charge"? And how many will actual understand the concepts? And who will judge if they are compliant? And where do they invest all those super contributions for their future if they aren't?
Just because YOU can achieve a certain degree of financial literacy does not mean that all 468,000 SMSF trustees can, especially faced with having to "..deal with the reality that shonky operators abound in all fields.." How will you educate all those 468,000 trustees to spot shonks? Even the auditors can't !!!
The fact is that the industry super funds are returning zilch, and that in part has contributed to an unbelievable surge in SMSFs. Last year they increased in numbers by 7%. So where do they go for advice? to financial planners?
Recent research by ASIC about financial advisers and fund managers imo just compounds the problem.
http://www.abc.net.au/news/2012-03-28/asic-raps-financial-planners-over-advice/3917290
''... rated just over a third of the advice given as poor, with just two examples of advice rated as "good quality".
I think investors will choose to rely more on their own strategies as reports such as this have been so prevalent.
With all those 468,000 trustees around, imo enough to incite a new flurry of schemes and dreams.
DANGER, DANGER.
When we placed funds from our "regulated" SMSF into these schemes we interpreted the fact that we could do so as an endorsement by the regulators.
All the funds we invested in carried an AFSL, they were all registered companies with ASIC.
It wasn't until some time after "the tide went out" that we realised that we were on our own in a scheme regulated by ASIC, but not
prudentially regulated by ASIC.
And that there were MANY of us in similar circumstances, from all different backgrounds, including educational.
Here's some stats about frozen funds... Banksia, the latest casualty, of course does not show up yet, that is still to come. And there will be more asset writedowns.
http://www.asic.gov.au/asic/pdflib.n...management.pdf
''....Current frozen fund estimates
Based on the most recent data available to ASIC (at November 2011), we estimate that FUM that are considered frozen have declined to $15.26 billion from a high of $25.36 billion in November 2009...''
''....Since November 2009, frozen FUM have declined through periodic withdrawal offers, as well as $127 million of hardship redemptions and
asset write-downs. Of the current total frozen FUM of $15.26 billion, funds worth $6.0 billion have been restructured with member approval or are winding up their schemes...''
So "Congratulations" ? no congratulations, thanks...the more I have learnt, the more I realise what I don't know..
Unless these funds are regulated by APRA, it will just keep happening. SMSFs shouldn't have exposure to risk where they can loss not just part, but ALL of their investment. In the case of the MIS schemes that we are involved with, the actually amounts retrieved to date after all those
asset write-downs are very little, and the expenses paid huge. Furthermore, when MIS funds freeze, we are at the mercy of every scheme in the book to separate us from our legal rights to redemptions and to be treated equally as per the Corporations Act, and to this day we continue to face this alone. And no, I am not angry or crying. I know that the world is not a perfect place. Everyone is different.
http://www.indiana.edu/~intell/bellcurve.shtml
''...."Inequality of endowments, including intelligence, is a reality. Trying to pretend that inequality does not really exist has led to disaster. Trying to eradicate inequality with artificially manufactured outcomes has led to disaster.