Fair call Julia, definitely a possibility....I never would have thought the car comment would have taken over the thread as it has lol. That's Awesome!
Financial advisors don't advise...
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Fair call Julia, definitely a possibility....I never would have thought the car comment would have taken over the thread as it has lol. That's Awesome!
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Good post, I can relate to this. I could be in Melbourne on a good salary accumulating wealth and driving a sweet car with a $60,000 lease. I decided to travel the world and earn f***-all instead. Clearly there's many out there who will judge me as being financially inept because of my priorities!!
OP, please give some info re the advice, I'm intrigued now!!! Allow me to guess at least:
- Rollover your super into my preferred fund (with no sound basis for advice other than 'more investment options', 'tailer your portfolio so that it's aligned with your tolerance to risk')
- Purchase $1mill Life & TPD, premium Income Protection policy, $300k Trauma (upfront commissions...mmmmm)
- SOA preparation fee $1,000
- Implementation fee $1,000
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Even worse is making the assumption that someone has achieved their wealth by acting in the best interests of their clients.
A great salesman is not necessarily beneficial to your own finances. Or put it another way, are the advisers returns maximised when his/her clients are? I think not!
Yep, I'd say that's a pretty typical snapshot of what advice for Jack and Jill Average looks like. Get insured, sort your superannuation out and maybe help pay for your insurance with it.
It doesn't cost much more to get yourself a plan that covers property purchases, savings plans, an investment portfolio for the kids or the grandkids futures, margin lending, investment lending or retirement planning. These things aren't always relevant - some people really would just be better off by starting off with the basics - get yourself insured, and sort your super out!
The problem is that documenting a simple plan in an SoA costs more than creating it.
On the note of upfront commissions: I've never seen anyone in my workplace write a level commission policy because very rarely do peoples lives look the same in 4 or 5 years as they do on the day you write the policy. Debt levels are often much higher, income increased much more than inflation on the IP policy, the cost of medical treatment as well as increased debt levels and more dependents renders old trauma cover inadequate etc etc. You go to compare the policy to newer policies and find out that for a similar price you can not get extra features. Insurance policies are just products too - they change features and price points as they try to one up competitors.
Air con and power windows used to be luxuries in a car - now a car without sat nav and parking sensors is skimping on features.
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Sorry Joe to harp on about the car, but this point frustrates me.
It is tall poppy syndrome at its finest. We dislike people who buy expensive cars because it's a waste of money and something most of us don't feel comfortable about spending/wasting money on.
The point isn't whether it is a good investment
To buy an expensive car you either need wealth or good earning capacity. Simple. A range rover, for example, on a 3 year lease will still cost approx $5k per month. If someone can spend this just on a car this indicates to me they have good earning capacity.
There will be some isolated examples where a person manages to spend their entire wealth or monthly income on a car. As a whole, however, I think it's a safe criteria to test if someone is successful. The test doesn't work the other way - It doesn't mean that people with bad cars aren't wealthy, there would be plenty of people with cheap cars who are wealthy.
It is tall poppy syndrome at its finest. We dislike people who buy expensive cars because it's a waste of money and something most of us don't feel comfortable about spending/wasting money on.
The point isn't whether it is a good investment
To buy an expensive car you either need wealth or good earning capacity. Simple. A range rover, for example, on a 3 year lease will still cost approx $5k per month. If someone can spend this just on a car this indicates to me they have good earning capacity.
There will be some isolated examples where a person manages to spend their entire wealth or monthly income on a car. As a whole, however, I think it's a safe criteria to test if someone is successful. The test doesn't work the other way - It doesn't mean that people with bad cars aren't wealthy, there would be plenty of people with cheap cars who are wealthy.
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It's still irrelevant. I can find you lots of conmen who drive nice cars too. And with those fat commissions, fa's who steered their clients into Storm I'm sure could also afford the monthly payments on a Range Rover. A financial adviser is not necessarily incentivised to maximise your returns. In the same way a broker makes his money by churning your account with endless buy/sell "recommendation".
That's why the whole car thing is a pointless exercise. Perhaps it confirms they can make money, it says nothing of whether they can make you money.
I don't think luxury cars are a waste of money - you're absolutely right, everything is relative and given enough income a luxury car is not a terrible decision. You'd still be paying a lump sum or borrowing non-deductible debt that has an opportunity cost of the same dollars worth of growth assets, but if you have enough wealth then why not?
Anyone that uses that as a measure of someones ability likely does so because they lack the knowledge to make a useful or meaningful evaluation of someone's ability. In a business where your hardest task is often articulating the value of what you do to people that don't understand why it's important, if they rate you on your car what are the odds they can understand the concept that losing 2% when everyone else loses 4% is actually a good outcome? Not good imo.
Anyone that uses that as a measure of someones ability likely does so because they lack the knowledge to make a useful or meaningful evaluation of someone's ability. In a business where your hardest task is often articulating the value of what you do to people that don't understand why it's important, if they rate you on your car what are the odds they can understand the concept that losing 2% when everyone else loses 4% is actually a good outcome? Not good imo.
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depends what you mean by 'afford it'. If you mean get to the stage where 170k is an irrelvance to you , for sure, when you're worth 10m. If you mean have >= 170k in the bank right now , you could buy it but might not be very sensible. If you mean earns some amount greater than the monthly repayments, some would some wouldnt, some mistake that for being able to 'afford it '.
Originally Posted by Julia
eh, what does a blokes housing status got to do with it now? Are we now to expand the theme by linking renting with owing a boring car with financial incompetence ?
I rent a house and only have a car worth 18k so according to this thread I must be a financial muppet. oops.
...... or I maybe I really am just the village idiot
Garpal Gumnut
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I believe Financial Advisers are essential for the brain dead without internet skills and the ability to do 101 courses on money management free online via google.
Many financial advisers are good for this type of investor.
History though is replete with the muppets of financial advice capable of destroying investor wealth.
Storm Financial is a good example.
So I would agree that Financial Advisers have a place.
The problem is finding a good one, one who is skilled, ethical and capable.
it is impossible to assess from the Financial Advice industry, which are good and which are bad.
ASIC is a useless determining body, applying insignificant penalties to crooks, incompetents and low IQ Financial Advisers, post hoc.
It is a matter of buyer beware.
One has a better chance of finding a good barber than one has of finding a good financial adviser.
And a bad haircut only costs $20 from the former.
gg
Many financial advisers are good for this type of investor.
History though is replete with the muppets of financial advice capable of destroying investor wealth.
Storm Financial is a good example.
So I would agree that Financial Advisers have a place.
The problem is finding a good one, one who is skilled, ethical and capable.
it is impossible to assess from the Financial Advice industry, which are good and which are bad.
ASIC is a useless determining body, applying insignificant penalties to crooks, incompetents and low IQ Financial Advisers, post hoc.
It is a matter of buyer beware.
One has a better chance of finding a good barber than one has of finding a good financial adviser.
And a bad haircut only costs $20 from the former.
gg
Julia
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Sigh. Just suggesting equating superficial observations with any conclusions about a person's financial competence or otherwise is not valid.
I'm not interested in whether anyone rents cars, houses or anything else. What matters is that they have made a considered decision that their choice represents the optimal use of available funds.
Not everyone wants to own a house. Plenty of examples have been put forward to show it's financially more rewarding to rent. Others will find value other than just the financial aspect in owning their own home.
My point was re the house potentially being rented that (if the example of the Honda Civic was any guide) the OP would seem to conclude if his FA was living in an opulent residence, then ergo this would be proof of his financial acumen.
Just trying to say it ain't necessarily so.
OK, then? Any other sensitivities I should address?
Garpal Gumnut
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Agree Julia.
It is a circular argument.
The rich or poor never drive cars indicating their wealth.
i would distrust a financial adviser whether he had a Honda Civic or in the case of Manny and Julia Cassimatis, a private jet.
May we return to the advice , rather than the mode of transport.
gg
I’ve bitten my tongue (or fingers or whatever!) reading the various adviser bashing threads on here, and just wanted to add my 2c speaking as a BANK adviser.
There are plenty of **** advisers out there who will use anything as reasonable basis to get a client into their products. This is not just limited to bank FA’s. Best interest duty will go a long way to stop this.
Not all bank advisers have to use their own financial products only. I work for a second tier bank that is owned by one of the big 4, and my APL includes OnePath, Asteron, MLC, Comminsure, AMP, Colonial First State and Asgard. As well as this I am able to provide advice on and recommend changes to any existing super funds that the client has, including industry funds.
Just because you guys don’t need advice, doesn’t mean no one does. Yes there are limitations and I’m sure that everyone here would be able to outperform all of my client’s portfolio of managed funds. However, this forum is in no way representative of the general population.
Please remember that the majority of people are scared ****less of financial matters, and yet they are forced to be involved due to the superannuation system. Most people’s only investment assets are their super (I don’t count 80% of the ‘investment’ properties I see as I struggle to see how anything with an LVR of >90% can be called as such. If you want to have a go at banks, that’s what you should be focusing on).
I can help people gain a little bit of understanding as to where they are going to be in retirement and how they are going to pay the bills, save them a few thousand bucks a year in fees and tax, make sure they have protection in place so that they don’t leave their families SCREWED if they died, and turn a profit for our business in the process. Why should I be vilified for that?
There are plenty of **** advisers out there who will use anything as reasonable basis to get a client into their products. This is not just limited to bank FA’s. Best interest duty will go a long way to stop this.
Not all bank advisers have to use their own financial products only. I work for a second tier bank that is owned by one of the big 4, and my APL includes OnePath, Asteron, MLC, Comminsure, AMP, Colonial First State and Asgard. As well as this I am able to provide advice on and recommend changes to any existing super funds that the client has, including industry funds.
Just because you guys don’t need advice, doesn’t mean no one does. Yes there are limitations and I’m sure that everyone here would be able to outperform all of my client’s portfolio of managed funds. However, this forum is in no way representative of the general population.
Please remember that the majority of people are scared ****less of financial matters, and yet they are forced to be involved due to the superannuation system. Most people’s only investment assets are their super (I don’t count 80% of the ‘investment’ properties I see as I struggle to see how anything with an LVR of >90% can be called as such. If you want to have a go at banks, that’s what you should be focusing on).
I can help people gain a little bit of understanding as to where they are going to be in retirement and how they are going to pay the bills, save them a few thousand bucks a year in fees and tax, make sure they have protection in place so that they don’t leave their families SCREWED if they died, and turn a profit for our business in the process. Why should I be vilified for that?
Julia
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You make some really valid points, especially that those of us who are critical of some advisers are not representative of the greater population.
One thing I've never been able to understand is how otherwise intelligent, well educated people, successful and diligent in their own field, just abrogate the responsibility of taking care of their financial well being.
Apologies to you for quite wrongly maligning your efforts.
One thing I've never been able to understand is how otherwise intelligent, well educated people, successful and diligent in their own field, just abrogate the responsibility of taking care of their financial well being.
Apologies to you for quite wrongly maligning your efforts.
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Good post, all valid points and highlight how some financial planners legitimately improve their clients' financial position.
I'm in the industry myself and know a few great planners. It's just frustrating how many poor/average ones give the industry a bad name.
Julia, I agree with what you're saying, but the fact is a large proportion of the population won't or can't manage their financial situation effectively.
Everyone is different, and possess different skill sets. For example, do you remember some of the kids in high school, and their total inability to understand basic maths? If you can't grasp basic maths...putting together a retirement plan or comparing superannuation providers is totally unachievable.
An ethical and well qualified financial planner can have a positive impact for some of those out there who can't work these things out for themselves.
Julia
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jmoz, just wondering what your response would be (seeing you haven't made one on the thread) to Tech/A's questions here:
https://www.aussiestockforums.com/forums/showthread.php?t=26732&p=771191#post771191
Is that list asking too much of a financial adviser in your opinion? Are they questions to which someone approaching their bank's FA could reasonably expect answers?
(No obligation to respond, of course.)
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If my financial advisor drove around in a 100k BMW, I wouldn't trust him with my money.
Buying a new car is one of the worst financial decisions you can make!
In other words - you want someone who leads by example....
agree 100%, i believe that the chances of an asic ban increase exponentially with any adviser driving a car worth more than $100k!
julia, have added my thoughts on tech/a's thread, cheers
