Financial Planners Brought To Account

[Hodgie]

A case of client's taking things into their own hands. Not the best method of bringing a financial planner to account I might add.

http://www.ifa.com.au/news/14029-fi...aign=IFA_Newsflash09_12_2014&utm_medium=email

 

[Garpal Gumnut]

It is not often that I disagree with LNP Policy, but tonight's Senate vote putting the screws on Financial Planners and the Banks, will benefit every Investor in Australia.

Storm and Timbercorp should never be allowed happen again.

gg

From David Murray , Head of the Financial System Inquiry.

Rip-offs:
The inquiry wants to ensure people aren’t sold financial services, including insurance and financial planning products, they don’t need, don’t understand or don’t do what they are meant to.

Currently ASIC can only take action after a breach of the law. Murray wants ASIC to have new power to intervene earlier in the creation of financial productions, before potential damage to those sold the products. Part of this should be to require minimum education standards of financial advisers.

Beware of Financial Advisers.

Glossy Brochures, Fancy Offices and Advertisements on TV do not necessarily indicate that a Financial Adviser will be qualified or educated to a level to give appropriate Financial Advice.

gg

 

[sptrawler]

Well the new rules that will be applied to financial planners, should bring about some positive changes, but it will be tough on some of them.
Still that is the way the World is now, adapt or perish.

https://thewest.com.au/business/you...ur-financial-planner-will-face-ng-b881223334z

 

[tech/a]

Well the new rules that will be applied to financial planners, should bring about some positive changes, but it will be tough on some of them.
Still that is the way the World is now, adapt or perish.

https://thewest.com.au/business/you...ur-financial-planner-will-face-ng-b881223334z

Not before time.

Even so.
Can someone tell me why I should be taking advice on what to do with my Finances
from someone who is striving to be in my financial position.

On the other end of the scale
Why would someone who is trying to increase his financial position
Take advice from someone trying to increase his financial position?

I know 3 Financial advisers and have met with 2 others.
Not one has given me any useful financial advice. I hear lots of
Rhetoric about how it all works (Economics) but nothing that would benefit me.

But this is what I hear most

"So Tell me your story----how did you get to where you are today."
By this point they know where I'm at.

 

[Junior]

Not before time.

Even so.
Can someone tell me why I should be taking advice on what to do with my Finances
from someone who is striving to be in my financial position.

On the other end of the scale
Why would someone who is trying to increase his financial position
Take advice from someone trying to increase his financial position?

I know 3 Financial advisers and have met with 2 others.
Not one has given me any useful financial advice. I hear lots of
Rhetoric about how it all works (Economics) but nothing that would benefit me.

But this is what I hear most

"So Tell me your story----how did you get to where you are today."
By this point they know where I'm at.

From what I know about you on this forum, you would yield little to no benefit from seeing a financial adviser.

However, there are many out there who derive substantial benefit, for a variety of reasons and under a variety of circumstances.

 

[tech/a]

From what I know about you on this forum, you would yield little to no benefit from seeing a financial adviser.

However, there are many out there who derive substantial benefit, for a variety of reasons and under a variety of circumstances.

Junior
I get that and I know you are in the industry.

I also get that everyone has different circumstances
But My view is that they are basically very similar.
The above is the F/A F/P mantra we have to assess
where your at but you'll be where 90% of every other
working Australian is!

Very little savings and very little disposable income
regardless of how that is derived.

But in all seriousness lets say I'm 30
Saving for a home and have $50K put aside
I have a disposable residue income of $1000 a month.
I have no clue on finance.

What can you do to help me that COMMON sense
wont buy me?

(1) Increase my income to well over what I need.
(2) Where do I put it other than a Managed Fund.

I've never heard anything of value
I've sat in with my kids who are in the 95% similar
situation when they have had a consult.

No one has EVER answered directly these questions
(Which I asked by the way---got crickets and the standard
we don't have a crystal ball---Confidentiality ---line).

Should I buy my own home and why now or why not now?
How will I know when is good? Why own my home--why not
How would I handle finances going forward in each case?
How would it differ one to the other?

Should I buy a few Stocks or even A stock or A commodity.
Why/Why not? When WHICH ONE/S
Lots of babble about beating markets and risk but
NO ANSWER

Can you supply me with a few Clients names that I
can contact who have increased their net worth over
the last 5 years with you by 25% or more

That of course gets shut down with confidentiality
yet if I'm talking to a trade who I'm investing $1000s
with that's a fair call!! Or a Solicitor or a Dentist or
a Pilot.

Financial Advisers DON'T ADVISE they sell themselves and
product.

 

[tech/a]

Hahahaha.

I have to laugh
The response here to the questions above is the
same as I get in F/P offices.

Crickets!

The Financial Industry in my view is based around Smoke and Mirrors.
Lots of smoke to cloak an in ability to discover opportunity and not only
alert clients but THEMSELVES.
Inability to advise clients how to be prepared and what to do to take
advantage of opportunity.
Mirrors because they are forever looking back at the same old same old.

Fear of litigation---you'll NEVER get the advice for the opportunity you
need to find and act on.

 

[Junior]

Junior
Very little savings and very little disposable income
regardless of how that is derived.

But in all seriousness lets say I'm 30
Saving for a home and have $50K put aside
I have a disposable residue income of $1000 a month.
I have no clue on finance.

What can you do to help me that COMMON sense
wont buy me?

(1) Increase my income to well over what I need.
(2) Where do I put it other than a Managed Fund.

I've never heard anything of value
I've sat in with my kids who are in the 95% similar
situation when they have had a consult.

No one has EVER answered directly these questions
(Which I asked by the way---got crickets and the standard
we don't have a crystal ball---Confidentiality ---line).

Should I buy my own home and why now or why not now?
How will I know when is good? Why own my home--why not
How would I handle finances going forward in each case?
How would it differ one to the other?

Should I buy a few Stocks or even A stock or A commodity.
Why/Why not? When WHICH ONE/S
Lots of babble about beating markets and risk but
NO ANSWER

Can you supply me with a few Clients names that I
can contact who have increased their net worth over
the last 5 years with you by 25% or more

That of course gets shut down with confidentiality
yet if I'm talking to a trade who I'm investing $1000s
with that's a fair call!! Or a Solicitor or a Dentist or
a Pilot.

Financial Advisers DON'T ADVISE they sell themselves and
product.

Your idea of what a financial adviser can achieve is completely unrealistic. In fact, I've never known of anyone who can do what you have described....take someone with little savings, and little to no disposable income and make them wealthy in 5 years, or achieve a year in, year out return of 25% per annum, based on setting aside $1,000 per month. If you know anyone who can teach or advise others to do this, I'd love to meet them!

Common sense, and 'babble' about markets and risk might be a waste of time for you. But the vast majority of the population know next to nothing about investing, or superannuation, taking out a mortgage, personal insurance, cash flow management etc. etc.

Your point about oil....are you suggesting that a financial adviser should know that two tankers were about to blow up in Hormuz?

 

[Junior]

To respond further.

A 30 year old, saving for a home, does require simple common sense. I agree with you absolutely on that point. For the most part, that isn't someone who would derive significant benefit from an adviser...unless they were really clueless on the basics of personal cash flow management and how much they can/should borrow.

An example of a client who will benefit, are those 50+ who have accumulated some assets, as this is where rules pertaining to super & retirement become more complex. For most people the idea of retirement brings on anxiety. They don't know how much they spend, how much they need, how they should invest the assets they have accumulated and how long it will all last.

Another typical client who really needs guidance are women who have just been through divorce. Often, the husband controlled the family finances, and they have NO IDEA how to handle a lump sum settlement. They have teenage kids, are renting and often just trying to re-enter the workforce. They need a plan to make the money last and grow.

You can denigrate what I've said here if you like, but this is what I see every day at work.

wrt to picking stocks or commodities, financial advisers are not traders, and shouldn't represent themselves as such. We build portfolios based on requirements & client goals: timeframe, risk appetite, income or growth requirements, tax structure and then advise accordingly. Yes, we primarily use managed funds to achieve this. We aren't traders.

 

[tech/a]

Thanks for your reply J

Your idea of what a financial adviser can achieve is completely unrealistic. In fact, I've never known of anyone who can do what you have described....take someone with little savings, and little to no disposable income and make them wealthy in 5 years, or achieve a year in, year out return of 25% per annum, based on setting aside $1,000 per month. If you know anyone who can teach or advise others to do this, I'd love to meet them!

Have another read I suggested a mere 5% a year.

Common sense, and 'babble' about markets and risk might be a waste of time for you. But the vast majority of the population know next to nothing about investing, or superannuation, taking out a mortgage, personal insurance, cash flow management etc. etc.

Junior This is exactly my point---it all sounds impressive but Average Joe has to pay often $100s to
listen to rhetoric and then be shoved into a managed Fund. Because Joe Average knows NOTHING
and F/P knows that---smoke and Mirrors.

Your point about oil....are you suggesting that a financial adviser should know that two tankers were about to blow up in Hormuz?

It should be a topic of conversation which at the very least is out on a mail out explaining possible opportunities.

Under the pump right now (beer O clock back later for part 2)

 

[Junior]

Thanks for your reply J



Have another read I suggested a mere 5% a year.



Junior This is exactly my point---it all sounds impressive but Average Joe has to pay often $100s to
listen to rhetoric and then be shoved into a managed Fund. Because Joe Average knows NOTHING
and F/P knows that---smoke and Mirrors.



It should be a topic of conversation which at the very least is out on a mail out explaining possible opportunities.

Under the pump right now (beer O clock back later for part 2)

5% is far more reasonable.

Beer o'clock here too.

 

[willy1111]

Perhaps a misconception many have is that financial planners are investment experts.

They are not.

I've come to learn they are more wholostic, knowing the rules pertaining to minimising tax with the use of super/structures, maximising well fare benefits, looking at risk to ensure adequate insurance, estate planning and the like.

Even for wealthy people who pick their own investments, they may get value in a financial advisor understanding their position so that if they were suddenly no longer here, the spouse who has no interest in investing will have someone they can trust to turn to.

 

[tech/a]

Perhaps a misconception many have is that financial planners are investment experts.

They are not.

Absolutely right they aren't.
Why then do they portray the image that they are.
Just place your total retirement funds in X because your a little younger and have ticked the
happy with more risk box or Fund Y which is more conservative because you've ticked that box
Which of course I ascertained in my extensive questionnaire related to you and your needs that
has set you back between $500 and $1000

I've come to learn they are more wholostic, knowing the rules pertaining to minimising tax with the use of super/structures, maximising well fare benefits, looking at risk to ensure adequate insurance, estate planning and the like.

That's what Accountants do.
Would you really go to an F/P for estate planning that's what Estate Solicitors are for.
In both cases BETTER QUALIFIED advice and they can actually put things in place!!!

Even for wealthy people who pick their own investments, they may get value in a financial advisor understanding their position so that if they were suddenly no longer here, the spouse who has no interest in investing will have someone they can trust to turn to.

Wealthy people understand their position and how to look after their families financial future.
Through Accountants and Solicitors who in many cases are FRIENDS.
They would also educate their spouse and family on what to do who to trust and how to do it.
By the way
Not so wealthy people can do exactly the same thing without involving the smoke and Mirror
Wanna be's.

 

[Junior]

Absolutely right they aren't.
Why then do they portray the image that they are.
Just place your total retirement funds in X because your a little younger and have ticked the
happy with more risk box or Fund Y which is more conservative because you've ticked that box
Which of course I ascertained in my extensive questionnaire related to you and your needs that
has set you back between $500 and $1000

That's what Accountants do.
Would you really go to an F/P for estate planning that's what Estate Solicitors are for.
In both cases BETTER QUALIFIED advice and they can actually put things in place!!!

Wealthy people understand their position and how to look after their families financial future.
Through Accountants and Solicitors who in many cases are FRIENDS.
They would also educate their spouse and family on what to do who to trust and how to do it.
By the way
Not so wealthy people can do exactly the same thing without involving the smoke and Mirror
Wanna be's.

I comprehensively disagree that accountants are qualified in the areas you have stated. They are qualified to give TAX advice.....that's about it. I've experienced accountants who delve into those other areas, and for the most part it is a bad idea.

Personal Insurance - a financial adviser is by far the most qualified person to advise in this area. Most accountants have little clue around this. It's not just knowing what they types of cover are. It's structuring, needs analysis, knowing what features are worth paying for, and knowing how the underwriting process works, and then reviewing regularly to make sure you aren't over or under-insured. Even more critical are for small business owners...key person cover and insurance pertaining to buy/sell agreements.

Estate planning - I agree a solicitor is best. An adviser should flag areas to be addressed and then refer to a solicitor.

Super & investing - a good adviser will build a portfolio in the manner I've previously stated. Not day trading or playing in stocks and commodities, but allocating a pool of money or assets in the appropriate mix of asset classes. I do agree however, for the average person who's only invest-able assets are a modest super balance, they generally shouldn't take advice on how this should be invested....just select the growth option and move on.

Retirement planning - you haven't mentioned this, this is where an adviser can add massive value. Most accountants in my experience don't think ahead any further than the next financial year. It's all about tax, not a long term strategy.

Tax and structures - yes accountants are the best to take advice on this. Having said that, a properly qualified adviser will have strong knowledge in this area.

 

[tech/a]

I comprehensively disagree that accountants are qualified in the areas you have stated. They are qualified to give TAX advice.....that's about it. I've experienced accountants who delve into those other areas, and for the most part it is a bad idea.

Not talking about your H.R Block type of accountant. I'm talking of a CPA. Comparing a CPA to a F/P is like a Street fighter meeting McGregor.

Personal Insurance - a financial adviser is by far the most qualified person to advise in this area. Most accountants have little clue around this. It's not just knowing what they types of cover are. It's structuring, needs analysis, knowing what features are worth paying for, and knowing how the underwriting process works, and then reviewing regularly to make sure you aren't over or under-insured. Even more critical are for small business owners...key person cover and insurance pertaining to buy/sell agreements.

You've hit it on the head this is all they can do --- mind you most insurance agents are just as good with no fee!

Estate planning - I agree a solicitor is best. An adviser should flag areas to be addressed and then refer to a solicitor.

Tick.

Super & investing - a good adviser will build a portfolio in the manner I've previously stated. Not day trading or playing in stocks and commodities, but allocating a pool of money or assets in the appropriate mix of asset classes. I do agree however, for the average person who's only invest-able assets are a modest super balance, they generally shouldn't take advice on how this should be invested....just select the growth option and move on.

Well healed can sort out their own Annuities.
Joe Average is best suited to most Industry Funds.--No charge

Retirement planning - you haven't mentioned this, this is where an adviser can add massive value. Most accountants in my experience don't think ahead any further than the next financial year. It's all about tax, not a long term strategy.

Do you speak of Joe Average or the well healed business owner? Again CPA's are all over it.

Tax and structures - yes accountants are the best to take advice on this. Having said that, a properly qualified adviser will have strong knowledge in this area.

Well in 2024 perhaps there will be some Properly Qualified F/A's to give HR Block a Run for their tax money.

 

[Junior]

Not talking about your H.R Block type of accountant. I'm talking of a CPA. Comparing a CPA to a F/P is like a Street fighter meeting McGregor.



You've hit it on the head this is all they can do --- mind you most insurance agents are just as good with no fee!




Tick.



Well healed can sort out their own Annuities.
Joe Average is best suited to most Industry Funds.--No charge



Do you speak of Joe Average or the well healed business owner? Again CPA's are all over it.



Well in 2024 perhaps there will be some Properly Qualified F/A's to give HR Block a Run for their tax money.

I think you are comparing the worst FPs with the best accountants. I have yet to meet any of these accountants who are qualified and skilled across those areas you've specified.

We have CPAs from mid tier accounting firms here in melbourne, regularly referring their clients to us for investment & retirement planning advice, so clearly they know their limitations.

 

[tech/a]

I think you are comparing the worst FPs with the best accountants. I have yet to meet any of these accountants who are qualified and skilled across those areas you've specified.

We have CPAs from mid tier accounting firms here in melbourne, regularly referring their clients to us for investment & retirement planning advice, so clearly they know their limitations.

I think you have read that incorrectly.

I would suggest they refer the Mundane to those best qualified to handle it
while they look after the important stuff that you need to be qualified for.
It leaves them free to do better paid work.

It happens in all industries.

we dont handle projects under 20K---doesn't mean we cant do them
Id rather my guys tied up doing a 50K project than a 20K project that
takes almost as long as the 20K project to produce.

CPA's no different.
Do you seriously think that CPA's are only qualified for Tax advice?

 

[willy1111]

Absolutely right they aren't.
Why then do they portray the image that they are.
Just place your total retirement funds in X because your a little younger and have ticked the
happy with more risk box or Fund Y which is more conservative because you've ticked that box
Which of course I ascertained in my extensive questionnaire related to you and your needs that
has set you back between $500 and $1000



That's what Accountants do.
Would you really go to an F/P for estate planning that's what Estate Solicitors are for.
In both cases BETTER QUALIFIED advice and they can actually put things in place!!!



Wealthy people understand their position and how to look after their families financial future.
Through Accountants and Solicitors who in many cases are FRIENDS.
They would also educate their spouse and family on what to do who to trust and how to do it.
By the way
Not so wealthy people can do exactly the same thing without involving the smoke and Mirror
Wanna be's.

Yeah and most people can mow their own lawns, do their own landscaping and build their own retaining walls....doesn't mean they want to or should...and so an opportunity exists for businesses that can fill that gap.

I don't see it as any different to FP's, one just needs to understand what their role is and it ain't investment experts.

 

[tech/a]

And if it’s small enough we would encourage that
In fact we will supply the materials.

F/Ps aren’t CPA’s currently few are qualified to do much at all
General Solicitors aren’t Barristers.

So they basically sell basic things like insurances and give basic advice
Which you need to see experts for if you need anything more than basic.
In that case I agree.

 

[Junior]

I think you have read that incorrectly.

I would suggest they refer the Mundane to those best qualified to handle it
while they look after the important stuff that you need to be qualified for.
It leaves them free to do better paid work.

Refer the mundane?

CPAs aren't legally authorised or qualified to provide investment advice or financial advice in Australia.

If you go to a CPA with $1mill to invest, they can't tell you where to invest it. Hence many will refer you on to a FP.

Furthermore you talk of wealthy people and their solicitors giving advice.... Solicitors are notoriously terrible with financial matters and generally unsophisticated in this area. Perhaps you have some savvy CPA and solicitor mates, and if so they are the exception not the norm.