Financial Planners

[Trembling Hand]

I wanted a fee-for-service model, and would be prepared to pay high hourly rates.

Also I wanted an advisor that could comment on Tax, Superannuation and Share market advice, as well as general advice.

I could only find 2 that were remotely suitable, both fully independant.
One was excellent, a CPA, SMSF specialist and hot shot share picker ( according to him)...he charged a commission tho, which he offered to halve.

Why not look for two different people rather than an all in one.

A good account to administer and do the Tax stuff and
and a good full service broker. They are out there. Somewhere.

If you have a fair bit of $$ you should be looking and able to pay for specialist.

 

[awg]

I agree Trembling H, that it is a good idea to have a relationship with at least one broker.

I should have mentioned in my previous post that I do, for various reasons, use a broker quite often, as well as online trades.

I suppose it is very much my wishful thinking, to get the perfect all-round wiz, at a low price!

I still reckon there would be a good niche market for such a service. Solicitors & Accountants do alright on a good hourly fee structure.

Maybe it is too hard for real independants?, there is a lot to know, a lot of responsibility, and you would be concerned about being sued, when some random market force inevitably crashed into your advice. The legal protection provided by working for the larger firms would be reassuring

I am curious what % of users of this list utilise a financial planner,
I think it would be fairly small.

I do not mean to disparage financial planners in any way.
It is a neccesary service for many people.

regards tony

 

[tech/a]

Ive been talking on this topic over on this thread
https://www.aussiestockforums.com/forums/showthread.php?p=265438#post265438

Thats not the place for the topic.
So important is the topic of self sufficiency on retirement and those who are there to supposedly guide us that I'm going to continue here.

Firstly to the 2 posts I wish to address specifically

Temjin

Tech/A, I can sort of understand you because I have been in your position before (for a short while). That is, being quite biased against the so called "professional financial advisers" because I felt they don't know how to advise their clients to act on opportunities to produce "wealth". (i.e. identify the bull run in properties, identify the opportunities in share trading, identify resource boom, etc) I was also against their risk management and investment advise, that is to diversify and invest for the long term. (buy and hold) And then their salesman attitude to maximise commissions and to make recommendations not in the best interest of their clients.

As someone for me who is very much into future/forex tradings, and investment in "a single basket" without much diversification, I am actually trying to change my career into the financial planning industry even with those biases.

The fact is, FINANCIAL ADVISERS have NEVER been responsible for helping their clients to speculate and/or recommend actions on opportunities based on predicting economic cycle turn around and/or other contrarian "alternative, non-mainstream" investments. This include trading and how to succeed in it. They are not here to help you to create extraordinary wealth, and I never expected to see anyone who would give you that advise in the first place.

If you want a "professional" to help you with that, then well, I doubt there is anyone out there that could help you. Maybe the best person you could talk to on "investment ideas" is YOURSELF.

The fact is that a great majority of the population are not spectuators or professional/dedicated investors. Even highly successful entreprenuers are not as investment minded and focus more on their business. This is where financial advisers come into play, to assist them with "general" strategies to protect wealth, minimise tax and basic wealth creation.

The stuff that a lot of us are doing, speculations in shares/futures, properties, are not mainstream stuff. Mums and dads, rich retirees, and successful businessman do not want advise in such stuff. Maybe they do, but why would any financial advisor would put themselve and their career at risk by advising on speculating for massive wealth creation?

Maybe your circumstance do not require the service of any financial planner. A specialist in taxation, accounting, legal stuff or business planning might be more suitable for you and your investments.

But I agree with Tom still, there ARE some high quality financial advisors out there who aren't just trying to hard sell their "recommended list of products" just for the sake of commission. I don't plan to be that at all, hate to be a hard sale guy anyway. (that's why I hate those credit cards salespeople)

My 2 cents worth.

And Tom

OK; I'm not going to engage in a long OT discussion about what financial planners should or should not do according to some people's opinions. I think Temjin has made some good points in his post, so I'll leave it at that.

Perhaps just a short addendum for the benefit of tech/a:

You may have good reasons for disliking financial planners and as I pointed out in my previous post, many of those reasons are fully justified. However what you would clearly like to see financial planners deliver is simply not going to happen for all sorts of reasons, several of them being legislative ones.

Financial planning is one of the most tightly regulated industries out there and unless you are very familiar with the regulatory framework, you will simply have no appreciation of the fact that no Australian Financial Services licensee will allow you to provide the type of service/approach to investing you clearly favour; regardless of whether you as a professional are able work that way & deliver for your clients or not.

If you advise a client to concentrate all his/her investment assets into one asset class, you will get into trouble because no AFSL licensee compliance officer will let you do that. Even if you get your own licence, you will be playing with fire because you can never be certain that a black swan event will not occur, which will wipe your client out. Consequently no professional indemnity insurer will cover you when you inevitably get sued.

Unfortunately - or perhaps fortunately, depending on one's POW - we all have to comply with lots of regulations many of which we sometimes do not agree with. That is the condition of obtaining and working under an AFS licence.

With respect to your comment about how a good accountant could give the sort of tax advice I mentioned before: Sure s/he could. But show me one who will. The majority of accountants are reactive rather than proactive and not trained to employ creative thinking. You may not believe me, but as a SMSF specialist I deal with accountants all the time, so I do know what I'm talking about.

Anyway, enough on this topic. It was not my intention to divert this thread from property to financial planning; these have been responses to some points raised by others.

I'm going away overseas for the next 3 weeks so there will be no further postings from me for at least that long. I mention this so nobody thinks that I ignore private messages or other relevant posts.

Cheers,

Tom R

Points raised by each are indeed very important for all of us.
The TRUTH is that even if they could work (Financial advisers/planners) un tethered---the best we can expect is on the longterm mediocure results in our investments---to out perform the market by a few % is the accepted barometer for success in the minds of most clients and certainly in the minds of advisors. But what about when those managed funds underperform and often for years? Diversify---into what?

Not only that but the biggest problem I see with Super is that by putting away as much as we can for the tax breaks we lose one of the most powerful tools we have. Capital base and leverage.

Due to charater length I'll post more below.

 

[tech/a]

we lose one of the most powerful tools we have. Capital base and leverage.

Once in Super we cannot leverage like we can when we have the same funds in equity or spare capital.
We cant take advantage of that Margin account or take advantage of that property deal (on 20% down)---even if its in 10 years time! We cant buy that business for passive income.

Those that work in the Financial industry have exactly the same problem we all have.96% of us are going to come to retirement age with a very sad lack of funds to see us through the hopefully 30 years of retirement we have worked our butts off for.

Let alone enjoying it with no care about money.
I came to this blinding flash of the obvious at 40,after going through a Midlife crisis---realizing that after 18 yrs of working for myself I had precious little to show for it.

So like all of us I searched out Financial advice---leading me to have absolutely no faith in these experts guiding me to financial mediocrity.

They did however concrete in my mind that there were only THREE mass creators of wealth available to the common man.
(1) Working for yourself and building your own "Empire"---I wasnt very good at this.

(2) Property----Id tried and failed.

(3) Shares----knew less than nothing.

So with no joy from the Financial sector what to do?

My solution was to actively search out MENTORS (No Wayne I do not wish to be ANYONES mentor!).

I wanted and still actively search out people with a proven track record in the specialty in each sector listed above. I'm more than happy---NOW-- to pay these people for their time.

As an example in the Business sector I had trouble growing my business beyond a few employees.I seached out someone who had grown and was still growing their business well beyond my wildest dreams.

It cost me a phone call and lunch.
This is what I learnt and it stood my Business on its head.

"You MUST HAVE the right people in the right position,if you dont have the right people find them,if you have people now in the wrong position place them in the correct one"

No Financial Planner or Advisory would have given me such a gem.The majority of them could have more than benifited from the exact same advice.

My point is simple
Take care of your future---yourself---there is no one better qualified.
So become the RIGHT person in the RIGHT job of securing your financial future.

We all will need passive income and if we get good at even one of the three listed above this is where you'll find it in abundance.
Annuities wont supply it in abundance.

 

[Temjin]

we lose one of the most powerful tools we have. Capital base and leverage.

Once in Super we cannot leverage like we can when we have the same funds in equity or spare capital.
We cant take advantage of that Margin account or take advantage of that property deal (on 20% down)---even if its in 10 years time! We cant buy that business for passive income.

Robert Kiyosaki's teaching - Using OPM (Other People Money) and Leverage.

The fact is that leveraging is inherently risky for the majority of the population who are risk adverse and do not possess the necessary financial intelligent to manage the risk.

Super is probably the only way for them to maintain their wealth through to retirement via favourable tax treatment. If you want to create massive wealth, then one has to look elsewhere.

Those that work in the Financial industry have exactly the same problem we all have.96% of us are going to come to retirement age with a very sad lack of funds to see us through the hopefully 30 years of retirement we have worked our butts off for.

Let alone enjoying it with no care about money.
I came to this blinding flash of the obvious at 40,after going through a Midlife crisis---realizing that after 18 yrs of working for myself I had precious little to show for it.

Sadly, that is so true for the majority of the people coming into retirement soon. That's including my parents and one of the main reason why I need to accelerate my wealth to make sure they maintain their standard of living after retirement.

So like all of us I searched out Financial advice---leading me to have absolutely no faith in these experts guiding me to financial mediocrity.

Is this what I think of what others think of financial advisors? That they are the ONLY solution to your financial problems? That if they can't help you, then no one else can? That they will make you "rich" and be ahead of the average group?

Unfortunately, this is not the way how financial advisors work, and will never be. The fact is that the majority of the population probably do not possess the ability to maintain their portfolio (if any) at even medicore level. (i.e. average market growth rate) Nor have the knowledge to minimise their taxation obligations. This is where advisors come into play here, to maintain their mediocrity by making maximise use of their wealth in the most practical and "legal" way.

They did however concrete in my mind that there were only THREE mass creators of wealth available to the common man.
(1) Working for yourself and building your own "Empire"---I wasnt very good at this.

(2) Property----Id tried and failed.

(3) Shares----knew less than nothing.

So with no joy from the Financial sector what to do?

My solution was to actively search out MENTORS (No Wayne I do not wish to be ANYONES mentor!).

I agree, the only way to create massive wealth beyond mainstream advise is to do something different and don't follow the herd. One need to be prepared to take additional risk that otherwise be viewed as "inappropriate" from majority of the financial planners. For reasons what Tom have said already, regulations and policies and in consideration of the person's ability and knowledge to take that risk.

It is either create your own business and produce wealth.

Or invest and grow your wealth.

Both can be magnified by using other people time or money through leveraging. And in managing risk and maintaining that competitive advantage.

My point is simple
Take care of your future---yourself---there is no one better qualified.
So become the RIGHT person in the RIGHT job of securing your financial future.

That is always true in a lot of case.

Unfortunately, and again, the majority of the population is not even qualified of securing their own financial futures. To think about creating massive wealth for them is simply impossible.

Anyone will benefit from the advises from a qualified and professional, ethic financial planner. If one wish to take risk beyond what a planner is able (and restricted) to advise you, then you will be the only one who is responsible to make it happen.

 

[Insan3]

Unfortunately, this is not the way how financial advisors work, and will never be. The fact is that the majority of the population probably do not possess the ability to maintain their portfolio (if any) at even medicore level. (i.e. average market growth rate) Nor have the knowledge to minimise their taxation obligations. This is where advisors come into play here, to maintain their mediocrity by making maximise use of their wealth in the most practical and "legal" way.
......

Unfortunately, and again, the majority of the population is not even qualified of securing their own financial futures.

Temjin, I think this is the most important thing people on this forum need to realise.

I'm another who is studying Dip.FP with an aim to move into Paraplanning.

Of course, people on Investment forums will not see the benefit in seeing a Planner, due to the 'Insurance Salesman' types still out there. They feel they can do it themselves - And I believe they can. People who are interested in Investment Forums, Investment Mags, Seminars, Annual reports, etc are going to teach themselves many, many things and can become quite successful from this.

This is the same for many things - can teach yourself to sew, cook, run a business - As long as you have a high level of interest, you can do many things yourself.

I feel Financial Planners are going to prove important for the remaining 99% of the population. The $100k/yr Tradies who read People mag instead of FinReview, the Doctors who work too much to learn anything else, the vast majority of the population who treat the financials on the news as the beginning of the ads and walk away.

I've seen it in my own circle of family and friends... my parents who took Investment advice from an Accountant to minimise Tax - Created a $50,000 loss when their Agri Investment died in the drought (and they are low risk tolerant - won't buy shares - and they were talked into AGRI!!!) My successful friends in great jobs who can't seem to afford anything other than their BMW, and have 0 growth assets.

People in general don't realise how low the pension is... or the issues that we will face in the coming decades when the ratio of workersensions moves from 4:1 to 2.5:1. will the 2.5 have to pay more taxes to support the retirees? I don't think so..... The view of an FP is not to help the super-rich, or to make you super-rich, but to help make sure that when age 60 rolls around, you aren't eating canned food.... It's all about keeping things comfortable and balanced by investing in areas to keep ahead of inflation, etc, Financial Planning is not a get-rich plan, it's a 'not living on the poverty line if the $hit-hits-the-fan' plan......

These people need to be told about Diversification, Risk Tolerance, Planning for future goals, ways to minimise tax, etc, as they have absolutely no idea, and no real interest in learning themselves.
The same as when many of us hear a noise under the bonnet of the car.. we too have no idea. This, I feel, is where the planner is required. help those who cannot/will not help themselves.

Ethics and looking out for No. 1 is a different story. But hey, nothing stopping that mechanic charging us $1500, for changing a fan belt....

Anyways, that's enough of a detour from studies

/rant over :

 

[tech/a]

The point I'm making is that 99% of us dont realise what is needed to be able to retire financially independant.
Assuming an inflation rate of 3.1% over the coming years if you wish to retire financially free then you'll have to reach MULTI millionair status.

Lets take a case of a 30 yr old with the following Stats.



If he can increase ALL 100% of his nest egg 10% a year compounding he will fall short if retiring at 65 let alone 55

Its not until he can achieve 12% compounding that he has success.
Needing over 4 million upon retirement




If your 50 now and dont have a million NOW then you wont make it either.



You also need 1 million NOW and 4 Million upon retirement.



All of us including Financial Advisors will need to achieve wealth which SOME would see as greed!
Conventional methods of tucking away funds for retirement wont cut it.
To expect un leveraged Super contributions to maintain 10-12% compounding over many years is un realistic---even Financial planners wont guarentee that! A year or 2 well below the target rate kills the end result.

 

[noirua]

Charts are all very good but everyone has different circumstances. Financial Planners could once again be a thousand kilometres out in their predictions if interest rates move down to 2% and inflation to -2% or interest rates to 15% and inflation to 25%.
Anything can happen and it's best, from my experience, to spread investments into at least 10 sectors and 20 is probably best. Then in virtually every group of countries in the World.

 

[tech/a]

from my experience, to spread investments into at least 10 sectors and 20 is probably best. Then in virtually every group of countries in the World.

Lets see say 10 countries,diversify into 20 sectors thats 200 investments or $2500 over a $500K Investment portfolio.Say 50% perform at 10% or better the rest under perform.

Tongue in cheek I'm sure.

I'm not tongue in cheek though and the figures I entered were deliberately conservative---well I thought they were.
Lets be certain of one thing.
Making a Million wont cut it.

 

[Insan3]

Charts are all very good but everyone has different circumstances. Financial Planners could once again be a thousand kilometres out in their predictions if interest rates move down to 2% and inflation to -2% or interest rates to 15% and inflation to 25%.
Anything can happen and it's best, from my experience, to spread investments into at least 10 sectors and 20 is probably best. Then in virtually every group of countries in the World.

Yes, correct.

Everyone has different circumstances.
Financial Planners might be short of predictions if the market moves in an unexpected way.
Yes, sector diversification and market diversification is a good idea.

The thing is -
Your plumber won't know this.
Your mechanic won't know this.
Your doctor won't know this.
Your children's teachers won't know this.
99% of the population won't know this.
Personally, I don't have a single family member or friend who has made a financial plan, or who would read Investment forums, or would invest in shares....

At least an FP will create a plan. Even if the plan falls short, you would imagine in most cases, it would be better than no plan. An FP would ask their client about their circumstances

Heck, I've got a number of friends who think that the 9% Employee Super Contributions is going to be enough. I've got friends aged 25 who think $45k/yr will suffice in retirement..... in 2050??? Ask them to factor in Inflation of 3%... they look at you blank. Tell them by then, a 2L milk may cost $12 (Based on current $3.70 price + 3%/yr x 40yrs), they laugh.....
Tell them weekly groceries that now cost $200 may cost $650...

We'll see how much they are laughing when they have $400,000 of super in retirement .... let's see how they are doing when they hit 80....

 

[tech/a]

For those who wish to have a play with the calculator.

http://www.bloomberg.com/invest/calculators/retire.html

Also view the reports to see the power of compounding.

 

[robots]

hello,

greeaat to see Ken Done taking on the these sharks that call themselves financial planners,

whether it be a large or small organization,

they are only concerned about their own financial planning when you walk thru the door,

go direct

thankyou

robots

 

[robots]

hello,

another great effort:

http://www.theaustralian.news.com.au/story/0,25197,23695545-25658,00.html

be very very careful if you go to financial planners,
direct property or direct shares and sit tight

have a great day
thankyou

robots

 

[TheRage]

hello,

another great effort:

http://www.theaustralian.news.com.au/story/0,25197,23695545-25658,00.html

be very very careful if you go to financial planners,
direct property or direct shares and sit tight

have a great day
thankyou

robots

Robots both of your posts infer that all Planners are cast with the same brush. A little more research than simply two articles needs to be brought to bear before passing judgement. I am a Financial Planner and have sat on the sidelines watching this thread with interest and have no commented for my own reasons.

However I do find the comment that all Financial planners only care about their own financial planning quite repulsive. I treat my clients money whether they be high net wealth or low net wealth as if it was my parents money, who by the way I manage also. I respect people and their money and I have built wealth outside of being a financial planner through shares and property. I work because I like helping people and educating them on how to become more financially savy. I will admit though that becoming a multi-millionaire is beyond the realm of most people even with discipline and compounding and I also think Tech has raised some very valid points about mentoring.

Please tell me what idustry all of you work in so I can make rash statements about your profession. For the record all fees are now disclosed to clients and I even go further by writing a letter with a quotation of excatly the cost of doing a job like a tradesman would, I do not charge trailing commissions. So to say that the industry is full of sharks given the regulation we follow is absurd. Next time you go to you accountant and he says to you I think you should put your money into cash becasue I think the sharemarket will go down over the next year. Let him know that he has just broken the law unless he puts it in writing to you.

 

[Macquack]

Please tell me what idustry all of you work in so I can make rash statements about your profession. For the record all fees are now disclosed to clients and I even go further by writing a letter with a quotation of excatly the cost of doing a job like a tradesman would, I do not charge trailing commissions. .

Firstly, everybody knows trailing commissions are a rort.
Secondly, "all fees are disclosed to clients", big ****ing deal.
Finally, what really pisses me off is you guys want a big pat on the back for doing what everyone else considers to be just fair and reasonable.
Macquack, builder for the record.

 

[TheRage]

Firstly, everybody knows trailing commissions are a rort.
Secondly, "all fees are disclosed to clients", big ****ing deal.
Finally, what really pisses me off is you guys want a big pat on the back for doing what everyone else considers to be just fair and reasonable.
Macquack, builder for the record.

Did I say I wanted a pat on the back.

What is fair and reasonable, charging someone $30,000 for a deck or extension which you make $20,000. Is that reasonable Mr Builder. I estimate my time to precision on the jobs that I do. My hourly rate is $200 but I reckon yours is much higher.

Have I seen you contribute to threads in this website in a positive and constructive way and provide information consistently that others here would not know. I guess being a builder gives you an opportunity to tell others about all of the super rules doesn't it.

Then again if you made an appointment to see me I would not keep you waiting but if you were to come round to give me a quote on a job I would still be waiting. Now there are some generalisations for ya!!!

 

[Mofra]

hello,

greeaat to see Ken Done taking on the these sharks that call themselves financial planners,

whether it be a large or small organization,

they are only concerned about their own financial planning when you walk thru the door,

go direct

thankyou

robots

ROFL!!!

This from a Real Estate Agent!!

 

[Mofra]

I'm another who is studying Dip.FP with an aim to move into Paraplanning.

Of course, people on Investment forums will not see the benefit in seeing a Planner, due to the 'Insurance Salesman' types still out there. They feel they can do it themselves - And I believe they can. People who are interested in Investment Forums, Investment Mags, Seminars, Annual reports, etc are going to teach themselves many, many things and can become quite successful from this.

I've also just started the DFP, and have recently moved careers into Para-Planner world (of sorts) already.

I'm wondering how many people criticising Financial Planners have been to one? I've been investing actively for a number of years and I still found my FP meeting quite a useful one, even if just to bounce ideas off someone qualified to offer his or her opinion & have that opinion binding by professional agreement.

 

[Duckman#72]

Next time you go to you accountant and he says to you I think you should put your money into cash becasue I think the sharemarket will go down over the next year. Let him know that he has just broken the law unless he puts it in writing to you.

Hi Rage

You have just highlighted the one of the major problems with financial planners and the industry as a whole. Have another read of your sentence. You don't make any judgement on the qualification of the accountant. Your answer is to "get it in writing". The stupid thing is that even if it is in writing it could be breaking the law depending on the qualifications of the accountant. The cover-your-ass techniques that have created 50 page Statements of Advice are doing nothing for the Financial Planning Industry. The profession would be better served ensuring higher levels of professional standard rather than developing 50+ page disclaimers designed to bamboozle and deflect criticism from performance.

Duckman

 

[TheRage]

Hi Duckman,

I agree with what you are saying, I guess that is why a lot of accounting practices are now trying to hold an AFSL or become authorised representatives so so they can give investment advice when setting up SMSF.

I think disclosure is getting better and I spend a lot of time explaining it to clients. By the way my comment was not having a dig at accountants as a profession but merely pointing out the automatic repect that are given to accountants and the lack there of to planners despite the hoops we have to jump to do anything for clients. I think the education standards are slowly raising themselves in the industry and when all the old dinosaur insurance slaesmen are gone the industry can probably achieve a more professional designation. For the record I have masters of accounting and an undergraduate degree in Science.