Financial Planners

[awg]

awg, when you say you're angry with FP's, do you mean that it was a FP who advised you to invest in the Wrap structure?

Hi Julia,

Obviously it was a FP that advised me to invest in a Wrap, but I am not angry about that all.

They are a convenient product and suitable for many, including myself at that time.

My annoyance stems from the fact that you do not get appropriate advice once you are in the product.

Specifically, as detailed in my post, despite me asking "do you think it would be a good time to sell various asset classes due to specific reasons"...answer "we do not give specific advice...time in the market etc"

Advised against cashing out Mortgage and Property funds (did anyway)...weeks later redemptions frozen.

No advice on possible loss of Franking Credits...only my own research uncovered that.

Incorrect answers given to specific questions.

Kept me in a higher fee paying scheme.

I could give further examples.

It is a lot of work to run a SMSF, especially if it is active in share trading.

bottom line $10,000pa-$600pa = $9400 in my pocket each year, if I live another 30yrs, would be $500,000+(including compound interest)

 

[awg]

actually Julia,(and others),

I was somewhat conservative with my estimate of figures.

If I saved $9400 on fees per year (very conservative, as it assumes my balance would never rise)

and added that to my account each year.

and compounded that amount at 7%pa tax free (it is tax free pension) per year.

and lived 30 more years (actuarial tables indicate I should)

the difference would actually be $986,079, in my favor.

based soley on the fee saving!

my descendants will no doubt be most pleased.

makes you think doesnt it!...like those Industry Super ads say.

many assumptions are factored in of course.

I use Esuperfund, who charge $600pa flat fee for all audit & tax requirements.

I spend several hours each day studying investment issues, it is my "hobby".

I know you have a SMSF Julia, so you have obviously done yr homework as well.

I chose Esuper cause they are the cheapest, to the consternation of my accountant, who is very good, but charged much more, based on the fact I am relatively young and have a fairly high account balance, the sums are very much in my favor.

I did a risk/return on the whole thing.

it is a proven fact that you live longer when you take a lifetime pension!

 

[MRC & Co]

If you have ever studied the material financial planners do, in order to provide you with advice, you will realise how disgraceful the entire industry is. They are simply salesmen, wouldn't even call them educated.

 

[Julia]

awg, I wasn't in the least questioning your choices or your thoroughly understandable reasons for the rant, just was curious as to whether a so called licensed financial planner had advised you the Wrap thing was in your best interests.

All I can say is congratulations for having extricated yourself and for having followed through on the tax situation. Proves once again how much that 'profession' actually cares about the profitability of the client, huh!

I went down the same road for a very short time until I - like you have now done - realised the ride I was on for the benefit of all the people in the commission chain. Then, the next step on the road of learning was to use a full service broker in the naive assumption that they were, umm, experts about stock picking and had the goal of making money for me! What a stupid notion!

That was short lived as well, thank goodness.

I'm very happy with the SMSF, though am prepared to pay the extra for sitting down with my accountant rather than using E-super. Probably not logical or necessary.

I don't find it too much work and like the sense of being in day to day control of what happens.

I sold my shares in early January. Being in cash has been good, but with rapidly falling interest rates this strategy will not be viable after the current term deposit reaches term. So I guess there will have to be a rewrite of the Investment Strategy.

 

[tech/a]

If you have ever studied the material financial planners do, in order to provide you with advice, you will realise how disgraceful the entire industry is. They are simply salesmen, wouldn't even call them educated.

My sentiments exactly.

If you cant control your investments DONT GET INVOLVED.
That goes for ANY investments.

If you dont understand what your doing LEARN

 

[brianwh]

AWG

I could have written this almost word for word - and with the same underlying sense of anger and frustration.

I retired 3 years ago and with FP + Wrap Account fees was paying in excess of $10,000 per year (plus MER). For this I was getting an annual review plus all administrative services. I have subsequently found out that in the industry they call this "set and forget". My request to renegotiate our financial relationship was met with tried and tested patter and the bottom line was they needed this fee structure "to give me the special advantages and accesses provided by their firm".

By September of this year their advice (and "special advantages and accesses") had seen my capital reduced by more than $200,000 and a number of the funds they had me in were performing below benchmark. In September I set up a SMSF. To the end of October this year, this had saved me from losing another $100,000. I currently hold my capital in forms of interest bearing deposits (although as Julia has noted, I will have to rethink this as interest rates fall). I expect to return to the equity market fairly soon - not trying to predict the bottom but hope to get some quality stocks at good prices. I will be staying out of property for the forseeable future.

My knowledge of the arcane world of finance is fairly unsophisticated but I will be making a concentrated effort to address this and will stand or fall financially on my own decisions. Just knowing that I have control of my own affairs and that someone who is contributing minimally will no longer be creaming off fat fees will be reward in itself.

PS Have you been able to get an answer to your question about the tax rates on the franking credits AWG?

 

[Mofra]

If you have ever studied the material financial planners do, in order to provide you with advice, you will realise how disgraceful the entire industry is. They are simply salesmen, wouldn't even call them educated.

The unfortunate fact of life is that there is a higher focus on compliance than on good advice within the industry. Commissions do play a part in advice; for risk, ease of underwriting is often the determinate factor.

If someone is financially illiterate a financial planner may have some value, however I'd say the majority of people here would be better off forming their own plan, as long as there is at least some measure taken on estate planning & personal insurance.

I've been in the financial industry for some time and have talked to (literally) hundreds of planners - there are a minority that are extremely good at what they do, but most will offer the same advice regardless of who walks through their door.

 

[Temjin]

The unfortunate fact of life is that there is a higher focus on compliance than on good advice within the industry. Commissions do play a part in advice; for risk, ease of underwriting is often the determinate factor.

If someone is financially illiterate a financial planner may have some value, however I'd say the majority of people here would be better off forming their own plan, as long as there is at least some measure taken on estate planning & personal insurance.

I've been in the financial industry for some time and have talked to (literally) hundreds of planners - there are a minority that are extremely good at what they do, but most will offer the same advice regardless of who walks through their door.

Yep, the focus on "being compliance" is much greater than most of you would think. Professional Indemity insurances cost HEAPS and with the laws around in Australia, one could find a way to sue any FPs who have "given" advises beyond what the "regulations" required them to do. It's difficult to find an unbiased, fee for only service, FP, and who know their stuff. But the fact remains that there are indeed some out there who are extremely knowledgeable and are prolly involved in investing/trading far more than most people here.

Does it sound like I want to become a financial planner. I certainly do because i am more motivated to help others to achieve their financial goals, and I HATE BEING a pure salesman. Hopefully one day, I could advise unconventional investment vehicles such as commodity funds, managed futures, hedge funds and other ETFs. Though I'm not sure if it is "possible" under the current regulation to provide such advises.

The fact remains that A LARGE MAJORITY of the public are financially illiterate and they would at least be better off than where they are right now by seeing a financial planner who gives "unbiased" advises and help them to manage their budget/debt/risk management. Most people don't even know how to budget properly!

If you have ever studied the material financial planners do, in order to provide you with advice, you will realise how disgraceful the entire industry is. They are simply salesmen, wouldn't even call them educated.

I know MRC. I've done the materials and the "investment" information there are quite "unsophisciated" for the average ASFer here. Most are salesman, but like I said, there are a few rare ones who probably know more than you might think as they could be as passionate about investing/trading as you are. At least I am one of those who are passionate about investing/trading.

 

[Temjin]

This has already been posted in another thread.

http://www.travismorien.com/invest_FAQ/

He is what I call one of the "rarer" financial advisor out there. Just by looking his "recommended reading" list show that he is not the standard "sales FP" guy out there. He even recommends Nassim's and Dr Van Tharp's book.

 

[MRC & Co]

Yep, agreed on the compliance BS.

 

[awg]

PS Have you been able to get an answer to your question about the tax rates on the franking credits AWG?[/QUOTE]


I am waiting by the phone and email to find out how I can save my $7000 worth of Franking credits for 07-08.

They assured me I would have an answer yesterday, after initially saying it would be lost.

That is what made me irate...if I cant save it, there will be a name and shame by me on this forum and other places, of the relevant institutions..I will tell them this, and they will have to fight me administratively as well.

I will not give up my $7k without an enormous sh1tfight...they can sue me if they want!!

as to the question re diferrential tax of MINs, I dont care anymore, as I no longer have any, would have been good to know...hang on, I still have $5000 with BT outside my super...I will email them with my question and see if they will answer

 

[awg]

an update for youse all.

After numerous phone calls and emails, with no help at all from my FP.

I have negotiated direct with Macquarie Bank, so that they will keep my account open until the Franking tax credits are paid, expected to be February, an amount that should be in excess of $7000.

otherwise this amount would have been lost to me, as I had been told my account would definately be closed.

I would like to point out that my FP was not connected with Macquarie.

I decided to deal with them direct, in a very forceful way, replete with threats of legal action and never ending administrative harrassment + APRA complaints, and slagging on forums, taking up more time than it was worth for them.

I did stay polite though, believe it or not.

I must say they were pretty good, they could tell i meant business, after I explained my previous expertise in managing complaints

today they emailed me ( at my insistence) to say they have found a way to do it.


they even said (verbally) " I should have been advised about this potential problem, thereby preventing it"

I said thanks, I would not have pulled my considerable 6 figure balance, if i had got what i paid for (decent advice).

prior to this they had not been so helpful..example, when my FP was on holidays, and I wanted to sell a Managed investment, I was told I had to wait till he came back!!.

I feel stupid for putting up with this nonsense, its a shame one has to be ultra-assertive to get decent service.

I think it has something to do with the present economic climate and also fear of job loss if poor service is complained about

 

[mattlaw]

For the people who have a SMSF, do you do your own research? If yes do you think you could have foreseen the financial climate we are in at the moment?

 

[awg]

yes I do my own research

yes it was POSSIBLE to foresee a stock price fall, see various ASF posts

but what to do? ( many opinions )

in my case I progressively sold down, as the market fell.

however, i still incurred substantial losses, as I did not cash out in one big hit early on.

i did not go short at all until recently

(now mostly still in cash)

still have problem of what to do when term deposits expire and IR are low

when to move back into market and how much trading

 

[Wealth Wizard]

I would suggest that the level of a planners education and ability to add value to each client would likely vary dramatically from firm to firm. There are of course the shonks of the industry but also some great ones, all the planners where I work are degree qualified (mostly Finance majors) alot are CFP's some have MFin, MEcon etc are passionate about investing and invest heavily themselves. A few guys are right into Trading (myself included) currencies, Futures, CFD's etc also. so its a case by case assessment IMO and alot of planners are comfortable charging based on time spent working the clients strategy/preparing SOA's etc or by commissions if the client prefers, The industry will always get hammered and cursed in a bear market because money is such an emotional issue for many people, so I wont even attempt to rebut the whole "planners are useless" line and will reserve that for when the market starts picking up

 

[Julia]

For the people who have a SMSF, do you do your own research? I

Yes.

If yes do you think you could have foreseen the financial climate we are in at the moment?

From the market peak in November a year ago, the charts of most of the larger companies were showing a consistent downturn by the beginning of 2008. Combine this with the increasingly bad news in the financial and general press and, yes, it was imo prudent to preserve capital and get out.
I did this, as did others, in January.

I don't think many even at that stage imagined that it would be as bad as it is, but it seems to me a lot easier to incur a bit of brokerage and (sadly) CGT to be safe.

 

[TheRage]

Temjin don't lose hope about becoming an FP. There are some fantastic parts to the job such as helping people. We are not all salesman and sharks and quite frankly the 0.000005% of the population that ASF represents should not deter you from joining a rapidly restructuring industry. If FP's are all sharks then by Proxy most accountants are sharks because almost all large accounting firms have an FP working for them or some sort of remuneration deal with an FP. This does not mean that accountants are bad this means that they see the value in having a good FP working with them.

By the way if we are going to continuously dig at FP's can I have a whinge about recruitment firms that charge 15% fees on the first year's salary in placing a professional. Also how about the realestate agent charging 5% of the sale on a property. My point is that these groups get paid this way they do because they do a lot of work and the job is hard and stressful. Our job is no different but we actually charge less and invariably have more responsibility as we are dealing with peoples life savings everyday.

To all the salesman financial planners out there it's time to retire. No doubt you probably won't have a choice soon as the market may make this decision for you. To all the good highly qualified Fp's out there keep up the good work in slowly changing the perceptions of our industry and driving it into a profession.

 

[Temjin]

Temjin don't lose hope about becoming an FP. There are some fantastic parts to the job such as helping people. We are not all salesman and sharks and quite frankly the 0.000005% of the population that ASF represents should not deter you from joining a rapidly restructuring industry. If FP's are all sharks then by Proxy most accountants are sharks because almost all large accounting firms have an FP working for them or some sort of remuneration deal with an FP. This does not mean that accountants are bad this means that they see the value in having a good FP working with them.

By the way if we are going to continuously dig at FP's can I have a whinge about recruitment firms that charge 15% fees on the first year's salary in placing a professional. Also how about the realestate agent charging 5% of the sale on a property. My point is that these groups get paid this way they do because they do a lot of work and the job is hard and stressful. Our job is no different but we actually charge less and invariably have more responsibility as we are dealing with peoples life savings everyday.

To all the salesman financial planners out there it's time to retire. No doubt you probably won't have a choice soon as the market may make this decision for you. To all the good highly qualified Fp's out there keep up the good work in slowly changing the perceptions of our industry and driving it into a profession.

Thanks TheRage, I'm not the type of person who would give up so easily.

I definitely see a changing perception of the whole FP profession in the longer term and trend toward away from pure commission to a more, unbiased fee for service structure. This is already happening from my understanding but just takes a while.

Despite all the gloom and doom, and even if there is a global depression coming in with the stock markets being stagnate for a decade, I still see potential in the FP industry.

Though I need to be realistic at this point of time and take care of my own needs instead of my own wants. Beside, I have other "opportunities" to pursue at this point of time. But again, I am on the look out to enter the industry as soon as it is possible.

 

[awg]

An update on my post No 112.

I did receive my $6000+ in franking credits.

I must thank Macquarie Bank, they were surprisingly helpful, once they realised I would not go away.

Something of a parallel to Storm, in that my super was in a badged Macquarie product, and they insisted I deal through my financial planner, that being Commonwealth Premium Wealth management.

Only when I moved my investments to SMSF, did they have no choice but to deal directly with my residual account.

I kept every email.

I always gave my sell instructions by email, even after I had verbally instructed.

That way I have a trail, if things go wrong.

The main reason I moved to SMSF, is because my fin planner would give me no advice whatsoever on sell strategies.

Having said that, it is still and awful lot of work managing your SMSF, in particular asst allocation and stock selection, you can spend endless time on, sometimes I wonder if I would have been better to just stay in a basic balanced strategy, and spend less time learning all that is required to manage my investments well, but a 1 to 2% fee is just a killer over 30yrs on a large account.

I must further add, that my planner was very professional in regard to risk management, and I know he would never have been a party to the ridiculous leverage utilised in the case of Storm

 

[Onlooker]

Good evening, everybody

(I'm trying to be very polite after having been booted out of another thread

I'm in here mainly to obtain different points of view and to follow some logical discussions and in the process learn something from it. As I am all for SMSFs and all against Financial Planners, this may be a suitable forum (although it would've been nice to have found a thread entirely devoted to SMSFs).

The point I wish to make here at this moment is to suggest that it pays to learn as much as possible for yourself about the administration of a SMSF, to do all the bookwork yourself, and then have the obligatory reporting and audit work done by one of those "mail order shops" who charge you a fixed fee (often as low as $500) regardless of the number of investments and there number of transactions (well, almost, as there is a bit of a scale on really large portfolios).

I had my SMSF with one of those "bucketshops" in the beginning, then thought it would be 'nice' to have somebody locally with whom I could shake hands and have a cup of coffee. It turned out that that handshake was a bit sticky and for what I paid for that cup of coffee I could have bought a whole Starbuck franchise. So I tried to extricate myself from that deadly embrace but was fought tooth and nail and had to part with an excessive amount of money to be let off the hook. Now I'm back to a "bucketshop" at $750 a year and very happy with it.

What are your experiences?