Managed funds - best option for someone clueless about the markets?!

[luutzu]

All those funds will also pocket a fee of around 1% and then often performance fees as well, it's a great gig - 1% regardless of profit or loss, to be fair a surgeon gets paid regardless of the outcome of the surgery.

Difference is a surgeon does not get extra pay if you're all healthy again after the surgery. That and they'd be sue if you go in for a bypass and come out missing a leg or two. That and just about all surgeons actually know what they're doing - financial advisors, well, you'd just have the take the word of the guy's uncle's friend and his boss that he know what he's doing.

Financial advisors get pay either way, more pay if it goes well; and if it tank you're the one wearing it.

 

[Vixs]

Difference is a surgeon does not get extra pay if you're all healthy again after the surgery. That and they'd be sue if you go in for a bypass and come out missing a leg or two. That and just about all surgeons actually know what they're doing - financial advisors, well, you'd just have the take the word of the guy's uncle's friend and his boss that he know what he's doing.

Financial advisors get pay either way, more pay if it goes well; and if it tank you're the one wearing it.

Here's an idea... if you'd like to know whether someone knows what they're doing you could look into their experience, their credentials, their qualifications, and think about whether or not their advice makes sense to you if you're concerned about them knowing what they're doing. If someone isn't comfortable with the advice they've been given they should get a better understanding before agreeing to proceed with anything. They can ask their adviser to explain it in more detail to see if they're full of **** or not, or they can seek advice from another adviser to get a second opinion. If the first one couldn't explain to you what you're doing and why you probably shouldn't deal with them anyway.

If your opinion is that a financial adviser should prevent you from losing any of your money at all, ever, and should work for free if you do have an investment that falls in value you must be very difficult to please. Those expectations are impossible to meet and if they could be met, how much would you pay? There isn't an active investor on this forum that has made the right calls 100% of the time, and yet that is your expectation just because you pay someone a fee.

 

[luutzu]

Here's an idea... if you'd like to know whether someone knows what they're doing you could look into their experience, their credentials, their qualifications, and think about whether or not their advice makes sense to you if you're concerned about them knowing what they're doing. If someone isn't comfortable with the advice they've been given they should get a better understanding before agreeing to proceed with anything. They can ask their adviser to explain it in more detail to see if they're full of **** or not, or they can seek advice from another adviser to get a second opinion. If the first one couldn't explain to you what you're doing and why you probably shouldn't deal with them anyway.

If your opinion is that a financial adviser should prevent you from losing any of your money at all, ever, and should work for free if you do have an investment that falls in value you must be very difficult to please. Those expectations are impossible to meet and if they could be met, how much would you pay? There isn't an active investor on this forum that has made the right calls 100% of the time, and yet that is your expectation just because you pay someone a fee.

If the financial "expert" know what they're doing with finance, they won't be diversifying it everywhere.

If someone need financial advise can properly judge whether the advice is sound, you think they would still need advising? If they ask a salesman whether the goods they're selling is sound, what will the salesman say? It suk?

Example, how would a typical client decide whether a listed managed fund is a good investment? The advisor recommended it, it's selling at $x at the moment. How do you or I or anyone know whether that advise is a sound one? Open up the annual report of each holdings that fund owns? Go through and analyse all of it? Or take the expert's word for it?

Yea, credentials, experience... I thought a bunch of financial advisors from Macquarie, from CBA, Westpac too if I remember right... all got fined for dodgy advice right? Or were they only need to repay their clients a bit due to a few bad apples?

Dude, i know people who do admin work for financial advisors. Most advisors, just about all of them, do not know anything about finance, and do not do anything beside making sales and sounding smart. They're worst than the typical fund managers.


Here's a smart investment advice: pssstt... we buy these assets in one portfolio and at each 12 months we analyse and "rebalance" it. What is rebalancing? Well it's where we cut the flowers and buy some more weed so one asset that's doing well shouldn't keep doing well.

 

[Vixs]

If the financial "expert" know what they're doing with finance, they won't be diversifying it everywhere.

Of course, you're right. If they had half a brain they would have recommend their clients go all in on Tesla in March last year, sold in July, sat on their hands for 2 months and then piled the portfolio back into the market in MTU in September. Great year they had with their crystal ball. Diversification is for wimps. Why would you manage risks when you can just be right all the time?

If someone need financial advise can properly judge whether the advice is sound, you think they would still need advising? If they ask a salesman whether the goods they're selling is sound, what will the salesman say? It suk?

They don't need to be able to analyse it all, but if the recommendations don't make sense to them they should ask for more information.

The 'salesman' doesn't get paid by commission from any managed fund under Australian law - they have no incentive to recommend one over another as long as it's on their approved product list, so what benefit is there to them recommending anything but the best available to them to suit the clients goals? Intentionally doing a poor job is rarely good for repeat business.

Example, how would a typical client decide whether a listed managed fund is a good investment? The advisor recommended it, it's selling at $x at the moment. How do you or I or anyone know whether that advise is a sound one? Open up the annual report of each holdings that fund owns? Go through and analyse all of it? Or take the expert's word for it?

Well someone looking for advice would be inclined to take the expert advice on it. That's the point, it's what they went and saw them for in the first place. If their adviser understands what they're trying to achieve, and it has been explained what they're doing, why they're doing it and what other options were considered then it shouldn't be an issue.

"I want to retire debt-free in 3 years on an income of $50,000 per year." "Excellent, I suggest you borrow against your nearly paid off home up to 80% of it's value and invest that all in Australian shares. I think it would be a shame to stop there, so we're going to take a margin loan to double the size of your portfolio. In 3 years you'll be a millionaire and can retire on a boat. Sign here."

It seems like it misses the point doesn't it?

Yea, credentials, experience... I thought a bunch of financial advisors from Macquarie, from CBA, Westpac too if I remember right... all got fined for dodgy advice right? Or were they only need to repay their clients a bit due to a few bad apples?

What's your point, extrapolating to every adviser everywhere in the country again? You're making a link between negligent or fraudulent behaviour and sales incentives that have since been banned by law, and someone's ability to ask if the person they're dealing with has any relevant qualifications or experience doing what you need them to do.

Well hey, while we're making up straw man arguments my friend saw 7 doctors before she got diagnosed with ovarian cancer because her symptoms were repeatedly dismissed as pregnancy. Obviously all doctors are idiots, right?

Dude, i know people who do admin work for financial advisors. Most advisors, just about all of them, do not know anything about finance, and do not do anything beside making sales and sounding smart. They're worst than the typical fund managers.

Here's a smart investment advice: pssstt... we buy these assets in one portfolio and at each 12 months we analyse and "rebalance" it. What is rebalancing? Well it's where we cut the flowers and buy some more weed so one asset that's doing well shouldn't keep doing well

That's a big extrapolation to make based on some people you know that work in admin. Just about all of them know nothing about finance eh? Well I guess I'll take your word for it, you do after all have a reliable source and a balanced perspective. I believe there are probably a lot of useless people out there working as financial advisers, just like any other job. Some accountants are better than others, some chefs are better than others and some shop assistants are better than others. The fact that some advisers are better than others should come as no surprise.

You're projecting the goals and expectations of an active investor or trader like yourself onto an average person, uneducated and inexperienced with investments

 

[luutzu]

Of course, you're right. If they had half a brain they would have recommend their clients go all in on Tesla in March last year, sold in July, sat on their hands for 2 months and then piled the portfolio back into the market in MTU in September. Great year they had with their crystal ball. Diversification is for wimps. Why would you manage risks when you can just be right all the time?



They don't need to be able to analyse it all, but if the recommendations don't make sense to them they should ask for more information.

The 'salesman' doesn't get paid by commission from any managed fund under Australian law - they have no incentive to recommend one over another as long as it's on their approved product list, so what benefit is there to them recommending anything but the best available to them to suit the clients goals? Intentionally doing a poor job is rarely good for repeat business.



Well someone looking for advice would be inclined to take the expert advice on it. That's the point, it's what they went and saw them for in the first place. If their adviser understands what they're trying to achieve, and it has been explained what they're doing, why they're doing it and what other options were considered then it shouldn't be an issue.

"I want to retire debt-free in 3 years on an income of $50,000 per year." "Excellent, I suggest you borrow against your nearly paid off home up to 80% of it's value and invest that all in Australian shares. I think it would be a shame to stop there, so we're going to take a margin loan to double the size of your portfolio. In 3 years you'll be a millionaire and can retire on a boat. Sign here."

It seems like it misses the point doesn't it?



What's your point, extrapolating to every adviser everywhere in the country again? You're making a link between negligent or fraudulent behaviour and sales incentives that have since been banned by law, and someone's ability to ask if the person they're dealing with has any relevant qualifications or experience doing what you need them to do.

Well hey, while we're making up straw man arguments my friend saw 7 doctors before she got diagnosed with ovarian cancer because her symptoms were repeatedly dismissed as pregnancy. Obviously all doctors are idiots, right?



That's a big extrapolation to make based on some people you know that work in admin. Just about all of them know nothing about finance eh? Well I guess I'll take your word for it, you do after all have a reliable source and a balanced perspective. I believe there are probably a lot of useless people out there working as financial advisers, just like any other job. Some accountants are better than others, some chefs are better than others and some shop assistants are better than others. The fact that some advisers are better than others should come as no surprise.

You're projecting the goals and expectations of an active investor or trader like yourself onto an average person, uneducated and inexperienced with investments

Sure mate, a few bad eggs. Not systemic at all.

That's why it just so happen a bunch of them across a bunch of banks got caught and got sued.

How did millions of people got their money lost during the GFC again? CDOs are as safe as houses right? Who needs to read what's in it when it's rated AAA yea? I bet you also think the people who lost their savings didn't seek advice but are traders and wannabe investors.

Mate, I got a Bachelor of Business, majoring in Applied Finance and a second Major in Financial Planning. So I'm more qualified than your typical financial planner - most of whom I read just yesterday might not want to stay in business if the gov't interfere in their work and require that all planners hold a university-equivalent qualification.


So no, stop comparing planners to Doctors and Surgeons. If they can make mistakes going through all those qualifications at proper medical schools, the kind of mistakes and incompetence most financial advisors make aren't exactly a one-off.

-------

So tell me, how does a managed fund get on that list financial planners use to objectively advised their clients?
On merits I bet.

Sounds like you're a financial planner, but you definitely do not know how the industry really work.

Hint: It does not work as the glossy brochures you guys print said it does.

If you are paid to, say 1.1% of your clients assets... do you spend more time trying to get more clients with big bucks or do you spend hours and hours finding the best product for them so they'd be richer?

I guess most would just follow a company-wide checklist of things to do recommend, forms to sign and azz to cover and call in new pay checks.

-----------

This is what you guys are doing, you just dress it up nicer and speak more convincingly with jargons and big offices and free latte as props.

You check how much cash they got. And a guy on $50,000 a year income with no inherited fortune couldn't even get a seat in your reception area so let's stop with the bull right there shall we...

But say a rich but clueless potential clients come in and you're more than happy to help.

You'd recommend Insurance - can't be too careful... Maybe have a few type of insurance - income protection, life, house, pets.

Maybe a lawyer to set up a Will, some specialist consultants might be needed if the account is big enough etc. etc.

All good so far right? Let's get to the income generating investment options...

Bonds: gov't and corporate; Local and International.

Managed Fund: This guy and that guy; this style and that growth mix; domestic and international of course.

Real Estates etc. etc. etc.


When a patient go see their General Practitioner, they do not expect to be sent to have all the tests done and all the drugs prescribe - just in case.

Unless you could narrow things down a lot, don't call yourself a professional. You're just covering all bases with other people's money.

----

Yea, all investors buy only one or two stocks like you said.

You guys can't even read what's in front of you, forget about predicting the future.

It may surprise you that a person could buy a handful of prominent stocks across a few sectors and maybe a couple larger ones on the NYSE and they're just as diversified as all the rubbish you guys are recommending.

Heck, they could just buy Berkshire Hathaway and they're fully diversified. Top up with GE or Disney and go fishing.

But but... they don't know much about BRK or GE... as if you guys know. You got it from a list and have no clue where or how that list got to your desk.

But of course that kind of recommendation would make it wrong to "analyse" and "review" their financial health each year for a fee right?

 

[Vixs]

Sure mate, a few bad eggs. Not systemic at all.

That's why it just so happen a bunch of them across a bunch of banks got caught and got sued.

How did millions of people got their money lost during the GFC again? CDOs are as safe as houses right? Who needs to read what's in it when it's rated AAA yea? I bet you also think the people who lost their savings didn't seek advice but are traders and wannabe investors.

Mate, I got a Bachelor of Business, majoring in Applied Finance and a second Major in Financial Planning. So I'm more qualified than your typical financial planner - most of whom I read just yesterday might not want to stay in business if the gov't interfere in their work and require that all planners hold a university-equivalent qualification.

So no, stop comparing planners to Doctors and Surgeons. If they can make mistakes going through all those qualifications at proper medical schools, the kind of mistakes and incompetence most financial advisors make aren't exactly a one-off.

-------

So tell me, how does a managed fund get on that list financial planners use to objectively advised their clients?
On merits I bet.

Sounds like you're a financial planner, but you definitely do not know how the industry really work.

Hint: It does not work as the glossy brochures you guys print said it does.

If you are paid to, say 1.1% of your clients assets... do you spend more time trying to get more clients with big bucks or do you spend hours and hours finding the best product for them so they'd be richer?

I guess most would just follow a company-wide checklist of things to do recommend, forms to sign and azz to cover and call in new pay checks.

-----------

This is what you guys are doing, you just dress it up nicer and speak more convincingly with jargons and big offices and free latte as props.

You check how much cash they got. And a guy on $50,000 a year income with no inherited fortune couldn't even get a seat in your reception area so let's stop with the bull right there shall we...

But say a rich but clueless potential clients come in and you're more than happy to help.

You'd recommend Insurance - can't be too careful... Maybe have a few type of insurance - income protection, life, house, pets.

Maybe a lawyer to set up a Will, some specialist consultants might be needed if the account is big enough etc. etc.

All good so far right? Let's get to the income generating investment options...

Bonds: gov't and corporate; Local and International.

Managed Fund: This guy and that guy; this style and that growth mix; domestic and international of course.

Real Estates etc. etc. etc.


When a patient go see their General Practitioner, they do not expect to be sent to have all the tests done and all the drugs prescribe - just in case.

Unless you could narrow things down a lot, don't call yourself a professional. You're just covering all bases with other people's money.

----

Yea, all investors buy only one or two stocks like you said.

You guys can't even read what's in front of you, forget about predicting the future.

It may surprise you that a person could buy a handful of prominent stocks across a few sectors and maybe a couple larger ones on the NYSE and they're just as diversified as all the rubbish you guys are recommending.

Heck, they could just buy Berkshire Hathaway and they're fully diversified. Top up with GE or Disney and go fishing.

But but... they don't know much about BRK or GE... as if you guys know. You got it from a list and have no clue where or how that list got to your desk.

But of course that kind of recommendation would make it wrong to "analyse" and "review" their financial health each year for a fee right?

You've missed the mark with your assessment of me personally, but sadly there's a good bit of truth in what you've said. It's a perfect example of why the most important thing for people to do is if they think the person they're dealing with is full of ****, get a second opinion. If it's not a good fit, see someone else.

On the doctor comparison, I wasn't trying to draw a parallel between advisers and doctors. The point was that mistakes are not unique to financial services.

Good luck to you, it's a shame you feel the way you do but a lot of change has already occurred and there is plenty more to come to shake things up further, I'm sure you'll be pleased. I'm personally not worried about education requirements as I've already completed a master of finance degree. I'm just looking to pay my bills and support my family. My biggest concern is that personalised financial advice and insurance advice will become more unaffordable for normal people.

 

[luutzu]

You've missed the mark with your assessment of me personally, but sadly there's a good bit of truth in what you've said. It's a perfect example of why the most important thing for people to do is if they think the person they're dealing with is full of ****, get a second opinion. If it's not a good fit, see someone else.

On the doctor comparison, I wasn't trying to draw a parallel between advisers and doctors. The point was that mistakes are not unique to financial services.

Good luck to you, it's a shame you feel the way you do but a lot of change has already occurred and there is plenty more to come to shake things up further, I'm sure you'll be pleased. I'm personally not worried about education requirements as I've already completed a master of finance degree. I'm just looking to pay my bills and support my family. My biggest concern is that personalised financial advice and insurance advice will become more unaffordable for normal people.

It wasn't directed at you personally, was at financial planning industry in general.

Mistakes is one thing, fraud and negligence is, was, a crime.

The way financial advise and investment management are conducted, losses are not a mistake, not even stupidity or incompetence - it's a systematic, deliberate collusion among the operators to provide plausible deniability. It's charging people for a "professional" service but take no responsibility for negative consequences of their negligence at all.

Why is it a shame to get upset at people who screw other people over?

Anyway, nothing personal. Good luck to you. Hope you'll be part of the effort to clean the industry up.