A LAST-resort compensation scheme to bail out investors will be examined by the Rudd Government in the wake of the $3 billion collapse of Townsville-based Storm Financial
Another silly Rudd Idea not sure how it would work but the idea that investors should be bailed out for been incompetent or taking unnecessary risk is not the roll of Governments, this may promote risk taking if the government is there to bail out people from failed investments.
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Nor did I get any clear indication what the committee's views were on the appropriate level of gearing for margin loans. Is it 10%? 15%? 20%? 60% Because, in my view, this is the crux as to why most Storm clients were trashed. Sure, they were critical of the one-size-fits-all approach by Storm Financial but that is all.
Nothing really about double gearing (it's triple really as the majority of companies have debt and margin lending is against equity. Just think about that for a moment.) But they seemed to OK it since the new requirements for margin loans are to take an holistic approach. Hmmm, I roll up with $900k in unencumbered shares and ask for a loan of $100k. Why do they need to know if I have a mortgage?
Waste of time.
A LAST-resort compensation scheme to bail out investors will be examined by the Rudd Government in the wake of the $3 billion collapse of Townsville-based Storm Financial
Another silly Rudd Idea not sure how it would work but the idea that investors should be bailed out for been incompetent or taking unnecessary risk is not the roll of Governments, this may promote risk taking if the government is there to bail out people from failed investments.
Good questions, I guess there's numerous ways it could be structured, all of which will of course have flaws, but in my view a basic starting point could be something like this:
* Licensed Financial Advisor is a regulated certification
* A Licensed financial advisor is not able to sell financial products or receive commission for the sale of financial products in any manner or form, from any party.
* The industry body for Financial Advisors markets itself appropriately and highlights this aspect of their industry and outlines the benefits
* It is illegal to market/brand oneself as a Financial Advisor if you are not certified and it is illegal to provide a statement of advice if not certified.
* Resellers/distributors of financial products do not need to be licensed financial advisors (and in fact can't be)
* Distributors of products can make product recommendations but any recommendation and any marketing material they use needs to have a disclaimer that they are not a licensed financial advisor and that before purchasing the product the client should consider seeking advice from a licensed financial advisor.
* The signing page of any purchase agreement for an investment product should have a tick box for the client to acknowledge this disclaimer.
Cuttlefish, I see what you're getting at with this, but I don't really see it working well for the people who need it most.
And I think it would take about five minutes for a duly Licensed Financial Planner/Adviser to hook up with a product distributor, and lo, we are back to where we were.
I can see it now. The naive investor goes to see the Licensed Financial Planner, secure in the knowledge that because the Planner isn't actually going to be selling him/her anything, all the advice offered will be absolutely full of integrity, tailored to the nth degree to his/her personal circumstances.
The interview ends with smiles and joy all round, at which stage the investor says "ah, but I don't know where to buy this managed fund, those bonds, etc that you are so sure will deliver me everlasting financial freedom".
Whereupon the very ethical Licensed Financial Planner will say, "no worries, here is the name of a firm which will provide you with what I have suggested".
The client smiles happily, shakes hands, and goes off to be fleeced by the product distributor who in turn happily accepts his backhander from the very ethical Financial Planner.
Just essentially adding another layer to the whole transaction imo.
Or perhaps I simply lack any decent level of faith in humanity on most levels.
I haven't got time at present, too much work on and a mate needs a hand agisting and feeding cattle, so I will not comment on recent Ripoll report and folks reaction.
My initial superficial thoughts are.
1. SICAG Model has been a monumental disaster and will neither assist present victims nor more importantly future ones. It plays into the Manny Model of trying to get the banks to pay back all the pre-margin losses which they won't do. Manny would be grateful for their good work. SICAG are the only organisation in all of this not to say anything adverse about Manny. They are good at organising bbq's to give them fair due.
2. The Financial Planning Industry have carte blanche to continue ripping off muppets.
3. The responsible planners formerly working at Storm continue to, and will continue advising muppets and collecting commissions.
In Queensland it used be called "The Joke" in pre-Fitzgerald Inquiry times.
gg
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