Use of financial planners

[tech/a]

MR J has it in one.

Financial planning is pretty simple.

Minimise risk.
Minimise gearing.(In these times)
Identify opportunity (Real opportunity the type your Financial planner is looking for himself!).
THEN
Minimise Risk
Maximise gearing.

Seek out those who can help you in this search---and their not generally F/Ps.

When it comes to the Markets Radge is damned good.

Remember most F/Ps can only dream of the wealth most of their clients have.
Those with REAL wealth wont need an F/P.
They dont have anything to offer the well heeled.

Frankly your better off in my view seeking those with real wealth and learning of their tricks.

 

[Mr J]

I'm partly amazed at how many people don't seem to care much about their financial management. They're happy to pass it on and remain reasonably ignorant. I've spoken to a few people about this, and they'll just repeat that it takes too much time and that they'd never be able to do it themselves. To me it sounds like a trader who doesn't practice money management. I don't understand how people are so preoccupied with earning money, but then completely uninterested in how they then use it. Then, when they take a big hit, they're out for blood and complain about how they're hard done by.

Obviously that is a generalisation and many people are do take an interest, but certainly not enough and not to a reasonable extent.

 

[Ghetto23]

I really do think that if you were a high income earner that didn't care about learning that this might be a way to go.

Unfortunately for them that's not me. I'm always trying to learn more - that's why I spend so much time looking around these forums

 

[Julia]

I also have a friend who became a fin planner and after a few conversations with him about the market and economics in general I couldn't believe just how little he actually knew and more importantly understood. He was told what to sell and his outlook was distorted by the company he worked for and the companies whose products he sold.

Yep, I've experienced this too. When I first became interested in shares I went to a full service broker in the belief that he would know a lot more than I would. A year or so later, when 10 of their 12 recommendations had lost me money in a decent market, I changed my mind and told them why.
Out of the blue a few months ago an email arrived from them offering me a free "financial health check up". Curiosity saw me accepting. Spent half an hour with one of the most clueless idjits I've ever encountered.
When I said I'd preserved my capital by moving to cash January 2008, he delivered the spiel about asset allocation being disproportionate!!
Well, yes, that was the damn point until the market stops falling.
It was quite obvious he'd been taught a parrot-type delivery and had no real comprehension of anything else. Even when I asked if they had recommended clients exit Allco, BNB, ABS etc., he very defensively said no one could have known they would fail.

I'm partly amazed at how many people don't seem to care much about their financial management. They're happy to pass it on and remain reasonably ignorant. I've spoken to a few people about this, and they'll just repeat that it takes too much time and that they'd never be able to do it themselves. To me it sounds like a trader who doesn't practice money management. I don't understand how people are so preoccupied with earning money, but then completely uninterested in how they then use it. Then, when they take a big hit, they're out for blood and complain about how they're hard done by.

Obviously that is a generalisation and many people are do take an interest, but certainly not enough and not to a reasonable extent.

I've noticed the same thing. e.g. someone who has investment property just won't consider shares because "property is safer".

 

[helicart]

At the end of the day there's only so many variations on a theme G.
It is a lot of money to pay for generalist advice.

I've got at least 7 friends who are CEO or CFOs of medium to large enterprises who took a bath on their super last year because their financial advisors didn't see the **** hitting the fan. These guys all lost at least 40% of their super because of it, and they were margined up just like you have been recommended to do.

I have seen two FA in my time and I didn't come away impressed. The guys above could have preserved their super by using a very simple investment indicator

- get out when the 6mth ema crosses down on the 10mth EMA and in for vice versa....
OR
- get in when 20wk crosses above 50wk EMA
get out when 20wk cross 1% below 50 week.
check once per week

Both these do a reasonable job of capturing bull markets and avoidng bears, with minimal whipsawing.

What's the point of them advising you to have income protection insurance and making higher super contributions if they don't know the risk your super is exposed to and how to manage that?

I'm with you guys - I though what they spelled out in the SoA would be really smart stuff that will really help me avoid paying so much tax.

What they recommended was pretty much:
-Borrow against my current homeloan to invest in Blue Chip shares with a high div/share (free capital growth)

who is going to manage the portfolio and recommend when to buy more and sell?

-Get income insurance (already have it)

that's a given.....talk to an insurance broker and try and get everything bundled - house, contents, cars, income pro, life etc

-Get a will

a given

-Salary sacrifice some more super

see above and also consider that the best investment is leveraged and liquid. ask them if they know how your SMSF can trade property or leverage against it into more property.

also ask them how to protect your super against your partner if she divorces you....

ask them if they know what a trevisan trust is.


-Start investing a certain amount per month in the Black Rock platform to put it in the sharemarket.


Why do you want to put your money in a fund that doesn't respect the most fundamental rule of investing- preserve capital .......check blackrock's last 2 rolling 1 year returns....they're pompous gits who don't care about their clients capital...as long as they get their fees...


Now I'm already putting a lot of money into the sharemarket, and have been doing quite well lately (in terms of capital growth), and all of the above looks like pretty simple stuff to me...

Call me crazy, but I can just do all of this myself.

I used these guys to do my tax last year and they found me a lot of extra money. I was impressed with their job.

I'm think that having a long-term plan is important, but can't justify spending the money for what I can see is very little return (that I can't do myself).

keep educating yourself.....unless these guys can talk to you with depth of knowledge and personal experience about the stock market, property development, bonds, and gold, then you aren't reaching high enough....

 

[helicart]

Blackrock performance

http://www.blackrockadviser.com.au/cms/public/mlim001126.jsp

always a good idea to compare a fund's performance against STW

 

[Ghetto23]

Blackrock performance

http://www.blackrockadviser.com.au/cms/public/mlim001126.jsp

always a good idea to compare a fund's performance against STW

Holy crap. Thanks for that heli - has opened my eyes a little.

 

[prawn_86]

Ghetto,

Members here are not allowed to give financial adive etc etc but if you are being advised to take out a margin loan what %pa will that be charged at? Wouldnt you be better off paying off your mortage asap and then focusing on shares?

Work out what return you will need to achieve once you take your margin loan into account and then work out how much you will save by paying off the mortage.

 

[Ghetto23]

Ghetto,

Members here are not allowed to give financial adive etc etc but if you are being advised to take out a margin loan what %pa will that be charged at? Wouldnt you be better off paying off your mortage asap and then focusing on shares?

Work out what return you will need to achieve once you take your margin loan into account and then work out how much you will save by paying off the mortage.

The LoC would be at 5.69%. Their plan is to have the interest covered by dividend (they mentioned ANZ shares would do this), and then get free capital growth.

I agree with the paying off of the mortgage thing - which is why I am 50/50 mortgage/shares at the mo.

 

[prawn_86]

The LoC would be at 5.69%. Their plan is to have the interest covered by dividend (they mentioned ANZ shares would do this), and then get free capital growth.

I agree with the paying off of the mortgage thing - which is why I am 50/50 mortgage/shares at the mo.

Remember that divs can be cut also. And that you could get the capital losses as opposed to growth

I agree with what most others have said that if you are interested it would be better to educate yourself.

Im not normally the biggest advocate for property, but if it was me i would try and pay it off asap so then you are debt free. Perhaps personally use 10 or 15% of your money to invest yourself to learn how the market really wants.

At your meeting i would ask your FP what will happen if the divs are cut? and why they think that you are better off taking out another loan as pposed to paying off the one you already have.

 

[Ghetto23]

Remember that divs can be cut also. And that you could get the capital losses as opposed to growth

I agree with what most others have said that if you are interested it would be better to educate yourself.

Im not normally the biggest advocate for property, but if it was me i would try and pay it off asap so then you are debt free. Perhaps personally use 10 or 15% of your money to invest yourself to learn how the market really wants.

At your meeting i would ask your FP what will happen if the divs are cut? and why they think that you are better off taking out another loan as pposed to paying off the one you already have.

Thanks for the advice prawn - def food for thought

 

[helicart]

At your meeting i would ask your FP what will happen if the divs are cut? and why they think that you are better off taking out another loan as pposed to paying off the one you already have.

especially considering ANZ just priced itself out of the fixed rate resi mortgage market. you have to ask why, and it will hit their revenue.

word is they expect their credit rating to be lowered shortly, and that would make them uncompetitive with the other banks in seeking foreign wholesale funds for fixed loans.

if blackrock don't know this, they really are behind the 8 ball.

 

[Smallprofits]

Holy crap. Thanks for that heli - has opened my eyes a little.

Pretty good returns.... they seem to have outperformed the index by about 15%

 

[Smallprofits]

Ghetto, I would be very interested to know how you ended up going with this.

Did you proceed with the recommendations.

I tend to agree with both points of view presented on this topic. It is difficult to distinguish between an adviser out for the $$ and someone who cares, problem is that trust takes time to develop.

The plan fee doesnt seem overly expensive but the intial implementation of $10,000 does...

and like others opinions, you are too young to be putting AN ADDITIONAL $12,500 into super. Sure, there is no doubting that super is the best structure in which to invest but age age 29 you have 31 years until you are able to get your hands on that.... in the meantime you need cash for you home, children, boat, car, travel etc....

Look after super - make small additional contributions but in my opinion keep this to a minimum and focus on mortgage before putting too much up in super.

just my thourghts.

 

[helicart]

Pretty good returns.... they seem to have outperformed the index by about 15%

think I'd rather have listened to this bloke....he might wear a polyester tie, but at least he said this:

"The preservation of capital is more important than the return on capital in a bear market."

Though he could have said preservation of capital is more important in every market.

 

[Mr J]

and like others opinions, you are too young to be putting AN ADDITIONAL $12,500 into super. Sure, there is no doubting that super is the best structure in which to invest but age age 29 you have 31 years until you are able to get your hands on that.... in the meantime you need cash for you home, children, boat, car, travel etc....

It's too bad that they have an age limit. Screws the 45 year old retiree, but I suppose they want us to continue paying taxes.

 

[Lone Wolf]

G'day,

Just to add one more opinion for the record.

I was with a financial planner until recently. They charged 10% up-front on every additional investment plus an ongoing fee of 0.66% on the total portfolio. Their policy was buy and hold while using margin lending to increase your market exposure. On the way up it was buy whenever you had money to spare or if you were in a position to borrow more money. Of course their 10% fee was also added to the margin loan (It's almost like it's free!). On the way down it was simply "Don't sell unless you have to."

If I asked anything about the state of the market the reply was always "We don't have a crystal ball, you can't beat the market, just buy and hold." Because of this standpoint I've been long the ASX200 right from the top. I soon came to the conclusion that I don't need to pay someone thousands of dollars every year to buy and hold.

But I must say that they are not to blame. They made it quite clear from the start that this was a buy and hold investment and that they "Don't have a crystal ball." They presented me with an investment strategy and I said sign me up. I guess I thought at the time that I don't know what I'm doing so I'll pay someone who does know to look after things. Please don't do this, if you want to use a financial planner then go ahead, but never assume they have your best interest at heart. Some might, I'm sure they're not all bad... But as others have said, most financial planners are sales people. They have a product or strategy in mind and they want to sell it to you. You have to ask, is what they're selling right for you? I'm sure you could do the same thing yourself for less. Do you have the time and motivation to do this yourself?

The good thing about having a financial planner was having someone to explain various things that I don't understand. Due to a lack of experience in the area, legal and financial documents always confused me, I didn't understand the system or the terminology. I can still remember trying to work out the difference between franking credits and imputation credits. So having a FP was good in that I could ask questions and they could run me through the documents, give me an understanding of the system and point out tax savings and such. But personally I don't feel this service is worth thousands of dollars a year.

The fact that you are here asking questions is a good start. If you do use them, keep an eye on them.

My experience with a financial planner is a bit like - You ask a mate to watch the oven for you while you duck down to the corner store for a couple of minutes. When you get back there's smoke billowing out the oven door and your mate is sitting there looking at it... "It's not looking too good." Thanks mate, but I guess it's true that I never actually asked you to stop it from burning.

 

[alwaysLearning]

especially considering ANZ just priced itself out of the fixed rate resi mortgage market. you have to ask why, and it will hit their revenue.

word is they expect their credit rating to be lowered shortly, and that would make them uncompetitive with the other banks in seeking foreign wholesale funds for fixed loans.

if blackrock don't know this, they really are behind the 8 ball.

And just to add in that I think many of the other banks did their capital raisings already but I don't think ANZ did one yet?

 

[long88]

Moral of the thread is:

Dont leave your financial future in the hand of someone that you havent seen their financial result.

It doesnt matter how good he/she, if there is no result, he will lost your money. reason is: No crystal ball seeing to the future.

So educate yourself, take this matter in your hands, after all it is your hard earned money that you traded your time, skill and concentration.

Cheers

 

[Ghetto23]

The good thing about having a financial planner was having someone to explain various things that I don't understand. Due to a lack of experience in the area, legal and financial documents always confused me, I didn't understand the system or the terminology. I can still remember trying to work out the difference between franking credits and imputation credits. So having a FP was good in that I could ask questions and they could run me through the documents, give me an understanding of the system and point out tax savings and such. But personally I don't feel this service is worth thousands of dollars a year.

Thanks mate, that was my thinking in the first place. I want to keep hearing from them, and I still want their advice, but I don't need someone to hold my hand through it all.

As far as learning the difference between franking/imputation credits and all that - is there a book that you can recommend?