Use of financial planners

[Kez180]

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?

http://www.ato.gov.au/nonprofit/content.asp?doc=/content/17149.htm&page=3&H3

EDIT: That thread that Sir O started is very good... It is stickied in the beginners section.

If you have any specific questions you can send me a pm... I can't give you 'advice' but I can explain processes for you...

 

[helicart]

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.

Need I say more about FAs of the ilk of Blackrock........their ANZ dividend strategy just got shredded......but don't rely on hearing it from them first.....so what's their plan B today?

ANZ shares tumble as H1 profit misses market forecasts

 

[jono1887]

their ANZ dividend strategy just got shredded......but don't rely on hearing it from them first.....so what's their plan B today?

ANZ shares tumble as H1 profit misses market forecasts

Hahaha

 

[prawn_86]

I would be interested to hear what the FP does say in response to your question Ghetto. Please let us know once you have had the meeting

 

[Ghetto23]

Will do mate, the meeting is on Tuesday.

 

[Lone Wolf]

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?

No, I don't know of any good books on learning how to speak the language. For me It's something I pick up as I go along. If I come across a term or process I'm not sure about these days I just google it. That or use the search feature on this site. If all else fails you could always ask the question here.

Best of luck.

 

[Kez180]

http://www.anz.com/edna/dictionary.asp

Thats a pretty useful resource as a first stop for research....

 

[Gerkin]

Have you raised these concerns with your financial planner?

Did they work the fee out on a charge per hour basis? Did they increase the fee because you have a substantial income?

I get the impression that the same firm does your accounting work? Were they open about how the fee structure would be applied when you had that work done?

Also you are liable if the accountants have dodged up the tax return, you signed it... Just be careful, the biggest deductions might not always be legitimate....

Most of the cases where financial planners have been acting dishonestly have involved large fees....

If you explain to them that while you are willing to pay, you need value for your money, you might find you wind up with either a more experianced planner or reduced fees!

Here is one of the MAJOR problems with financial planners... it is too easy to become one...

Keiran,

How long did it take you to become an Accredited Mortgage Consultant?
It took me 15 Hours with a course run by AAMC. No outside work or anything of the like. And then to get accredited with banks you just rock up to the banks BDMs and sign a bit of paper.

Why are you even stating your title anyway?? Looking for business from this forum?

 

[Sir Osisofliver]

I recently paid $2750 to have a financial planner to create a Statement of Advice for me in terms of setting up a long-term financial plan.

The cost of implementing it will be somewhere in the region of $10K - and I'm baulking at it a bit. Plus $5K annually to keep reviewing it and making sure that it suits me.

I like the fact that they aren't trying to flog me any products to get comissions etc but it is a lot of money. I know that the benefits that they can pick out in terms of income protection and tax benefits will probably end up paying for itself - it's just that I'm a bit put off by the initial amount.

I just wonder whether I can do this myself and save the money...

Thoughts?

For some background I'm 29 with a high income ($150K+)

Ghetto,

Here's something for comparison purposes for you.

(Insert disclaimer about no advice here)

I'm RG 146 compliant and I produce fee for service financial planning..

A plan from us (depending upon complexity) will cost you between $1800 and $10,000 up front. (Only rarely do plans cost more than $5k) There may be additional fees associated with analysis if you have extensive equity holdings (more than 50 lines) or need multiple and complex structural analysis (I.E you have 15 different company and trust structures with multiple trustees) which is charged at $100 per hour. (once again this rarely occurs)

If you use our services to set up the plan and buy the equity and or property (no Managed Funds and no trailing commission) you are charged between 1.8 and 0.6% of the portfolio - and the same on an annual basis if you want us to manage the portfolio on your behalf.

(By the way for everyone reading this...no I'm not looking for more clients... please don't contact me)

Cheers
Sir O

 

[Jack Payback]

I know I'm probably opening myself up to abuse here but I am also an FP.

One thing that someone thinking of using an FP should keep in mind, is that it is ultimately the licensee that is responsible for the advice given, not the adviser, although they are still held accountable.

The firm I previously worked for had a set of strategies and parameters of advice for advisers to work in. If I gave out any other advice, it could come back to haunt them more than me, although I would probably have been sacked.

That was my biggest frustration, in that I had to give the advice that fitted within that advice structure, whether I thought it was the best advice or not.

Advisers are accountable to their licensee, for those that don't know, an adviser can only give advice as a representative of a financial services license (AFSL). The advice parameters are also guided by the public indemnity insurance policies held by the licensee.

Another point people should know is that the financial planning industry evolved out of the life insurance industry. I remember back in the early 80's my father went to see one. Anybody calling themselves a financial planner back then was really just a life insurance salesman, ie planning for your family's financial future if you died. And that "sell,sell,sell" philosophy has remained in place, even though the advice has become much more sophisticated. There are still a few "lifeys" in the industry but what they sold back then - risk policies and insurance bonds are nearly obsolete now.

Having said that, in terms of the fee structure we worked with, we only charged a client if we were able to make them some money, if we could not find a way to make them any money, no charge.

Initial plan fees from $900 up to a cap of $25K. Yearly fees were capped at $3500 regardless of the time spent working with the client.

Financial planning is not brain surgery, you can do it yourself if you put in the time, effort and expense to educate yourself, like most of the users of this site.

Most of my clients were people who had no inclination to take the effort but knew they should be doing something, or time poor professionals, even sophisticated investors, accountants and I even had one professional trader who wanted a second opinion.

I was surprised by the large amount of people who would put their absolute trust in someone right from the first meeting. Ironically, that was the reason I got in to the industry, because I did not trust advisers!

Well, I've got my headgear on and groin protector in place, let me have it!

 

[pilots]

The best advice I ever got was ask your planner what he is worth, if it is less than you have, he should take advice from you.

 

[prawn_86]

The best advice I ever got was ask your planner what he is worth, if it is less than you have, he should take advice from you.

I dont agree with that. What about high paid sports stars or people who have inherited money etc etc.

Just because you have a lot of money doesnt mean you know how to put it to best use...

 

[Jack Payback]

The best advice I ever got was ask your planner what he is worth, if it is less than you have, he should take advice from you.

Yes I used to get asked that by one client, every time we met "So are you a millionaire yet?" I thought it was hilarious.

And yes, the client was worth more than me - he was a coal miner!

 

[pilots]

I dont agree with that. What about high paid sports stars or people who have inherited money etc etc.

Just because you have a lot of money doesnt mean you know how to put it to best use...

P86, my beef was that when we retired I went to 6 or7 FP, most was under 30 years old, the worst was West pack, I has a young girl who would not have been twenty years old. We have now done it on our own, and thank god we did not buy shares.

 

[tech/a]

Financial planning is not brain surgery, you can do it yourself if you put in the time, effort and expense to educate yourself, like most of the users of this site.

Most of my clients were people who had no inclination to take the effort but knew they should be doing something, or time poor professionals, even sophisticated investors, accountants and I even had one professional trader who wanted a second opinion.

I was surprised by the large amount of people who would put their absolute trust in someone right from the first meeting.

An understandable summary.

The "Are you a millionaire" question to me isn't about the literal sense in have you made a million but more so ---- if you had and preferably much more---how then did you do it and that's the sort of advice I want.

Application of Financial planning in their own back yard

If I could find an F/P who could answer practical questions with practical solutions rather than the canned "Managed Fund---its not timing the market but time in the market" party line then perhaps I would have more respect for them.
They may well be out there but I just haven't met one.

3 Mates are Financial Planners.
I have taken control of my own destiny and as you can imagine have quite some discussions with my mates.

In 1996 I started buying houses and asked them what they thought.
"Good long term investments but good funds were out performing Property"

in 1998 after buying 2 Esplanade Apartments I remember clearly calling 2 of them and telling them of the deals and that 3 were left of 15---that they were an no brain-er (They never asked why) and get into it!--they didn't.

See the point
In the above is THEY had no idea what constituted a "NO BRAINER" in a Property deal. It still remains a set of conditions which are rarely seen in a lifetime in the property market --- Ive seen them together twice in 55 yrs. The best in 1998 but they remained true in Adelaide until 2003.


In 2007 I sold all my long term share holdings (A little early in July). It was and still is a sizable sum. My mates thought I was a nutter. China/India Booming emerging economies a resource boom that would never end--you've heard it.

See the point
Not one saw it coming. But more than a few here including Mr Toxic (Me)-- did.

Next we have economic meltdown.
We now seem to be going to BBQ's rather than restaurants.
One topic is
"How will you grow your business in this economic climate"
The response is and all three I may add.
GROW? You mean survive!!!!
No I mean Grow.---Yes this F/Y we will grow again and are employing new people AGAIN.
They have no clue as to what to do to grow their companies.
This is the greatest opportunity they are likely to EVER see.

Their competitors are being crucified yet they don't have a clue of how to take advantage of the pressure the economy has placed on their competitors.

See the point
They see themselves as Victims not Predators.

I'm a Builder---Civil Works---what do I know?

If I had the need for an F/P Id want one with PRACTICAL PROVEN experience in HIS Financial affairs and NOT the Porsche on LEASE a rented office and an 80% mortgage 2 credit cards and the trophy bimbo.

Yeh he knows how I feel---and still a good mate.

 

[Mr J]

I dont agree with that. What about high paid sports stars or people who have inherited money etc etc.

Just because you have a lot of money doesnt mean you know how to put it to best use...

The point is more important than the packaging.

I went to 6 or7 FP, most was under 30 years old, the worst was West pack, I has a young girl who would not have been twenty years old.

I imagine she'd be like the others, just selling the bank's package.

 

[pilots]

The point is more important than the packaging.



I imagine she'd be like the others, just selling the bank's package.

Yes at the time we had three rental properties, the first thing she wanted was for us to sell them.

 

[helicart]

See the point
Not one saw it coming. But more than a few here including Mr Toxic (Me)-- did.

Tech, what specifically gave you the confidence to sell your whole portfolio?

 

[Jack Payback]

An understandable summary.

"How will you grow your business in this economic climate"
The response is and all three I may add.
GROW? You mean survive!!!!
No I mean Grow.---Yes this F/Y we will grow again and are employing new people AGAIN.
They have no clue as to what to do to grow their companies.
This is the greatest opportunity they are likely to EVER see.

Their competitors are being crucified yet they don't have a clue of how to take advantage of the pressure the economy has placed on their competitors.

[

I agree 100%, I have been saying this to my colleagues, with the same answer you get. It seems I'm pushing it up hill. The thinking is "our revenue has halved, we better go in to our shell", the same as any investor after the downturn, when it should be "now is the time to be active for a long term return."

It's bad economic times like this when an adviser should be their most active, this is when a client needs their adviser the most, the good times are easy, it's now when the adviser really earns their money. The reality is most advisers don't know how to handle a situation like this.

But it seems like advisers are just people who like to go with the crowd. If everyone else is doing it - it must be right.

 

[Mr J]

If everyone else is doing it - it must be right.

Natural human behaviour.