Where does one get "good" financial advice?

[Tom Ronalds]

Originally posted by CAFA1234 here:

https://www.aussiestockforums.com/forums/showthread.php?t=11094

Serious question - where does one get 'good' financial advice?

The average qualified financial planner will give you
average, often 'big 4 bank' sourced, generic plans focused on diversification by use of various mutual funds. They are SO risk adverse that it is almost a joke.

This same observation, in only a slightly different form, was raised relatively recently by tech/a on the "House prices to keep rising..." thread. It deserves the same answer I gave then, so let me repeat it.

If you are a qualified FP yourself (as you have indicated at the end of your post), you would know that what an FP can and cannot do is largely determined by the compliance departments of the Australian Financial Services Licence holders (also sometimes called "Principal Dealers").

These guys have two missions in life: First and foremost to be risk averse, because they don't want any court cases against their Authorised Representatives, and second to keep it all as simple as possible, so they don't confuse the most feeble-minded, computer-illiterate ex-life insurance agents still found amongst their Reps. ;-)

This is why trading/fast churn is essentially not allowed at any time and also why they tend to frown on any direct investments (shares etc) which are outside the Top 200 and/or not covered by their preferred research house. Many will not even allow instalment warrants (outside of a Telstra float) or similar instruments.

Similarly, placing all your bets into property (as tech/a was saying everyone should have done back in early 2000's) or any other single asset class is a no-no in any circumstances and generally pretty silly anyway - no matter how smart it may look in hindsight. The fact that you can use ridiculous gearing levels in property speculation is not a justification - you may be comfortable with that level of risk, but a prudent adviser should not be.

There are two main reasons here for using managed funds: The first one is that in this way, financial planners do not have to get too involved with the actual investments. This is important, because sadly, many financial planners have little idea about investing or even about what it is they are recommending. I know it sounds strange, coming from a practising CFP, but hey - let's be honest here - this is how so many FPs kept recommending the Basis Yield Fund as "international fixed interest" fund and sold it to risk-averse investors as such!

Secondly, because the major institutions typically make most of their money out of funds management rather than the cut they take out of their Reps' income for services rendered, they much prefer if those Reps act as salesmen and just stick to recommending products from a narrow product list. This is how you get so many advisers placing SMSF clients money into a platform and then in managed funds, thus adding another 2% or more in totally unnecessary costs. It makes life easy for the advisers and makes money for the licence holders. Shame about the clients, but most of these advisers know no different, so they would be genuinely surprised if you told them they are not doing the right thing.

If you want better than that, you need to go to someone who preferably has their own AFS licence, charges on a *true" fee for service basis and is not in any way linked to the majors. Even the word "boutique" has been abused sufficiently now in this country that we have the likes of Hillross (fully owned by AMP - and check out their Financial Services Guide for the pages and pages of product-related conflicts of interest!) calling themselves "boutique"...

I had hourly paid planners from 2 of the large bank planning groups create plans for me back in 2004/6 and although interesting reading...

I'm not surprised - if you went to the banks, you should not expect technical proficiency from those planners. Their job is to sell you the bank products, period.

And if you go for a specialty financial planning house then be very careful - much of the mezzanine finance for house developments (and now lost money) was sourced via financial planners.

True, but interestingly enough, the vast majority of those planners were linked to the main stream dealer group anyway.

Besides, the dodgy schemes invariably pay upfront commissions of up to 10%. My opinion has always been that if anyone wants to/can afford to pay so much to the salesmen of their product, then the product probably cannot stand on its own merit/is dodgy and it should be avoided.

If you go to a fee for service planner, you are unlikely to encounter these type of products.

Having said that, you can still lose money - even the best planners rely on research and you just need to look at the likes of Centro, Allco, MFS and ABC Learning Centres to work out it's easy to get burned. Every one of these was on the "Strong Buy" list of most reputable analysts even when their share price had halved. If your licensee stops you from having hard stop losses on your clients' portfolios (because invoking those could qualify as "trading"), then you will still suffer losses.

...neither could plan in different income streams kicking in at different times within the pension phase.]

That should not be a problem. It is possible to model such scenarios without any difficulty. For example Coin Financial Software (not really appropriate for home use though - too complex, with many modules relating to client management etc, plus the annual licence costs close to $8,000 per user) can model as many strategies, entities and income streams as you can throw at it.

Like accountants or lawyers, average planers are two a penny, but good ones are very difficult to sniff out.

Very true, but hey - isn't that the case with anything? ;-)

Serious question - where does one get 'good' financial advice?

You'll just need to do the hard yards and find someone who knows what s/he is doing.

Does anyone know of a sophisticated software model e.g. excel spreadsheet to model lifestyle financial planning?

I don't think a spreadsheet, even if you could put one together with all of the necessary parameters, would be a viable way to do this. Keep in mind you need to cater for legislative changes on a regular basis (i.e. at least annually) as well.

Declared Interest:- qualified financial planner DPF 1-8 inclusive.

Did you only do the theory, or did you actually have any practical work experience in FP? -- I guess going through the study course and then writing a plan (presumably without the experience or the right tools) would have been a lot of work for little use, if you did not intend to use it eventually.

Cheers.

Tom R

 

[Julia]

Tom, your remarks are less than reassuring for any inexperienced person seeking FP advice, so I hope they are heeded.

I'm always especially surprised that anyone would expect unbiased advice from any FP employed by a bank!

 

[Tom Ronalds]

Tom, your remarks are less than reassuring for any inexperienced person seeking FP advice, so I hope they are heeded.

My comments were not intended to be reassuring; rather to answer some questions that have been raised by others.

I think that it is very important to remember that by the very nature of this forum, most subscribers here would be at least reasonably sophisticated as investors. This is in stark contrast to the general public, where the level of financial ignorance is absolutely woeful.

Most financial planners do not get to work much, if at all, with sophisticated clients. Some financial planners even specialise in areas like Centrelink assistance. In some cases, this work can resemble financial counselling rather than planning.

What this means is that it is not necessarily important that not every FP is an absolute technical guru. Many clients' needs are rather basic and involve things as simple as setting up a budget, regular investment plan and some insurance.

Their long term financial situation will improve immensely just by taking these few simple steps and this is where an FP should be able to add value. At that level, investment products often tend to be of secondary importance, too - the regular savings and investment plan will be more important than whether the managed funds used are run by AMP, Vanguard or Colonial First State.

Some technical gurus, on the other hand, cannot relate well to people, so even their most sophisticated strategy is unlikely to be taken up by the prospective clients.

This is what some posters here seem to have trouble with - to realise that they are not average investors. And because they are such a minority, some of them may well find they know more about the actual investing than the institutional financial planner they've just talked to.

That still does not mean the institutional financial planner is useless - s/he just covers a different market segment, that's all.

Sophisticated investors are relatively rare, so then one can't be surprised the same can be said about sophisticated financial planners (or accountants etc).

I'm always especially surprised that anyone would expect unbiased advice from any FP employed by a bank!

Exactly - you can't expect an ANZ bank teller to tell you the CBA term deposit pays a higher rate of interest either!

But then again as I said above - for many clients, this may not be the most important consideration. If the planner can get them motivated enough to get started on their wealth building adventure, then that planner has done them a large favour.

Cheers.

T. R.

 

[Temjin]

Extremely well written there Tom! That is why I am changing my career into becoming a financial planner. (I come from a mechanical engineer background)

This is why sophisicated technical guru investor such as Tech/A will gain very little from an "average" financial planner out there. He would be better off to find extremely sophisicated financial advisors who specialise in selecting and modelling different PUBLIC managed futures / commodity trading systems from professional CTAs. And to my knowledge so far, I only know of one place in Australia that have only "intermediate" knowledge in such specialised knowledge.

I think that it is very important to remember that by the very nature of this forum, most subscribers here would be at least reasonably sophisticated as investors. This is in stark contrast to the general public, where the level of financial ignorance is absolutely woeful.

I agree 110%. A majority of subscribers here are on a total different level than the average mums and dads in the general public. They don't want to know how to select the best undervalued stock or when to time entry/exit, they just want to make sure their basic financial goals are achieved so they could focus on something they considered more important in their life.

I really need to get a print out of this and save it for future reference.

 

[tech/a]

Why cant F/P's show people who ask.

(1) How to invest profitably in the stock market.
(2) How to make a strategic trading or share investing plan.
(3) How to invest in an IP and be positively geared.
(4) How to invest in proferty and be negatively geared to their benifit.
(5) How to do a profitable housing developement. With little or no cash down.
(6) How to gear a commercial developement.With little or no cash down.
(7) How to turn vacant land into a money spinner with little or no cash down.

My veiw is that a very large majority have no idea themselves.
Thats why they simply DONT KNOW.
They dont want to know---because there is no money in it for them.
If they DID know they would be doing it themselves.
Then THEY'D KNOW.

 

[wayneL]

Why cant F/P's show people who ask.

(5) How to do a profitable housing developement. With little or no cash down.
(6) How to gear a commercial developement.With little or no cash down.
(7) How to turn vacant land into a money spinner with little or no cash down.

In fairness, these particular points are well outside the remit of an FP.

 

[tech/a]

Why?

If I had no idea about these things and I had the capital either in cash or equity and I had heard of success in these areas I'd be thinking a Financial Planner would have the answers.

I wouldn't be seeking out a mechanic.

Theoretically where would most people think they would go to learn about these things?

Id be thinking a financial planner knows everything about investment of my money,no matter how diverse. At least a basic understanding of the Pro's and Con's plus where to go for specific in depth application of those points. Not simply buy these off plan from XYZ developements.

What then about (1) to (4).

 

[Andy_aus]

Where did u go, or what resources did u study to learn about these things tech/a. Point me in the right direction mate.

 

[wayneL]

Why?

If I had no idea about these things and I had the capital either in cash or equity and I had heard of success in these areas I'd be thinking a Financial Planner would have the answers.

I wouldn't be seeking out a mechanic.

Theoretically where would most people think they would go to learn about these things?

Id be thinking a financial planner knows everything about investment of my money,no matter how diverse. At least a basic understanding of the Pro's and Con's plus where to go for specific in depth application of those points. Not simply buy these off plan from XYZ developements.

What then about (1) to (4).

1 to 4 sure, I agree with you, but 5 to 7 is not "investing". It is a business/project.

Should I expect an FP to advise me on buying and restoring vintage cars for profit? Should I expect advice on building a real estate agency?

No! These are specific business activities. An FP is not a business adviser or mentor; see below.

Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
financial planning
–noun
1. the devising of a program for the allocation and management of finances and capital through budgeting, investment, etc.
2. the business of devising such programs.
””Related forms
financial planner.

http://dictionary.reference.com/browse/financial planner

 

[Insan3]

If I may add my 2c worth...
I currently work as a Planning Assistant while I complete my Financial Planning Diploma. It's been interesting, I joined them on the belief they were boutique... they are aligned very strongly with one of the Big 4.

Tom has made several good points. Not all of them are glowing praise for FinPlanning, but are true. The problem in the litigious society is that if a planner does go outside the ASX200 or outside of the Approved Funds List and it goes pear-shaped, the clients are likely to sue and the planner has 0 protection.

Not many jobs were the final product may be out of your hands. Mechanic - car runs or it doesn't. Gardener - grass is mowed or isn't. A Planner can do everything with best intentions, research, etc and it can collapse. They diversify, they get criticised. They stock pick, they get criticised. Research companies also get it wrong. Our planner was telling me 2 years ago, LEI was a Red-light - Sell Immediately at $20. Now it sits nicely at $53.

We deal with high net worth clients, and we charge a fair chunk in fees. For ease, most are placed into a Wrap product incurring fees, then incur fees on the funds. It cuts our Admin work down by a huge amount... would the client prefer to pay by the hour, if 2/3 times the manpower was required?

As far as the double up in fees, that is because of 2 separate processes. How many people complain about extra fees for separate processes in other industries? Do builders cop a hard time for passing on the Architect and Engineers fees? Why can't planners pass on fund managers fees?

I do believe that sophisticated investors can do it themselves, cheaper and more suited for themselves. But most don't have time/choose to spend time in other activities. It would be tough to monitor and act on a Corporate Action if you have a large portfolio - constantly needing to check if anything is announced. We get the details, planner decides if it suited for client, we prepare ROA's, documentations, ensure funds are available, and then simply call the client for a simple yes/no. The client gets interupted for 30 seconds, we spend 3-4 hours doing the work.

The public seem to expect FP's are these magic finance people who know all accounting matters, legal matters, stockbroking, real estate matters and can always pick stocks and provide advice about buying houses or running businesses. They are just part of the team, and people forget this. To do all of the above, you need Accountants, Solicitors, RE Agents, Business Advisors and the FP to bring all the parts together.

That's my part - for what's it's worth, I'm looking to specialise in average-joe's. The people who don;t expect miracles, but the people with 2 kinds and 40hr week jobs who just need help with advice. Much the same way we view Accountants - they do their job, nothing fancy, no major miracles.

 

[Insan3]

Id be thinking a financial planner knows everything about investment of my money,no matter how diverse. At least a basic understanding of the Pro's and Con's plus where to go for specific in depth application of those points. Not simply buy these off plan from XYZ developements.

A planner will generally shy away from Direct Property, two reasons.

- No Commission, No ongoing business.
- It whacks the diversification/asset allocation strategy out of whack.
Need to hold a large portfolio to keep property within recommended guidelines of 20% of investment portfolio!

Also, lack of partial liquidity, low yields, low gains (compared with well-run High Growth portfolios) etc, etc

 

[robots]

A planner will generally shy away from Direct Property, two reasons.

- No Commission, No ongoing business.
- It whacks the diversification/asset allocation strategy out of whack.
Need to hold a large portfolio to keep property within recommended guidelines of 20% of investment portfolio!

Also, lack of partial liquidity, low yields, low gains (compared with well-run High Growth portfolios) etc, etc

hello,

thats interesting,

it is so blatant that because no commission or ongoing commiss direct property is out full stop, amazing

i would say the actual amount down is minimal and maybe a very small part of investment portfolio,

typically, the difference in return between equities and property is a couple of percent,

thankyou

robots

 

[Temjin]

Why cant F/P's show people who ask.

(1) How to invest profitably in the stock market.
(2) How to make a strategic trading or share investing plan.
(3) How to invest in an IP and be positively geared.
(4) How to invest in proferty and be negatively geared to their benifit.
(5) How to do a profitable housing developement. With little or no cash down.
(6) How to gear a commercial developement.With little or no cash down.
(7) How to turn vacant land into a money spinner with little or no cash down.

My veiw is that a very large majority have no idea themselves.
Thats why they simply DONT KNOW.
They dont want to know---because there is no money in it for them.
If they DID know they would be doing it themselves.
Then THEY'D KNOW.

I agree with WayneL, point 5 to 7 is definitely out of a FP's merit. How could anyone expect the "average" FP could do all the things above?? Do you actually believe every FPs in the market should be trained to teach how everyone be able to create these kind of wealth? Do you actually believe the average mums and dads would require such advices anyway?

It's already been explained quite clearly, any average FPs are not suitable for you Tech/A because you seem to know just about anything related to investment. But it does not mean they aren't suitable to 99.99% of the population.

 

[Tom Ronalds]

Why cant F/P's show people who ask.
(1) How to invest profitably in the stock market.
(2) How to make a strategic trading or share investing plan.

Of course a good planner can do that. Keeping in mind that nobody can ever guarantee that your investment will at all times be profitable.

(3) How to invest in an IP and be positively geared.

Most planning practices are prohibited by the terms of their licence to advise on direct property.

Outside of that, given the current massive property bubble, it is pretty much impossible to be positively geared unless you have a very substantial deposit.

My advice at this stage would be to get the hell away from property; full stop.

(4) How to invest in proferty and be negatively geared to their benifit.

Not a hard thing to do, but given the absolutely atrocious short to medium term direct property metrics, you'd have to be mad to enter a loss-making investment into that asset class right now.

(5) How to do a profitable housing developement. With little or no cash down.
(6) How to gear a commercial developement.With little or no cash down.
(7) How to turn vacant land into a money spinner with little or no cash down.

If you had read my previous posts, you would realise that these points do not make sense.

My veiw is that a very large majority have no idea themselves.

What do you call "no idea"? -- There's a lot more to putting together a decent financial plan outside of property speculation.

Thats why they simply DONT KNOW.

Or maybe it's just not relevant to their job.

They dont want to know---because there is no money in it for them.

Possibly in some cases, but not as a rule. It simply is not relevant to most planners - just like most accountants do not know anything much about complex superannuation - or even tax reduction - strategies; they really are just number crunchers. Have you thought to complain about that?

If they DID know they would be doing it themselves.

But of course they wouldn't. Not everyone wants to engage in property speculation or share trading; for all sorts of reasons. Most people, including most planners, are not speculators or traders.

It may well be that when the a**e falls out of the property market here in a similar fashion to what's been happening in the US and now also in Britain, NZ and Spain, you may well be reminded of the lesson you've apparently already learned once before in the late 80s.

Then THEY'D KNOW.

Well, history tends to repeat itself.

Cheers.

T. R.

 

[Tom Ronalds]

A planner will generally shy away from Direct Property, two reasons.

- No Commission, No ongoing business.

That may to some extent be the case with commission based practices, but ultimately the terms of your licence will not allow you to offer specific advice on direct property; full stop.

This is a federal government regulation.

If you are only a trainee or a junior planner, you may not be aware of that, but this is definitely the case.

Other than that, personally I think that the "no trailing commission - no advice" argument is symptomatic of all the bad things that are wrong with this industry. Either you are paid for advice, independent of product - in which case you can call yourself a professional - or you are paid by product providers for selling their product - in which case you are nothing more than product flogger and an agent for that product provider.

Unless and until the link between product and advice is decisively broken once and for all, this industry (financial planning) will continue to attract criticism. And very justifiably so.

- It whacks the diversification/asset allocation strategy out of whack.
Need to hold a large portfolio to keep property within recommended guidelines of 20% of investment portfolio!

Recommended by whom? Be careful using arbitrary figures like that; they will be wrong at any given time for the majority of investors.

Also, lack of partial liquidity, low yields, low gains (compared with well-run High Growth portfolios) etc, etc

Those are all subjective points and will depend on the individual client's circumstances.

Really the only relevant issue here is that you cannot make recommendations on direct property outside of general advice.

Which practice do you work for in Cairns?

Cheers,

T. R.

 

[Tom Ronalds]

hello,

...

i would say the actual amount down is minimal and maybe a very small part of investment portfolio,

thankyou

robots

Robots, it is not the "actual amount down" that is important; it is your overall commitment. Ultimately there will be debt to the bank that you will need to repay at some stage, or that will bankrupt you. That same debt also tends to impact on your cashflows somewhat...!

I would have thought that a sophisticated property guru like you would know such basic things...! ;-)

T. R.

 

[2BAD4U]

My personal belief is that people who NEED to see a financial planner only require basic advice, they wouldn't be looking for the more advanced information.

There are people out there who simply can't work out that if they spend more than they earn then they're on the road to ruin. This is the type of clientele that I think most FP's are there for. Most people who own properties or shares maybe started off with help from an FP and now deal with more sophisticated advisors or even went off and got educated themselves.

Financial planners have their role but it probably doesn't suit a lot of people on this forum, that doesn't mean they are useless, incompetent, etc.

 

[robots]

Robots, it is not the "actual amount down" that is important; it is your overall commitment. Ultimately there will be debt to the bank that you will need to repay at some stage, or that will bankrupt you. That same debt also tends to impact on your cashflows somewhat...!

I would have thought that a sophisticated property guru like you would know such basic things...! ;-)

T. R.

hello,

no guru here just a punter who saves his money and reports on current situations,

i am in direct shares and property, and are amazed at the such strong comments towards property as a no go zone by financial planners,

similarly, managed funds and stocks have had a major bull run over the last five years and many think this has ended yet I will guarantee these are on the top of many fp's list when the client gets their report,

thankyou

robots

 

[tech/a]

Hmm some good stuff to reply to here.

Insan3

There is a saying I learnt many years ago.
"Go where the Money is and Go there OFTEN" while your motivation may well be noble in helping the little guy your own financial future lays with the big fish.

Personally I think you all (Financial Planners) should be paid for performance---if I hand over X$ for you to grow for me. If I want specific advice then I'll pay an Hrly rate.--but that's me.

Tom

Of course a good planner can do that. Keeping in mind that nobody can ever guarantee that your investment will at all times be profitable.

And so can over 50% of posters here,but very very few will be able to give you the blueprint you need to be successful in ALL market conditions---I'm not talking about being right all the time but Profitable year in year out---something FUNDS dont and cant do. There are people who have taught me and a few here how to achieve this and they arent F/Ps.

Most planning practices are prohibited by the terms of their licence to advise on direct property.

Outside of that, given the current massive property bubble, it is pretty much impossible to be positively geared unless you have a very substantial deposit.

My advice at this stage would be to get the hell away from property; full stop.

In the middle 90s All of my F/A friends (I have 3) warned me in no uncertain terms about Property investment. In 2001 I vividly remember a barbeque arranged where I chatted to all 3 and 4 of their cashed up mates about my own story. Seems in your circle its no different!

My advice would be to UNDERSTAND how you can profit from Property in these times---at ANY time. Think outside of the domestic home.There are quite a few---opportunities.
But as a savvy financial man this should be child's play.

I just cant fathom the lack of DEPTH in wealth creation ability ---TRUE wealth creation ability displayed by people who have been trained by people who are supposedly experts in the field.

What do you call "no idea"? -- There's a lot more to putting together a decent financial plan outside of property speculation.

I love this!!
There are more millionaires created from property than ANY other investment yet after the biggest boom seen in our lifetimes F/P's are bellowing out all sorts of warnings.---So why wasn't Property at the top of the list over the last decade? No idea---I call NO DAMNED IDEA. How many F/Ps do you know that have 10--IP's in a diverse range of property holdings taking advantage of the massive demand out there and the massive capital appreciation which is still and will still go on!!---of course you know of which areas I'm speaking of.?

Tom Let me ask you a question.

How can I recognise the precursor to the next boom in Property---DOMESTIC? It sticks out like a wart! Has done so 3 times in my life time.

Or maybe it's just not relevant to their job.

I cant honestly believe this. How can the single most valuable wealth creation vehicle over ones lifetime not be relevant to an F/P's job?
Regardless of property Market conditions---at sometime people will want to know just like Andy_Aus.

Andy_Aus.
I searched out people who were involved in development over the years I have spent many lunches with.
(1) Speculators--people who flip property---some from options to buy.
(2) Long term investors in multiple property holdings.
(3) Developers of Apartments,Commercial and Industrial complexes.
(4) Land developers experts in subdivision.
(5) Renovators.
(6) Wrappers--and not IcedT

All have demonstrable hands on experience in these fields--in other words this is what they do!

Look I know there are times when each asset class comes into its own.
I also know (as I have friends in the industry) That they want the "Whales".
The guys who have millions to park in trailing commission packages. They don't want the struggling couples who don't have a 5 grand bank account.

The truth is F/Ps can service the clients they don't really want but have little to offer the clients they do want.


95% of F/Ps want to have the wealth their Whales----- and should be spending more time learning from their whales than attempting to "Help" them.

 

[Tom Ronalds]

There is a saying I learnt many years ago.
"Go where the Money is and Go there OFTEN" while your motivation may well be noble in helping the little guy your own financial future lays with the big fish.

Personally I think you all (Financial Planners) should be paid for performance---if I hand over X$ for you to grow for me. If I want specific advice then I'll pay an Hrly rate.--but that's me.

Well this may surprise you, but this is exactly how the practice I work for charges.

You can opt for an annual service package, where you pay a fixed dollar fee for a fixed level of service. In some cases, there may be a performance fee; in other cases, where it's only about advice and not about investment management, you just pay the package fee.

Or you can pay by the hour.

We're not the only ones who work like this and the fact that you are not aware of it doesn't mean it doesn't exist. You just need to ask around to find what you prefer.

You're still unlikely though to get the type of advice you obviously seek (see below).

And so can over 50% of posters here,but very very few will be able to give you the blueprint you need to be successful in ALL market conditions---I'm not talking about being right all the time but Profitable year in year out---something FUNDS dont and cant do.

That's great, but so what? There is no such thing as a universal "blueprint", so your point is moot. You consistently keep forgetting that most people are not like you, and what may be a "blueprint" for you won't work for most others.

If you are as successful as a trader/investor as you are essentially stating, you would well know that the majority of people do not even possess the psychological make-up to consistently apply a trading/investment strategy, let alone be able to implement some kind of a magic grail.

Truly, you surprise me that you'd even come up with something like such a suggestion.

Even the most successful investors are not "always" profitable; even on a year-in/year-out basis, as you state - they just manage to keep losses to an acceptable minimum. Have a look sometime at the track record of the likes of Jerry Parker of Chesapeake Capital, one of the original Turtles. Even Warren Buffet has recently written off a fair bit of money on his options speculation - but when you're as big as Buffet, you can still come up in front overall, as you can move the markets by yourself.

There are people who have taught me and a few here how to achieve this and they arent F/Ps.

Well that's great and I say good on them, but it still is not relevant to the majority of the population, because they are not at your level and never will be.

Does this still not make sense to you?

I'm sure Buffet does not seek help with his investment strategies from financial planners either; does this mean nobody else needs financial planners then?

In the middle 90s All of my F/A friends (I have 3) warned me in no uncertain terms about Property investment. In 2001 I vividly remember a barbeque arranged where I chatted to all 3 and 4 of their cashed up mates about my own story. Seems in your circle its no different!

Yes, you have mentioned this particular anecdote before.

Given that property did essentially nothing throughout the 90s, if this happened in the middle of that decade, then their advice was sound, as the opportunity cost over the next 5-6 years would have been pretty large.

According to you, an impending boom was obvious to anyone at the end of that decade, so taking out the maximum possible amount of leverage and shoving it all into property was the appropriate and prudent way to go.

You know, I have to say again that for a sophisticated investor, you surprise me with statements like this. On one hand, you very correctly pointed out to someone elsewhere on the forum that technical indicators have the bad habit of looking fantastic in hindsight; and yet they more often then not fail when applied to new trades.

Despite this, you clearly do not see that in this example, you are engaging in just the same error: You are speaking with the benefit of hindsight.

While it may have been clear to you that property was about to take off, by taking out maximum leverage into a single market segment, you could just as easily have been wiped out if the Asian crisis had hit as hard here as it did in many Asian countries. The subsequent property boom was due to several factors, many of those would not have been easy to predict - like the relatively loose monetary policies here and especially in the US, or the first home owner grant and so on.

You could not have predicted the eventual outcome, because you'd have no way of knowing any of this at the time - and yet you, an experienced investor, had placed a risky bet on an illiquid asset, which had the potential to return big, but also to wipe you out for good.

You don't seem to be able to comprehend that no FP will give this sort of advice; no matter that that level of risk may be acceptable to you. It won't be acceptable to the adviser's PI insurer. And it will be a breach of most AFS FP licences.

To put it simply and to repeat: You're missing the point in what financial planners can and cannot do in their professional capacity, just like you're missing the point of what a financial planner's job actually is in this country.

My advice would be to UNDERSTAND how you can profit from Property in these times---at ANY time. Think outside of the domestic home.There are quite a few---opportunities.

That's great that there are plenty of opportunities. However these'll typically not be within the realm of your average investor, who is struggling to even understand the concept of net yield; s/he just knows that negative gearing into property is a sure way to riches.

At this time, investing in direct property is for most investors not a good idea, because the property market is heading for a crash.

If you were so prescient about the coming booms, surely you can now see the writing on the wall just as clearly?

But as a savvy financial man this should be child's play.

Most would-be investors are not savvy. However, be assured that their lawyers are...!

I just cant fathom the lack of DEPTH in wealth creation ability ---TRUE wealth creation ability displayed by people who have been trained by people who are supposedly experts in the field.

Well obviously - just like you clearly can't fathom the actual job description of an average financial planner and the legislative/legal constraints under which s/he must work.

I love this!!
There are more millionaires created from property than ANY other investment

Have you got any hard data that supports this claim?

And please don't include owner occupiers in this; those asset-rich, but income poor, struggling oldies who now cannot afford to pay the rates on the beach shack they've lived in for the last 50 years, in an area that has suddenly been taken over by urban speculators!

yet after the biggest boom

You mean the biggest bubble, surely?

seen in our lifetimes F/P's are bellowing out all sorts of warnings.

There is a reason for that: Bubbles tend to burst. Going by the size of this one, when it goes it won't be pretty.

Incidentally, the vast majority of people are a lot happier taking lower returns along the way, as long as they reduce the chance of losing their capital.

Clearly you don't believe that it is the duty of an ethical adviser to advise his/her clients to steer away from an impending property crash?

---So why wasn't Property at the top of the list over the last decade?

How do you know it wasn't?

No idea---I call NO DAMNED IDEA. How many F/Ps do you know that have 10--IP's in a diverse range of property holdings

I don't know any that would be quite as silly so as to park all or even the majority of their wealth into one highly illiquid asset class and gear themselves up to the eyeballs when the writing is on the wall for the whole Ponzi scheme to fall over.

I do have clients in that situation, but they are worth many millions of dollars, they have very low relative levels of gearing (some have none) and own plenty of other assets outside of property as well.

taking advantage of the massive demand out there and the massive capital appreciation which is still and will still go on!!---of course you know of which areas I'm speaking of.?

No, as a matter of fact I don't know. What I do know is that of the two major property developing companies here in FNQ, one has had its shares downgraded recently by several margin lenders from 40-45% to zero, both of their share prices have essentially collapsed, they are selling assets wherever they can and I have spoken to people who have done contractual work for them and have been paid late (some are still waiting to be paid).

I am also aware that property for sale inventories are going through the roof nation-wide and that prices are now dropping by double digits in many places - yes, including Adelaide by up to 15% in places; see here and disregard the usual REA spin:
http://tinyurl.com/3q57z9

Furthermore, commencing from June, substantial numbers of fixed rate mortgages will start re-setting to variable, implying an increase in monthly repayments of hundreds of dollars for many borrowers, who are already stretched by rising prices of fuel and food. When unemployment starts rising and the credit crunch hits here in earnest, then you can remind me how great the opportunities in property are and how you can't cope with demand.

Cheers,

T.R.