Opinion Investments and other money matters

[Dobie G]

Most people probably aren't aware that many financial products recommended by a financial planner often have commissions and on going bonuses paid to the FP. The former Labor government introduced measures to help stop people losing their life savings because of poor investment recommendations, in particular it was a response to the Storm Financial collapse. Regardless of whether the investment made a profit or a loss the FP still received the same commissions.

This current government has succumbed to pressure from the big end of town and decided not to go ahead with the following

• FP having to act in the client's best interest
• Full fee disclosure
• Opt-in requirement every 2 years to review a contract
• Changes to grandfathering arrangements to favour the clients

From http://www.abc.net.au/news/2013-12-...to-future-of-financial-advice-reforms/5168742

The big end of town......

 

[Power Raid]

Most people probably aren't aware that many financial products recommended by a financial planner often have commissions and on going bonuses paid to the FP. The former Labor government introduced measures to help stop people losing their life savings because of poor investment recommendations, in particular it was a response to the Storm Financial collapse. Regardless of whether the investment made a profit or a loss the FP still received the same commissions.

This current government has succumbed to pressure from the big end of town and decided not to go ahead with the following

• FP having to act in the client's best interest
• Full fee disclosure
• Opt-in requirement every 2 years to review a contract
• Changes to grandfathering arrangements to favour the clients

From http://www.abc.net.au/news/2013-12-...to-future-of-financial-advice-reforms/5168742

The big end of town......

I am not sure financial planners are the big end of town but I haven't seen such a rort of an industry other than property.

Quite sad really.

Oh and better rules won't fix it. The culture is wrong.

I have seen bikie gangs and mafia buy into FP businesses to see people's financial records and then blackmail them.

No level of disclosure can fix that!

 

[Dobie G]

I am not sure financial planners are the big end of town but I haven't seen such a rort of an industry other than property.

Quite sad really.

Oh and better rules won't fix it. The culture is wrong.

I have seen bikie gangs and mafia buy into FP businesses to see people's financial records and then blackmail them.

No level of disclosure can fix that!

It's the big end of town pressuring the government, just google "financial planner" and see how the banks and insurance companies control the industry. No different to the tactics used by Coles and Woolies against the corner shop and small petrol station.
The culture of many FP's isn't good, putting their interests before the clients.
Bikies are kicking up against the new Qld laws, itsn't it so sad?

 

[Power Raid]

It's the big end of town pressuring the government, just google "financial planner" and see how the banks and insurance companies control the industry. No different to the tactics used by Coles and Woolies against the corner shop and small petrol station.
The culture of many FP's isn't good, putting their interests before the clients.
Bikies are kicking up against the new Qld laws, itsn't it so sad?

It is sad and it is frustrating.

I own a third stake in a merchant bank which specialises in wholesale ( not retail - mums and dads) transactions in the resources industry.

Being wholesale we have no disclosure obligations but have the threat of legal by equal or more powerful organisations. So that risk keeps the industry relatively honest.

The mums and dads are instead protected by legislation and crazy disclosure.

There are two problems with this:

1) the good offerings only go to wholesale clients as it is easier to pick up the phone and make an offer rather than write up a prospectus and submit it to ASIC.

2) the risk and issues are tucked away in the hundreds of pages of crap.

The other important rules in finance are "look at the whites of people's eyes" you know when they are telling the truth and it's not what they say rather what they don't say that matters.

 

[Dobie G]

It is sad and it is frustrating.

I own a third stake in a merchant bank which specialises in wholesale ( not retail - mums and dads) transactions in the resources industry.

Being wholesale we have no disclosure obligations but have the threat of legal by equal or more powerful organisations. So that risk keeps the industry relatively honest.

The mums and dads are instead protected by legislation and crazy disclosure.

There are two problems with this:

1) the good offerings only go to wholesale clients as it is easier to pick up the phone and make an offer rather than write up a prospectus and submit it to ASIC.

2) the risk and issues are tucked away in the hundreds of pages of crap.

The other important rules in finance are "look at the whites of people's eyes" you know when they are telling the truth and it's not what they say rather what they don't say that matters.

Most mums and dads blindly put their trust into FP's. I have my own small accounting practice and have seen many clients burnt badly by dubious investments recommmended by FP'ers. I had to study extra to give very limited FP advice yet the FP'ers can give full tax advice without having any qualifications or restrictions.
As you said, who has the time to wade through pages of fine print and 12 page quarterly investment reports to work out what rate of return (or loss) their capital is getting and also what fees the FP are charging.
Rant > rant.

 

[Power Raid]

Most mums and dads blindly put their trust into FP's. I have my own small accounting practice and have seen many clients burnt badly by dubious investments recommmended by FP'ers. I had to study extra to give very limited FP advice yet the FP'ers can give full tax advice without having any qualifications or restrictions.
As you said, who has the time to wade through pages of fine print and 12 page quarterly investment reports to work out what rate of return (or loss) their capital is getting and also what fees the FP are charging.
Rant > rant.

I am a CA by training and there is no way I would give tax advice despite 3 years Uni, a CA, 4 years big 4, close to 10 years merchant banking and many more years of running businesses and international trade.

Sure I still do my own tax and our companies taxes but giving advice needs a specialist with experience.

 

[Dobie G]

It's old but true

The Squeezer


The local bar was so sure that its bartender was the strongest man around that they

offered a standing $1,000 bet. The bartender would squeeze a lemon until all the juice

ran into a glass, and hand the lemon to a patron.



Anyone who could squeeze one more drop of juice out would win the money.



Many people had tried.... over time: weightlifters, blacksmiths, etc., but nobody could do it.



One day, this scrawny little fellow came into the bar, wearing thick glasses and a polyester suit,

and said in a small voice, "I'd like to try the bet."



After the laughter had died down, the bartender said, "OK"; grabbed the lemon; and squeezed away.



Then he handed the wrinkled remains of the rind to the little fellow.

But the crowd's laughter turned to total silence.... as the man clenched his little fist around the lemon....

and six drops fell into the glass.



As the crowd cheered, the bartender paid the $1,000, and asked the little man:

"What do you do for a living? Are you a lumberjack, a weight-lifter, what?"



The little fellow quietly replied:





"I work for the Tax Office."

 

[Dobie G]

Reserve Bank leaves official interest rates on hold at a record low 2.5 per cent
From ABC breaking news

 

[Power Raid]

I am fairly sure the ATO takes the juice not the last few drops.

Nevertheless, pretty funny

 

[proman_x]

I am fairly sure the ATO takes the juice not the last few drops.

Nevertheless, pretty funny

Except in the case of Mr Murdoch

What area does wholesale finance cover, Raid ?

 

[Power Raid]

Except in the case of Mr Murdoch

What area does wholesale finance cover, Raid ?

retail is a term used in finance and by asic to describe investors as per s761GA of the corporations act (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761ga.html). Essentially mums and dad type investors who require additional disclose material such as a prospectus etc.

wholesale investor is generally used to describe someone captured by s761G (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761g.html). Essentially the wealthy or experienced other exceptions as per s708 (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s708.html).

 

[proman_x]

retail is a term used in finance and by asic to describe investors as per s761GA of the corporations act (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761ga.html). Essentially mums and dad type investors who require additional disclose material such as a prospectus etc.

wholesale investor is generally used to describe someone captured by s761G (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761g.html). Essentially the wealthy or experienced other exceptions as per s708 (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s708.html).

Thanks for the heads up, Raid