A new era – DIY Financial Planning and Management.

 Foes Join Forces to fight for the freedom of financial advice.

 

http://www.abc.net.au/news/2014-07-15/coalition-strikes-deal-with-pup-on-financial-advice-laws/5598738

Who would have thought that Clive, throwing his weight around, Palmer would capitulate to Tony, after declaring he would stand firm on an issue of such importance to the people of Australia

But then financial advice in Australia only yields the highest superannuation fees in the World. Medical Practitioners guilty of accepting kick-backs for promoting Pharmaceutical Products would risk being struck off the Medical Register if they did likewise. The finance industry lacks these ethical standards. They enjoy entrenched compromised (sorry I should say conflicted) payments for promoting the products of those who think they need the money more than the elderly, and will pay to get it.

It really is time to stop this rape of the wealth of the elderly. Such kick-backs should never be permitted. They are corrupting. They are akin to bribes. We have been tolerant too long of such unethical practices. Most advisers are well-educated, well-informed; their services are valuable if the investment advice is independent.

It is proposed that advisers should sign some sort of legal contract agreeing to act in the best interest of each client. How will this help? Promising to be a good boy does not guarantee honesty and frankness. Self interest still wins. Clients should have a right to expect their interests to transcend those of providers whatever the service.

The solution is simple. No need for Tony Abbot to reduce consumer protection against poor advice, under the pretext of a small government policy. Please just ban the kick-backs!

 

Tony at his negotiating best. Who’s the boss around here?

 

Jovial Clive the foe joins forces

 

What is the future of Financial Advice in Australia? is it shaping up as a New Era of DIY Financial Advice and Management?

 

The People of Australia are more intelligent than the finance industry has given them credit for.

They knew when they were being ripped off but were powerless to act in the past. They had no recourse to recompense or justice. There was no court of appeal. ASIC’s attitude was “Sorry, there is nothing we can do”. Buyer beware! Investments are risky.

The internet is empowering them to assume control of their own savings. They do not wish to be treated paternalistically and talked down to. They want to keep ownership of their own money, not placed in large investment pools where their returns are at the discretion of the fund manager.

Just this year Trustees Australia who specialises in Managed Investment Schemes, created a new and needed arrangement to raise capital for agricultural projects. They floated  on the ASX a Property Trust (Rural Funds Management, Code RFF) which leased rural assets to similarly listed entities that managed the rural enterprises. With listing comes liquidity for investors to exit when needed. This may be a template to replace the many past development schemes with a long lead time to profitability in which capital was quickly exhausted to the detriment of both investor and to the tax- office when it allowed deductions.

Now those who can afford to set up their own self-managed superannuation fund do so, and assume responsibility for their own investments. About one-third of all super funds are in this DIY category. This does not diminish the need for advice as some may have feared. Rather it has created opportunities for advisers and providers of services in a host of previously unimagined ways.

One of the newest phenomena in this era is the advent of community investment websites. The largest of them “Hot Copper” has a staggering more than 250,000 registered contributors who produce in excess of 6000 posts a day, sharing their thoughts and views. There is a real thirst for financial information, a need met to some extent by such websites, the many well-attended seminars for the public conducted by financial providers, the sale of books and periodicals on finance, and TV channels such as Sky Business, CNBC and Bloomberg.

Over the past year and a half I have contributed to a new boutique website “Ten Bags Full” which features other innovative information gathering services and features. Other similar websites include:

  • Australian Stock Forum
  • InvestEd
  • ShareScene
  • Sharesguru
  • TopStocks

Professionals may be unfairly contemptuous of the forum concept, deriding them for the standard of comment. Whatever their faults, they do stimulate interest in and support for the speculative small end of the market where professional analyst coverage is usually lacking. Many contributors display outstanding and intimate knowledge of companies about which they write, providing investment leads and warnings that can be invaluable to others. Without the support of retail investors many ventures and enterprises would never raise the capital they need.

There is no need for the government to pander to the finance industry. It is still doing very nicely. Whatever the government decides, let it include “Scrap the Kick-Backs”. They are unethical, not needed, and are corrupting.

 

 



Categories: Business, Community Issues, Financial News, Investment, Market Regulation, Superannuation

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