Financial Planners....confusion

There’s nothing in that advice of major complexity. Simple stuff. It’s one thing to charge that sort of fee for initial review, advice and implementation etc but to continue to charge that on an ongoing basis is as suggested daylight robbery.

 

It is amusing that they charge for estate planning advice which is - go and see your lawyer!

 

Although there's nothing of major complexity, people who don't identify the simple planning opportunities can stand to miss out on a lot more than the cost of seeking advice.

The amount of people I see when preparing strategies that have just been so inactive with their financial planning that they have cost themselves so much, and it's through no fault of their own, it's just simply you don't know what you don't know. Even the simplest strategies can leave clients far better off.

 

Agreed that if a planner is charging clients extra for estate planning it's a bit of a joke, but also a planner who doesn't work with a client to put together an estate plan isn't really doing their job. Even if it's just having a meeting and working with a client and their lawyer to develop and understand their wishes, it's important for the planner to be involved to make sure that everything is in order.

 

It's a fixed fee guys....not an extra for explaining a TT to them, just outlining somethings they picked up on...same as explaining to them they could have still been contributing significant sums to super as they have been working in their old biz they handed over, essentially just for something to do...no pay. It's because the one that has always handled finances, investments, biz etc has gradually lost the ability for it...

What's a better alternative for an elderly couple?
1) Cheaper or hourly charge....I'll continue to keep my eyes and ears out, but unfortunately the market for these guys seems to be very expensive...had a hard enough time finding someone charging a fixed fee.
2) Industry super fund....as mentioned it would save around $2-3k....until they sell more property and add that in....I think there's def $2-3k of value in it anyway.
3) I handle it all....This may be valid, I'v got a bit of an idea, may in the future when it's more simplified???

Any other suggestions or advise?
Cheers

 

The economics of operating a financial advice business have drastically changed over the past year. The cost of PI cover and licensing has blown out.

Grandfathered commissions are switched off, upfront insurance commissions have fallen from 120% to 66%, this leaves us with pure Fee For Service, and advisers must all be highly qualified once the education requirements kick in. Annual CPD requirements are 40+ hours, we have to sit the FASEA Exam (4 hour exam), and undertake additional study.

We are governed & regulated by FASEA Code of Ethics, Corporations Act, Tax Practitioners Board and ASIC. We're answerable to our licensees' compliance and vetting procedures. The requirements around research and record-keeping relating to each piece of advice will make your head spin.

You do not want to shop for financial advice based purely on cost. The guy who is still charging low fees will either go out of business, or be earning some form of conflicted remuneration from elsewhere.

The result of all this is a higher quality of advice, but far more costly. It won't suit everyone, but a good adviser will make sure you get your money's worth, in fact it's now enshrined in the FASEA Code of Ethics....we have to PROVE our advice is value for money.

 

I was chatting with an FP and this aspect surprised me. I was told even if his firm receives an email from a client simply stating to buy or sell, they are required to document the fact no advice was requested and also advice the client of that. That costs time and therefore money. The twists and turns of some legislation has interesting outcomes.

Client: Buy this.
FP: OK but you didn't seek advice so this is what happens.
Client: I know I didn't ask for advice. I'm a Trustee for a SMSF and am not obliged to seek advice.
FP: Doesn't matter what you're legally obliged or not obliged to do. This is still what's going to happen. Here is the account.

Personally I think it's crazy but there it is.

 

Yes I agree - don't choose a planner just based on cost. You want to get a good one for what you are after, but that doesn't necessarily mean a specialist on a high fee - or with some planners a non-specialist who is getting away with charging high fees, just because of the demand.

 

In many cases now, we have to turn customers away who refuse advice. SMSFs are one example, we cannot do any work for an SMSF unless they agree to personal advice.

The legislation now is an absolute minefield, but there are still some great advisers out there who are figuring out how to navigate it.

 

Seems strange though that eSuperfund continue to be low fee and successful, know personally some happy clients.

 

I think they do administration though and not advice?

 

And so...

Majority of Aussies not seeking financial advice

I do not know if the stated percentage is true or not plus there could be some who don't require advice.

 

that is unfortunate. The way things have worked out is not right. but I don't know what the solution is as if not regulated you can people getting dodgy advice if too regulated the ones that need it most are not getting advice.

 

The conundrum of seeking advice, acting on it and then if it all goes pear shaped...

Canberra couple who switched supers say they're $300,000 worse off

Blowed if I know where the line between being a Trustee and advice should or can be drawn. One for the courts or maybe settlement out of court I suppose.

 

Some quotes:

It is legal in Australia for financial advisers to develop funds for people to invest in and for the advisers to sell those funds to the clients they're advising.

Dixon Advisory denies that there was any conflict of interest between its role as both a financial adviser and as a developer of products.

They said jointly, "We were made aware that these products were associated with Dixon Advisory and that we would be paying fees applicable to the products, in addition to the annual advice and administration fee of $5999."

 

I wonder whether a great, super smart accountant will do the trick

My accountant is a great investor, understands structure and how it can help reduce tax.

He also has been successfully investing in shares, property CIP/resi and businesses. He is not selling me any particular product

 

OK, I did not know this was the case.

 

Accountants have their own conflicts of interest to look out for. They sometimes favour more complexity in terms of your tax situation....more work for them to charge out and will tie you closer to them going forward.

Hence they may push SMSFs, Trust and Company structures & investment properties. All are fine if they genuinely save you a lot in tax $$ and help you grow wealth, and create a better life for your family.

Just something to be wary of as complexity isn't necessarily a good thing, and it can be costly and stressful 'unwinding' all these structures down the track.