Financial planning

It's a sad fact unfortunately. Most of us learn the hard way when we start out, thinking FP's are going to solve all our woes. Good and bad in every profession of course.

 

I may well do the same in the years to come myself. At this stage it's still about building a large enough asset base and then I will transistion into the cash flow stage when the time comes. I think I need just 1 more good property and with renovating Mansfield and possibly building in under Carina heights and I should be in a strong position. May also do some basic reno's to Redcliffe house as well, but bit more tricky as this one is in SMSF.

 

One thing I noticed during an initial discussion with an FP, there was a strong push towards investing in shares where they would charge a % fee for value under their management. I guess this is where an FP could make a constant revenue similar to a trailing commission and be potentially biased towards shares.

Totally agree though, same as brokers, lawyers, accountants, doctors, builders and any other occupation, there are good ones and not so good ones. At the end of the day, some level of trust is needed unless you think you can be a professional and expert at everything and DIY.

 

Some FPs do charge a % fee based on assets under 'management' - a ridiculous fee which you could just refuse to pay. Some planners just get away with this sort of crap, but I think people should pay a fixed fee.

 

The other hilariou stunt is to charge something like a $5000 for a generic plan .........why???

I also know some FPs charging $600 for the first hour....that is ridiculous...anything more than $350 (incl. of GST) is ridiculous.

The whole FP industry needs to be restructured....

 

Hey Terry, I can understand your feelings here. But where were you when I wanted a FP 20, 30 even 40 years ago? Certainly I could not access a FP in Sydney when I live in Brisbane and we didnt have the internet to find info back then. I used to work in a bank and I didnt like what I saw around me. Like LB, I only ever stumbled upon planners who wanted us to take on excessive life insurance and buy into a managed fund. Until recently I had never heard of Vanguard, Buffett and other such household names. The younger readers here have access to information that wasn't around in the past. We used to bungle along on our own because Blind Freddy could see through the massive holes in "debt recycling" strategies that were around 20 years ago. All I had was Noel Whittaker and Paul Clitheroe on the TV.

 

Same for me. I read and followed Noel Whittaker for many years. I even worked for Paul Clitheroe at IPAC securities back in 1999/2000.

 

The last time i used an FP was when i was forced to when i established a SMSF and it had to be signed off by an FP for my investment strategy. Funnily enough they actually didn't want to sign off on it as they were not happy with the negative cash flow. I had to tell them this was a short term mindset and the property rent was actually not market rent and i would put this up etc. I had to pay $1,300 for a 10 page document of which only 2 pages contained any real details, the rest was just rubbish charts they used for every other client. That was $1,300 of my super money. I am glad to say the property in Redcliffe i purchased back in 2014 has risen in value and made it all worth while.

 

They had a 2 day diploma and charge more than a surgeon!

 

Like I said clowns....I remember going to one very large FP firm...when push came to shove and asked them for proof....the young FP wheeled out his arrogant 33yr old GM...who berated..and his response their needs to be relationship fit...needless to say...it looks like they only want suckers who want to be lead by the nose...

It is time people like ASIC grew some cahones and sorted these cowboys out....

 

Agreed. The wise among us worked out that FP's where never going to get out to where we want to be and moved on to new strategies in this case property for the most part. Even when you work out property is the way to go, that's another mine field to begin with until you make a few mistakes and work it all out.

 

It does need sorting out, but I don't know how this could be done.

Soon you will need a degree to be a planner, but I think any old degree will be accepted.

 

Very easy the reward structure.....and a broader view to not only focus on shares but also other asset classes.

 

That will never happen I think.

People need to be free to charge how they please - unfortunately
Also forcing someone to advise on other asset classes would not be possible.

If I was a planner I would focus on property for example. I wouldn't want to start advising on bonds, fixed interest, real estate trusts etc.

 

I would always ask up front how they get paid: up front set fee, billable hourly rate for consults (and if so what increments do they charge in), or as previously mentioned the % of funds under management.

Of note, if a FP tells you to hand your cash over to them to put in a managed fund this will come under their funds under management vs if they tell you to make a property investment on your own.

Also, enquire into their commissions they get from insurance products they sell you and who pays for that.

Its always good to know an advisors interests from the get-go and to have an open chat about it.

 

Thanks everyone for all the comments.