Why do we need Financial adviser and what do they do?

Discussion in 'Accounting & Tax' started by mikel, 13th Sep, 2019.

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  1. mikel

    mikel Member

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    Hi All,

    We have been with our financial adviser for more than 5 years now. I got on to him through AMP Super and he has charged me an ongoing 0.44% advice fee (based on my super balance). Over the first year, he has helped to set up a life insurance component and invested my super to Perpetual fund.

    No changes happened for the last 4 years, he says there is no need to change as this is a long term strategy. So my question is why do I need to keep paying this ongoing fees? is this somewhat of fee for no service from these AMP financial advisers.

    When I prompted him on what other advice he could potentially help in terms of property/share investment he would ask me to seek help from broker and accountants.

    My gut feeling is that my adviser does not look after any other financial aspect, but only there to eat up my balance over time.
    1. Should I sack him and get another adviser?
    2. Do I need an adviser? given they're not able to help me with property or share investment which's what I really interested at this stage of my life.

    Would love to hear your opinions.

    Cheers
    Michael
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    Good question - you don't need to keep paying their fees. If you need one get one who charges on an hourly basis.
     
  3. See Change

    See Change Well-Known Member

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    Most people use financial adviser's because they don't have the experience or confidence to manage their own affairs and for many people that's appropriate .

    Most people on this forum don't use financial adviser's . That's why they come here . The main thing you have to be wary of here , are people who are giving advice that happens to align with products they promote / sell ... That has caught a few people out in the past .

    We've talked to FA's on two occasions and both times were a waste of time and money . The first one set us back years and the second one was a hoop that we had to go ( bank imposed ) through to get finance for our super to buy a property .

    The only time I'd use a financial adviser would be if it came from a recommendation from a friend who was a sophisticated investor to an FA who had experience and access to those kinds of investments .

    Cliff
     
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  4. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    A financial planner should charge an annual fee that is agreed in advance yearly. You should then get the option of engaging them each year or not. Their fee should not be dependent on the level of assets invested. They should operate like accountants or doctors.

    Ask if the planner is independent. If your planner is not independent you should ask if they give advice or if they are a financial distributor.

    Increasingly planners are becoming independent and transparent. There is still a hang over with lots of life insurance salesman floating around.
     
  5. mikel

    mikel Member

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    Our planner claimed to be independent and has proven to be as he signed our life insurance to mlc rather tham amp.
    The agreed rate was signed on the first year which was .44% of my balance. So as my balance increase the fee increases.
    I dont mind paying the fees as long as i could see some value. But things have stayed the same for the last few yrs.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    The word independent is regulated under the corporation act. An amp planner wouldn't be able to claim that
     
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  7. The Y-man

    The Y-man Moderator Staff Member

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    I can see great value in the arrangement - for your planner :D

    Check out the financial planner story told by @Big Al

    The Y-man
     
  8. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    Get them to send you an email saying they are an independent financial planner. If he tells you something verbally but refuses to document that then you have an idea of who you are dealing with.
     
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  9. significance

    significance Active Member

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    Our first (independent, fixed annual fee) financial advisor did basically nothing. Set up a portfolio of shares for us that did not line up with our stated ethical constraints, didn’t explain what the companies were or why they had been chosen, and contacted us just once per year to ask if we wanted updated advice at an additional fee.

    After several years, we switched to a different advisor (also independent, with a transparent fee structure). They researched and set up a new portfolio for us, checking that each investment matched our stated preferences and that we were happy with the company and the risk. They send regular market updates and keep an eye on our investments all year, recommending changes from time to time. They are available for consultations at no additional fee any time we feel it is needed, such as when changing jobs or buying a new property. We are much happier with them.

    It is definitely worth shopping around if you are not getting value from your advisor.
     
  10. Sackie

    Sackie Well-Known Member Premium Member

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    Personally I'd never engage a financial advisor unless they came well recommended from someone very financially successful and the FA was successful themselves. No point taking advice from anyone about finances if their own finances aren't great. Makes no sense and is a risky endeavour.
     
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  11. mikel

    mikel Member

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    That sounds like the type of planner and services we are looking for :). Are you able to disclose your fixed annual fee and whether it gets deducted from your super?
     
  12. significance

    significance Active Member

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    The advisor that we switched to doesn't have a fixed annual fee but a percentage of the portfolio -- but it's worth it for the better advice. They aren't managing our super (we are using traditional super funds), but our investments outside super.