A new era for personal financial advice?

A new era for personal financial advice?The Future of Financial Advice (FOFA) reforms ban “conflicted remuneration” … in the future

Many people will be unfamiliar with the new FOFA reforms that came into effect on 1 July 2013. In this article, we look at one of the key changes: the banning of “conflicted remuneration”.

The intent of the FOFA reforms is to improve the quality of financial advice in Australia. One of the key elements of the reforms is to ban “conflicted remuneration” i.e. the payment of commissions and rebates by financial product issuers to advisers who recommend their product to a client. This reform is not peculiar to Australia – there has been a worldwide push to remove commission based financial products.

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The Pros and Cons of Lifetime Annuities

The Pros and Cons of Lifetime AnnuitiesLifetime Annuities and the quest for certainty

Lifetime annuities offer you the opportunity to outsource a large slice of the uncertainty associated with managing your retirement capital. You get to exchange your capital for an annuity that will offer you a guaranteed income stream for life. And, for an additional cost, this income stream can be indexed with inflation.

The growing demand for greater certainty since the Global Financial Crisis has brought lifetime annuities back to the forefront as a retirement solution. In this article, we ask whether they are a suitable alternative to the self managed solution that most retirees select by default?

The Uncertainties of Managing Retirement Capital

There are a number of risks to consider when managing retirement capital, including:

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The cost of “free” financial advice

The cost of “free” financial adviceFinancial advice is “freely” available

Many people are reluctant to seek out and pay for personal financial advice. Some are just distrustful of financial planners, heavily influenced by the negative publicity that accompanies every financial product disaster. The entire financial planning industry is tarnished by the “bad apples”

But there are many others that can’t see the point in paying for advice because they believe they can get it for free: from family, friends, and the media, including the internet. “Free” is a very strong motivator, particularly if the advice is apparently authoritative and credentialled.

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Is your Investment Strategy personalised?

Knowledge of investments isn’t everythingIs your Investment Strategy personalised?

The availability of investment news and information has been increasing over time. This has led to an improvement in most people’s understanding of general investment concepts. It has created the opportunity for many to choose to manage their own financial affairs.

Knowing “where” to invest your money is an important part of the financial management equation. However, by itself, it’s far from comprehensive in terms of an investment strategy.
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Financial Planning: Personal Financial Advice or “Product Flogging”?

They make used car salesmen look good …Personal Financial Advice or Product Flogging

The financial planning industry (and a number of accountants dubiously playing on the edge) has come under intense fire recently.

The downturn in investment markets has exposed a number of products that have not turned out to be in clients’ best interests. These include high yield mortgage funds, absolute returns funds, agribusiness and protected equity products and excessive margin lending.

Criticism of planners and offending accountants that promoted these products is well justified. In many instances, it is difficult to resist the conclusion that their sale was driven or too heavily influenced by what was best for the promoter.

But, judging from public responses to a number of recent newspaper articles adverse to financial planners many people also blame their financial adviser for recent poor investment performance and/or failing to get them out of share markets prior to the downturn.
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