Independent Financial Advice: is it becoming more accessible?
The Future of Financial Advice
The financial advice industry is going through some major reforms following numerous post GFC reviews and the Government’s “Future of Financial Advice” (FOFA) proposals. The intention is to create a profession of advice providers that is separate from the financial product providers. This requires breaking the (commission based) nexus that currently exists between the two.
While most advisers accept that this is the right path to take, there has been significant resistance to the proposed banning of financial product commissions. Understandably, the proposals require some significant reforms to the practices of the majority of advisers. In future, they will be required to seek payment directly from the consumer, rather than via commissions from the financial products they recommend.
What is “The Value of Financial Planning”?
Financial planning continues to get a bad rap …
Financial planning continues to get a bad rap. The Global Financial Crisis, poor investment returns, the failure of various financial planning firms and investment schemes, threats of further government regulation of the industry and a media that is all too willing to focus on the negative are contributing factors. As a result, many people that should under no circumstances attempt to look after their personal financial affairs have been convinced that this is the best way to go.
And for those that continue to seek financial advice, too many decisions are being made on the basis of immediate cost rather than an assessment of value. This is often because it is difficult to judge the value ahead of making the decision to appoint a financial planner. But cost may be a very poor guide to quality. And, unfortunately, it will not reflect missed opportunities, mistakes and poor decisions.
DIY Financial Planning – The real costs may not be evident
DIY Financial Planning appears to be a low cost alternative
There are a lot of smart people who make some rather dumb choices with respect to their finances. More often than not this is driven by short term thinking and the desire to save an immediate out of pocket expense. There is often a failure to lift the eyes and see the bigger picture.
An example that highlights this is the use of superannuation. We’ve talked previously about the significant benefits of making pre-tax contributions to super. However, in this article we look at the benefits of making post-tax contributions to super.
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Is your investment risk strategy paying off?
Are you an intelligent risk taker?
Most investors accept the notion that risk and return are related and that those who are prepared to take on more risk will ultimately get rewarded for their risk taking. As we’ve seen with the implosion of some investments during the GFC, increased risk taking does not always guarantee higher returns, it simply exposes you to the opportunity for higher returns.
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