The advice model is seriously flawed so take care when you’re looking for financial guidance
‘You need to see a planner” is one of the mantras of the financial services industry. We are led to believe that planners can help us reach our financial goals and make us money.
Some 2.3 million Australians visited a financial planner in 2016. They sought advice about retirement (about 35%), loans and investments (25%), a self-managed super fund (20%), tax (10%) and estate planning (10%).
But rather than building wealth, too many Australians have had their wealth gouged by poor financial planner practices. The Hayne royal commission into misconduct in financial services uncovered jaw-dropping evidence that going to a financial planner hasn’t helped people; instead it has been to the detriment of hundreds of thousands of Australians.
It revealed that people were overcharged, received poor advice, paid for advice they never received and were pushed into products that hurt their ability to reach their goals. Planners were reluctant to change under performing investments because that would interfere with their “grandfathered” trailing commissions. In some cases people were financially devastated.
What went so wrong? The problem has been with the “vertical integration” model of the big financial institutions – the big four banks and AMP. They have run their own investments and insurance as well as owning the product distribution through financial planners. These five own the bulk of all financial planning businesses in Australia although this situation is set to change. Often consumers don’t even know that their financial planner is tied to a big bank or AMP as there are lots of confusing brands.
Esta historia es de la edición August 2018 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición August 2018 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor? Conectar
Is the public market shrinking?
Australia needs a healthy stock market to give companies access to funds and to allow retail investors to build wealth.
India: three steps to transformation
Massive investment and extensive reforms turbocharge the economy.
The ballet of business
Changing direction, products, models and marketing is a hard task for a business. We chart what it takes to turn a business around, plus profile four successful pivots.
Save money and the planet
Could the high cost of living give us the incentive we need to reduce how much water and energy we use or waste? These eco-friendly household tips will help you do just that.
AI adoption is the new black
Artificial intelligence is set to reshape the commercial world, and small enterprises can’t afford to miss the boat.
Spam attack! Murky laws jam our inboxes
Unwanted marketing material is one of the pain points of modern life.
From rags to riches in style
Rich Tran sported a bowl cut until he was 14 years old and had no intention of becoming a hairdresser.
New work deals are killing the 'old' office
The Covid pandemic and the subsequent lockdowns accelerated the trend to more people working from home. It was a mixed experience.
Points taken: the truth about rewards
Can hopping between credit cards really boost your frequent flyer haul and give you cheap or free travel - or is it doing more harm than good behind the scenes? Money puts it to the test.
Shortcuts to own a home
Innovative ideas with a focus on low costs and sustainability could help solve the housing crunch.