Get involved in your branch.

1. industry bodies that collect fees and provide little (if anything) in return for their Members
2. research houses that have a limited ability to appraise the historic outcomes of those managed fund able to pay rating fees… a bit like driving your car by staring at the rear-vision mirror
3. industry training/dealership/research entities with ties to industry manufacturers, who continue to claim independence despite reporting lines &/or links back to their ‘mother-ships’
4. those claiming to be financial advisers who remain ignorant of how a CDO differs from a hedge fund from a passive fund that charges active-fees… etc etc
5. again – those claiming to be financial advisers who believe that risk profiling can be achieved in 3 questions or less – or is a counter-terrorism initiative

Grump: you have a right to be grumpy, because the NZ financial services industry (by and large) is ignorant of what changes are required, and are lining up to repeat their actions that have got the industry to where it is today… If 95% of the financial services industry are rubbish, and the industry contains 5,000 financial advisers – then (by definition) there are less than 250 (probably much less) who are providing a fair-deal for their clients.

I, for one, would like to get a better idea of who was rubbish before the new regulatory regime smooths out some of the problems in the industry. I have a long memory, and just because regulations force a company to clean up their act, doesn’t mean I want to use them now.

Take for instance the ANZ/ING issue. If the new regulations stop what many people believe was a mis-sold product being sold, that is great. BUT, I’m not using them now, knowing what they were before.

Know who they are and don’t forgive them easily, just because they can’t now do what they once did . . .

If in doubt, sit down and dissect one of your own plans, even better have someone else do it (a colleague or an external audit). The report should be viewed as a learning experience for all advisers including independents and corporates with the aim to raise professional standards.

Their advisers are compelled to use related managed funds which they have a vested interest in, regardless of whether they are best of breed or not
Secondly, the only investment vehicle that is offered is the actively managed fund because of all the profit centres it offers the corporates
Thirdly, most clients are unaware of the true cost of actively managed funds
Lastly, there is a definite conflict of interest between the interests of the investor and the shareholders of the large parent companies.

In this country unfortunately, independent best advice is sorely lacking, and for my money clients should rather be seeking smaller focussed advisers that are not tied in any way, shape or form to any investment solution and who are able to deliver diversified solutions that are cost effective and simple. I am not saying that there is not a place for managed funds, but in my book direct blue chip shares and bonds, exchange traded funds and limited managed funds are the way to go.

A recent study by Prince and Assoc. in the US of investors with $1 million or more in investable assets discovered:

a). 81% of the respondents planned to take money away from their current adviser
b). 86% of the respondents planned to tell others to AVOID their adviser
c). 2% of the respondents plan to recommend their firm to other investors

It may also be worth taking a look at the Forbes article entitled “The market for financial advice is in turmoil” for further thoughts on the future of our industry.

Without wanting to pre-empt any findings from your own surveys, I’m picking that your clients are probably more disgruntled than they are prepared to tell you in person, many are looking to unbundle their relationship with you in the near future, many view your services as non-essential, many are unhappy with the over-weighting of managed funds to achieve their financial outcomes, and most of those surveyed are quickly becoming aware of the cost/benefit of using a financial adviser. In other words – your trusted clients are probably more simple consumers of financial advice than you would like to think.

Sorry to be the bearer of bad news – but it’s time that the financial service industry stopped living in the false belief that past behaviours are ok for the future.

Consumer is clearly using this to drive more sales of its magazine.

Like this site does, you mean?