'Expensive fortune telling' the fault of the banks

by BN27 Jan 2012

Mortgage brokers are outperforming the "expensive fortune telling" of financial advisers, but blame the government and big banks, not the planners.

That's the message from WhistleBlower on the Australian BrokerNews forums, where brokers and planners debated an ASIC review slamming the quality of financial advice.

WhistleBlower said:
The quality of advice from Mortgage Brokers far outstrips that of expensive fortune telling with a 'over the horizon' predictions --- and, you can't even blame Financial Planners, it was stupid Government 17 years ago that led to re-painting the veneer of that industry... and don't forget, we are discussing banks here, the artful dodgers.... they OWN the vast majority of Financial Planning infrastructure, brands, pipeline, compliance, maintenance.... what's the bet ASIC attempts to slight the little guy who's busting his guts and ignore the Mammoths in the room, banks!

Terry also took aim at the banks, from his own experience as a bank employee.

Terry said:
I worked for one of those banks. the focus is purely on sell, sell, sell. not on the quality of the advice or the clients' needs. it profot before customer. I couldn't work under that ethos.

Financial planner John lamented the outlook on his industry, and said he was disheartened by ASIC's focus on forward projections.

John said:
This is very disheartening. I have been in this industry for over 25 years as a financial planner (but never as an insurance salesman) and I work long hours for my clients running my own business. My income at best is modest. I do not charge excessive fees but I spend many hours understanding the needs and wants of my clients to make sure what I tell people is both reasonable and as realistic.
But I am dismayed at what I suspect to be the subjective content that appears to be required by ASIC as to what should and should not be in a Statement of Advice. I am particularly dismayed as to the apparent importance ASIC appears to place on the use of projections that a financial planner should place on them as a reliable determinant in forecasting a client’s future retirement income. Perhaps someone might like to enlighten me as how much reliance is or should be placed on projections. Whilst I use those projections authorized by my licensee I am only too well aware of the downfalls that relying on projections can result in. Using historical or accepted industry expected returns based on asset allocations is at best misleading. There is not enough space here to discuss the shortcomings of product providers including information published and marketed by institutions including the likes of industry super funds which appear to be a protected species.

What do you think? Have your say on the ASIC secret shop that tarred planners as providing inadequate advice.

COMMENTS

  • by Phil 27/01/2012 12:13:15 PM

    Its over regulation that effects any industry and ultimately the consumer. Planners spend so much time on paperwork and dealerships on legal advice to avoid litigation that the natural result is being motivated by income. However many planners I work with, qualify the client before appointment and the initial first appointment and fact find is free. I don't know too many planners that advised on margin scheme products. The whole reason ASIC are looking into the industry. It was the Bank that lent clients the money against o/o property. It was also the Bank that sold up all the shares at a loss. It was the Bank that failed to disclose that they in fact owned these shares not the client. The Bank will still lend you 100 percent on what you put in and in fine print "however we will sell you up as we see fit as we own the shares". Ultimately endorsed by ASIC. When is this pathetic ASIC going to go for someone other than the little guy? All they have done in both the financial planning and mortgage broking industry ( whats left!!) is increase the domination of Banks.