Have you lost faith in financial planners?

Should we tar all financial planners with the same brush?

financial planner

Many people seek financial advice from friends, family and websites, instead of seeing financial professionals. Is this a reaction to recent scandals? Have you lost faith in financial planners?

It may not come as a surprise that the reputation of the finance and banking sector has been sullied by repeated rackets, constant corruption and instances of deceit, scandals and ethical breaches. But the truth is that not all financial planners are bad and we shouldn’t tar them all with the same brush.

Besides, YourLifeChoices has some great tips for choosing a financial planner, as well as expert advice on how to deal with a planner, including the questions you should ask, and the most common questions people forget to ask.

A recent study by the Financial Services Planning Board revealed that just 17 per cent of those surveyed agree that they are knowledgeable about financial matters. And around 19 per cent say they are successful at sticking to financial strategies and 22 per cent have confidence that they’ll achieve their goals.

Only 32 per cent have a written financial plan.

When it comes to financial advice, 68 per cent of consumers rate trustworthiness as the most important consideration, yet six in 10 don’t know whom to trust.

The most important financial matter for most people – not just retirees – is retirement planning. In fact, 50 per cent of those surveyed placed retirement planning as their top concern, followed by investment planning (38 per cent) and budgeting and debt management (36 per cent).

Other financial focuses include:

  • being debt free
  • being prepared for an emergency
  • owning a home
  • planning for retirement
  • managing their own finances
  • supporting others financially
  • managing investments.

World Financial Planning Day is about offering you the knowledge and resources you need to develop successful financial strategies and meet your money – and life – goals.

Possibly the most trustworthy source of information when it comes to researching financial planning is the Australian Securities and Investment Commission website. You could also try the Financial Planning Association of Australia.

Finding a financial planner you can trust may be a challenge, but a planner who understands your needs and goals and can help you achieve them is truly an invaluable resource – and one that can help you take control of your financial life.

Do you trust financial advisers? To whom do you turn when you want to discuss money? Do you consider yourself financially savvy? What sort of information do you find most valuable?

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    COMMENTS

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    Rosret
    4th Oct 2017
    10:27am
    I didn't lose faith I just didn't want to lose the contents of my wallet. When he said he charged $350 per hour I figured I could do a lot of my own research for that sort of money and make my own decisions.
    I think they just got too greedy.
    Maggie
    4th Oct 2017
    10:41am
    I think a lot depends on whether you want continuing financial advice or just a one-off session.

    My own experience has been to discover that it takes far more financial acumen than the average person has, and a lot more time keeping track of the stock market than I have to spare (even if I understood the ins and outs ) and I know that I have done better with the advice of a trained professional than I would have done on my own - in fact I would have amost run out of money by now had I not taken advice.
    Retired Knowall
    4th Oct 2017
    11:08am
    There is no-one better to look after your finances then YOU.
    It's not that hard, the critical part is self education, i.e Invest In Yourself. The average person lacks motivation not intelligence and finds themselves at the mercy of people with questionable ability.
    Deakin Uni runs a Financial Planning course and thew Internet is full of knowledge applicable to Financial Planning.
    Hasbeen
    4th Oct 2017
    1:03pm
    I wouldn't touch one with a 40Ft barge pole.

    I worked for Telford Property Trusts, running some of their investment properties. It became obvious that something was not right, & some of us were not surprised when directors went to prison for their illegal activities with the funds.

    My parents went to 3 over about 15 years. Each one cost them money.

    Were they dishonest? Probably, more interested in recommending the investments that paid the highest commission to the adviser. Were they incompetent? Most definitely, & probably a combination of both.
    steveg3731
    4th Oct 2017
    10:39am
    Having recently retired, I am perhaps lucky to have found our FP. Ours is a set and forget person, who looks after everything,stays in touch and just tells us that things are going OK. His fees are set, so no surprises and no percentages on whatever money you have invested.
    Rosret
    5th Oct 2017
    8:15am
    But phones you whenever he needs some extra income???
    steveg3731
    5th Oct 2017
    11:55am
    No - doesn't phone unless he wants to change something - and as I said before his fees are up front - nothing else.

    Lots of negative people around here !!
    Maggie
    4th Oct 2017
    11:42am
    Actually Mr Knowall, I have a lot of other things to do than study accountancy, the rules and regs of Centrelink, the taxation office and what is claimable and what is not. I don't want to sit up all night keeping up with share on foreign stock markets etc.. . . . and I am happy to pay a modest sum of money to someone who is better qualified to do this for me.
    Retired Knowall
    4th Oct 2017
    1:16pm
    With your obvious limited knowledge of Financial Planning it's probably better that you pay someone else that probably has as limited knowledge.
    This a perfect example of ignorance Not being Bliss.
    Fortunately technology has moved forward to the extent that there are now programs that will provide you with a comprehensive financial plan after you answer a multitude of questions.
    Financial Planner will be a thing of the past in the next few years, all except for people like you.
    Rosret
    4th Oct 2017
    2:31pm
    Actually RK it sounds as though Maggie IS a financial planner beating the drum for their business.
    I have watched so many people get stung during the GFC, investing in futures on borrowed money etc. due to financial advice.
    The people who know how to look after their money have far better outcomes than letting someone who takes a cut no matter what.
    I didn't want to have to worry about my portfolio when I retired but the pendulum government laws and private super fund fluctuating investments have made sure I have to constantly be aware of changes.
    Jim
    4th Oct 2017
    12:08pm
    I am not sure if trust issues are the problem, I retired 7 years ago and found the advice I was given by the many financial advisors I contacted was so varied that it became very confusing, maybe I contacted too many, in the majority of cases there were two lots of fees, one for the the financial advice and the other was mostly in % of my balance, the problem I found with these systems was that everyone got paid no matter how well or how badly their advice proved go be, I am fully aware that there is a risk factor when investing, but the risk is all one way, after 5 years of modest returns and increasing fees I determined that I could look after my own money, I didn't need to make as much because I wasn't paying fees to two different sources, it may not be the solution for everyone but it works for me.
    Maggie
    4th Oct 2017
    12:53pm
    Each to his own. I find it interesting that while we are generally prepared to pay for professional advice - say from doctors, dentists, solicitors, surveyors electricians builders and plumbers we quibble when it comes to financial advisors (though I would balk at paying two financial advisors, especially if they were giving me conflicting advice!)

    True, they cannot predict with total accuracy what markets will do but they do have more knowledge than lay people about minimising risk etc. and they do not make the sometimes hasty or emotional decisions we may make about our own money.

    I cannot agree with Knowall that EVERYONE is the best person to look after their own money even if they do go on courses.
    Retired Knowall
    4th Oct 2017
    1:18pm
    Just examine the results of the Commbank and Storm Financial advisers.
    Rosret
    4th Oct 2017
    2:40pm
    Maggie a financial adviser may have a degree in commerce (maybe).
    I have a degree too but could not command that hourly pay rate. Now I have retired every cent is precious and if you accept that $350 p.h. is OK then really its just an option for the the wealthy. However wealthy people are generally smart and they will manage their portfolios themselves!
    Jim
    4th Oct 2017
    3:23pm
    I agree Maggie, we do expect to pay doctors, plumbers etc, the difference is that if I employ a tradie to do I job for me and the result doesn't do what it's supposed to do then I don't pay him, doctors are a little different, each of us have different needs from our medical people because our bodies react differently some times, money acts according to how the financial advisor gives advice I accept that financial advice is unpredictable in its accuracy, but never the less the advisor gets paid wether the advice is good or bad, maybe if the advisor didn't get paid when your portfolio dropped in value and they got paid slightly more when your portfolio increased in value people might be more inclined to use them, it seems to me it's all a bit of a gamble, but the problem is that it's your money they are gambling with, with no loss to them either way win or lose they get paid out.
    Retired Knowall
    4th Oct 2017
    4:22pm
    When I was completing my Financial Planning course with Deakin Uni one of our tasks was to assess 3 organisations in our area. We had to approach the organisations as prospective clients and evaluate these organisations on 12 criteria. To my surprise the Planners that interviewed me were an ex painter an ex Fitter and an ex Electrician.
    Two of the 3 organisations were rated as below average and both recommended I take out a $200K loan and put into a share porfolio. This was 6 months before the GFC and I was 62 at the time....Great Advice huh.
    So to state that these guys are highly qualified is a joke.
    Anonymous
    6th Oct 2017
    8:22am
    My experience is not good of financial planners and chose to do my own financial planning. I do not know if a so called expert could get me a better return on my money or not. All I know is that I am doing OK I have no financial concerns and I am not greedy. Have enough to last me out.

    However, that said, I agree with Maggie that there are some people who have not a clue regarding finance and they would be better off getting financial assistance of some sort even if it does cost. I am sure there are some good advisors out there who do not charge like wounded bulls.

    How often do we hear in the media about people getting involved in some scheme or other and losing all their hard earned money through some con artist. Also many people are down right greedy and chase high returns and we all know high returns usually involve high risk.
    johnp
    4th Oct 2017
    12:10pm
    Use an industry super fund for max performance and maybe able to use their fp if they are competent at that as well
    floss
    4th Oct 2017
    1:45pm
    The worst financial adviser we used was employed by the Commonwealth Bank that in the past we trusted.
    Jtee
    4th Oct 2017
    5:27pm
    Same here
    wheels
    4th Oct 2017
    2:41pm
    Years ago I had a retired planner over to my house. I thought that I'd be safer with someone that had just retired and I'd pay directly. Nope. The week after (as I was thinking), I got a glossy brochure from a well known finance firm. No doubt he was going to get a fat commission. So, I flew up to Brisbane to an extremely well known advice firm. The Principal writes for newspapers. Same thing ! Brouchure the nexxt week. So, I do my own and make money every year with no extra charges. I'm in a Super fund and by active managing (after some practice) make more than leaving it. 10.4% last year. It's a bit scary but I enjoy looking at it daily. I understand that it's not for everyone.
    ChristineS
    4th Oct 2017
    2:45pm
    My husband and I went to a financial planner (through our bank). What a disaster. He wanted me to cash in my superannuation, put it in the bank's plan, at greater risk / costs, wasn't interested in anything we needed help with that he couldn't get his hands on. We paid the $500 fee (this was in 2002) and said goodbye. IF we had gone with his "plan" the fee would have been waived. We manage our own finances.

    4th Oct 2017
    3:31pm
    Like politicians, financial planners are in it for themselves.
    Jtee
    4th Oct 2017
    5:22pm
    Lost heaps. Lost confidence. Bank financial planner forged signature on docs and that not regarded as important when reviewed under Bank's review program. Got 200+ dollars recompense from that when actual loss in excess of $60,000. Thank goodness had investment property to fall back on. But wait ...... this year the Federal Government changed the asset test (with no grandfathering for those long retired). Now our holiday/retirement house has had to be sold. Not going anywhere near financial planner.
    Tib
    4th Oct 2017
    5:57pm
    Most of them are just insurance salesmen not worth your trouble. Their advice is garbage not worth your time or money.
    mogo51
    4th Oct 2017
    11:40pm
    to loose faith in financial planners, you have to have some in the first instance. That leaves me out.
    mogo51
    4th Oct 2017
    11:40pm
    to loose faith in financial planners, you have to have some in the first instance. That leaves me out.
    Blondie
    5th Oct 2017
    1:38am
    Like Steveg3731, I, and my entire family ( and now, some friends!) have found an ethical, knowledgable, FP that has saved me money over the years, and was wonderfully helpful and supportive when I became a widow. They ARE out there.....word of mouth can be invaluable!
    MD
    5th Oct 2017
    10:47am
    Whether (or not) to engage the services of a Financial Planner is obviously a personal decision. Some degree of risk is generally attached to most professional advise, whether financial, medical or legal to name a few. As to whether anyone "practicing" within the financial advisory field is "qualified" is another matter entirely - caveat emptor applies.
    Government state and federal seem reluctant to formulate anything of substance that addresses consumer fears or failures of subject industry - with the exception of inconsequential 'lists'.
    For those folk that feel the need and whom can afford to 'buy' advise and thereafter comfortable to accept it must then pay the piper, no guarantee of outcomes.

    Have we become so wrapped up in our existence, both present and projected and thereby forgotten how to count our blessings instead ? It's somewhat similar to the current mob, all ages, eyes glued to phone screens and totally oblivious to life - ie real life as opposed to the 'virtual' variety, although nowadays 'real' applies to almost everything - "really" ?
    To 'get a (better) life' we need to consider whether we 'have' one in the first place and no amount of money, whether planning, hoarding or frittering it away will make that much difference to those intent on chasing the almighty dollar, hoarding a nest egg or hell bent on pursuing their 'entitlements". Surely others have seen the countless articles featuring -"Retirees/Widow's life savings lost, investors left bereft" - shot moves to weeping soul(s) wringing hands and stating "everything, my life savings gone, I trusted them" or words to this effect. What was it that motivated those individual's investments ?
    Other than Dylans' contribution - " The answer my friend is blowin in the wind", the seven deadly sins might offer some insight.
    Rosret
    5th Oct 2017
    2:24pm
    Actually MD all Australians are supposed to be aiming towards private superannuation. 50% of the population have a below average IQ by definition.
    It is not always greed. We have to be responsible for our retirement savings for 30 years - how many people do have that ability. I would suggest very few.
    It is the system that is flawed more than the good, bad, or ill educated financial adviser.
    Earth angel
    5th Oct 2017
    4:08pm
    Just before the GFC, my financial planner at the time advised me to invest all my money in an income stream which they said was a very good product. I had reservations about putting all my eggs in the one basket and voiced my concerns, only to be told that I may as well have an injection and lie down and go to sleep. The day before I was to sign on the dotted line, this particular company had all its assets frozen. That was a close call. Thanks to that
    financial advisor, I successfully completed a Diploma of Financial planning with Kaplan. In fact, I'm more qualified than a relative of mine who works in a bank as a loans officer. And the course cost me less than one year's fees the financial planner intended to charge me to lose my money. Money well spent.
    johnp
    6th Oct 2017
    1:00pm
    Great comment earth angel. :-) Most people would benefit from the likes of some sort of Diploma of Financial planning. I believe its not too time consuming ? Is that right?
    Adrianus
    9th Oct 2017
    11:00am
    I also echo johnp's comment. Does the compliance training take up much time?
    Nerk
    7th Oct 2017
    7:12am
    You are only paying for an opinion and at the end of the day if it goes all bad then they just walk away and leave you with the problem, keep away from them and learn how to invest.
    ex PS
    7th Oct 2017
    12:17pm
    When i retired i booked into a session with the Financial Planner connected with my Super Scheme, it cost me $350.00 for a two hour session and it has to be the best money I have ever spent.

    He analysed my risk tolerance/sensitivity, listened to what my expectations were and designed an investment strategy that suited my temperament. He also designed a strategy that was flexible and that could be adjusted by myself if I wished to. That was seven years ago and from what I took away from that session I have had no need to contact him since. He actually taught me in that short amount of time how to manage my retirement fund and use the proceeds to have a comfortable lifestyle.
    Nerk is quite right when he/she says you are only paying for an opinion, and a good planner will make it quite clear that he/she is offering investment options and at the end of the day it is you who have to make the decision.
    I moved from a cautious low risk investor to now having a mix of mainly low risk with a small proportion of high risks options e.g. International Shares, something I probably not considered before. My International Share investments made about 23% last year so I am quite happy.
    Earth angel
    9th Oct 2017
    6:06pm
    Hello Johnp and Frank. In answer to your question about how time consuming a course in Financial Planning is, I guess it depends on your motivation and priorities. Many people sit up till late at night binge watching Netflix. I chose to use that time studying finance. It was a two year online and distance education course with exams held in the CBD. I was working and raising children at the time. I believe you can achieve what you want or need to do if it is important enough to you. Of course, it's not for everyone and that's why people still need help with their finances among other things. I hope this has answered your question.