Should Judy trust her financial adviser?

Post the banking inquiry, Judy is having second thoughts about her financial adviser.

Should Judy trust her financial adviser?

In the wake of the financial services royal commission, YourLifeChoices member Judy and her husband have been having second thoughts about their financial adviser and the super fund their money is in. She asks personal financial guru Noel Whittaker for guidance.

Q. Judy
My husband and I are 68 and 66. Through a financial planner, we have our super in a fund tied to AMP. With what the financial services royal commission has revealed about financial advisers and AMP (and other institutions), should we stay or leave? And where do we go? We have been working people all our lives and very concerned that we are, and have been, ripped off.  We would appreciate your opinion.

A. It’s true that all the big institutions got caned at the royal commission, but that does not necessarily mean the planner you have been using is not right for you. I suggest you have a meeting with him or her and say that you are concerned about your finances in view of the royal commission, and ask for a full overview of your situation.

Find out exactly what fees you are being charged each year, what mix of assets you have and how many of these, if any, are AMP products. You then need to ask the planner to justify the fees and explain why the funds you are in are the best ones for your situation.

Do you have a question you’d like Noel to tackle? Email us at newsletters@yourlifechoices.com.au

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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    COMMENTS

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    pedro the swift
    12th Jun 2019
    10:26am
    I had my super in AMP(via company) many years ago and had them make up a very nice looking financial plan folder for me. How, ever when I looked at it closely, I saw that they were charging what I considered to be very high fees for doing nothing much and I did not proceed to use them and moved my super to what I considered a better fund. And I am quite happy with my fund at the moment. My suggestion? Get out of AMP and find a fun with better performance and lower fees. AMP is a ripoff!
    tropic
    12th Jun 2019
    2:29pm
    Don't forget that Noel is in the investment business himself. He would not say anything bad about AMP. You can ask the advisor anything you like, and he will tell you a nice story why you should stay with AMP. Why would you pay someone to invest in financial products. Just invest directly in some well regarded blue chip shares. I made that decision years ago and it was the best I ever did.
    Agnes
    12th Jun 2019
    3:02pm
    Have always found Noel's advice reliable, over more years than I care to say. But I agree, like all of us, he has the bias of his profession....how could he (or anyone) not.
    adbob
    12th Jun 2019
    4:08pm
    Noel is usually one of the best - he seems to be pulling his punches here a bit.

    To paraphrase:

    In the middle of the night you hear the sound of breaking glass and a man wearing a striped T-shirt and a balaklava and carrying abag with "swag" written on it bursts in.

    You say to him: "Excuse me - are you a burglar?"

    He replies: "Of course not - I am from the local auction rooms and we are doing free valuations of people's jewelry and valuables. We just don't like to disturb busy people during the daytime"

    You reply: "Oh - well that's put my mind at rest. What about all the silverware from our display cabinet that you just put in your bag?"

    Burglar:"That will need to be examined by one of our experts. I'll bring it back in the morning. Here's a receipt."

    and he hands over a piece of paper with a lot of numbers all in fine print - which you don't read.
    Tom Tank
    12th Jun 2019
    11:07am
    Simple common sense indicates that a super fund that is run for profit must have higher fees than a not for profit fund. The need to make a profit inserts another layer of costs and this applies to more than just super funds.
    Tom Tank
    12th Jun 2019
    11:07am
    Simple common sense indicates that a super fund that is run for profit must have higher fees than a not for profit fund. The need to make a profit inserts another layer of costs and this applies to more than just super funds.
    johnp
    12th Jun 2019
    11:39am
    Noel should have said as follows.
    Stay or go with an industry super fund but check with the various ratings agencies for the high performers. Avoid AMP and the retail funds as they are rip offs !!
    Arvo
    12th Jun 2019
    1:07pm
    My ex-wife invested through a WA financial planners service....6 months later she got a statement with a $20,000 lesser balance. If that happened to me I would have taken the scammers to court but, it was her problem not my.
    adbob
    12th Jun 2019
    2:18pm
    Back in the good old days, when Australia really was the "lucky country", returns of not much short of 10% p.a. were available on a lot of investments as well as capital appreciation of about the same amount - but it wasn't all that easy for ordinary investors to even buy such investments, apart from property.

    That made it easy for the middleman to step in and pull out (or rip off if you prefer) commisions of 3% or more on either or both and still leave some bread on the table for the punter. Add tax breaks to that (they used to be much greater than they are now) and you had quite a honey pot for the inevitable flies to buzz around.

    Those days are long gone. Sadly the "industry" is still around.

    Because it's called an "industry" it would be politically inexpedient for any government to simply get rid of it, even though it would actually perfectly possible for personal super to be organised personally simply by following various rules in order to qualify for the tax breaks.

    The ever-changing tax breaks are really the raison d'etre for the whole thing.

    Take them away and hand them to individuals and you will find most of these timewasters hanging around on street corners looking a lot more like the spivs they actually are.

    It's only the unnecessarily complicated rules that keeps them in business.
    MacI
    14th Jun 2019
    7:34am
    Transfer to one of the best performing Industry Funds is my advice. In general they charge lower fees and provide better returns than retail funds. It's easy to do. Get in touch with the selected fund and they will take care of the transfer logistics.