Investment
Time for a review of financial position
Tuesday, January 19th, 2010 | Business, Economy, Investment | No Comments
The lull after Christmas and New Year always seems to be an fitting time to review an investment portfolio, and with the rollercoaster we have witnessed in global and Australian financial markets over the past 18 months a review may be even more overdue. It’s worth periodically looking at asset allocation – both to asset classes and within asset classes – which may have deviated from your initial plan with the volatility. It may be an appropriate time to question whether your financial adviser adding sufficient value to justify the fees you are paying. Though the collective weight of the recommendations of the Ripoll, Cooper and Henry Reviews may bring about the removal of adviser commissions in the longer term, the volume of information available on the internet already makes it easier for investors to do their own research and manage their own portfolio if they wish to do so. More broadly, with bank interest rates rising quicker than official RBA cash rates a comparison of the home loan products and rates available to determine whether a current home loan is still the most suitable may also prove to be warranted. To Business Dust readers: all the best for 2010!
Financial advice and financial advisers
Thursday, December 3rd, 2009 | Business, Economy, Investment | No Comments
Did a fiduciary duty formerly apply to financial advisers in Australia? [And if one didn’t, why did one not]? Commissions are received in many industries, more than most people realise. To some extent – and in most instances – it is nothing more than capitalism. Sure, when it comes to someone’s life savings there is more at stake, no one would argue with this. It is hardly original when I say that I would like to see ASIC given greater regulatory power – advisers who do not put their clients’ interests first should not be granted a second chance. The skeptic in me questions the value of most advice as commission-driven, but all forms of remuneration are open to abuse. The advent of the internet empowers the consumer though. With so much information now freely available consumers are more able to choose how and when they pay for advice, and this in itself puts should put advisers on notice – fail to add value at your peril. I did come across one informative website on life insurance recently. This is hardly a unique illustration though; so many similar examples exist. So, back to the point of this post. Find a professional financial adviser that you are comfortable with and confident in. Advisers should be able to justify their existence and remuneration, irrespective of whether it be commission or an hourly rate.
The End of Financial Year
Thursday, June 18th, 2009 | Business, Economy, Investment | No Comments
The all important End of Financial Year – in capitals – is a little under two weeks away, but working in financial industry you could be forgiven for forgetting this. Sure, the predicable structured investments from the usual suspects are once again available (it must be surprising to anyone in the industry that these brands are remain brands worth promoting, but pleasantly so for anyone selling, and let’s face it, few are more than salesmen). Cynical? But I’m going to conveniently steer away from the [meaningless] adviser remuneration debate that is currently raging in Australia, at least until my next post or when I next can’t think of anything else to post about. So, back to the eerily quiet end of financial year – maybe investors are still wary of the fluctuating sharemarket, or are understandably turned off by the naïve meddling of the Rudd Government. Adverse changes inevitably affect confidence in superannuation, especially given it is a long term nature and repeated government changes. The word counterproductive comes to mind – have we forgotten that an aging population makes saving for retirement essential on the agenda? The other staple end of financial year recommendation for advisers (for which, incidentally, I am not one) – margin lending – is undeniably a bad word. Either way, for an observer in the financial industry, it’s dull.
Marginalised mortgage brokers
Saturday, April 4th, 2009 | Economy, Investment | No Comments
Few sectors have managed to escape the changing economic climate in Australia and internationally, and as expected we have seen some companies adapt while others fail. Businesses that were not so long ago considered sound have fallen one by one to their debt obligations, and no doubt others will follow. One previously profitable line of business that has, and will no doubt continue, to face increased pressure is mortgage broking. Always quicker to borrow than invest, Australians love their property. And though the various Government incentives have buoyed the market, the accumulation of mortgage business by the major Australian banks coupled with the disappearance of non-bank lenders has seen mortgage brokers both subtly and effectively marginalised. Equally subtle [to all but mortgage brokers and their profit and loss statements] has been the reduction in initial and ongoing commissions paid to mortgage brokers, again to the benefit of the banks, who true to form have seized the opportunity. Makes you want to buy bank shares. I have read a few things recently about mortgage brokers moving into financial planning and life insurance advice in their own attempt to adapt and survive. It should not be forgotten, though, that Australians are quicker to borrow than to invest.
The apparent fiction of investment banking
Friday, March 20th, 2009 | Economy, Investment | No Comments
Irrespective of one’s view of the actual effect of the current financial crisis on the wider economy, it’s rare to watch the news now without hearing about various companies and organisations slashing 500 or 1000 jobs. There is little doubt that organisations in almost all industries and businesses are now shedding staff in response to the continued economic downturn and its anticipated continuation. Some industries and businesses more than others inevitably, but those totally immune are few and far between. One theoretical positive to come out of failing investment banks and fund managers though is that the better minds graduating from colleges and universities around the world might now be more likely to migrate into the fields of science, technology and engineering – following the money which the Obama administration has pledged and moving away from the sectors that will be unable to fund the salaries and bonuses seen in recent years. Maybe it’s not a bad thing that this seems likely to be a move away from the apparent fiction of investment banking and into areas that will arguably progress and benefit society as a whole to a greater extent. One hates to think of how much further ahead we would be in the fight against diseases like cancer in a more rational world.