Economy
Financial advice and financial advisers
Thursday, December 3rd, 2009 | Business, Economy, Investment | 1 Comment
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.
Since we last spoke
Thursday, November 26th, 2009 | Business, Economy | 1 Comment
How quickly the world changes; at least here anyway. The sharemarket has bounced back, the big four banks have increased their market share and interest rates are going back up. Property exuberance is back in all Australian capital cities, employment figures are better than expected, and the IPOs are returning – a sure sign of recovery. And how quickly we forget. China and mining, mining and China – the saving grace. Technically Australia never entered a recession, which is amazing given the rest of the world including the UK, Europe and the US. It seems we have disentangled from the US, at least somewhat, in a further indication that in fulfillment of the popular prediction China has emerged as the next emerging super power. (Yes, the use of emerged and emerging in one sentence was intended.) The collapses – including but not limited to ABC Learning, Babcock & Brown, Storm Financial and Great Southern – which left so many investors with so much less money than they used to have are already a memory to everyone other than those who lost money. The Ripoll Inquiry is in, now waiting on the Henry Review and the Cooper Review. The next post on businessdust – financial advice and financial advisers.
Marginalised mortgage brokers
Saturday, April 4th, 2009 | Economy, Investment | 3 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.
2009 begins
Friday, February 13th, 2009 | Economy | 1 Comment
For all intents and purposes the business year in Australia has now started – the inevitable increase in peak hour traffic with the majority returning from summer holidays is testament to this. January does tend to be slow for those who aren’t away, and this year even more so for the slowdown in the economy happening around us. Although having said this, many industries in Australia appear unaffected; earlier in the week I ate out, for example, and no one seemed to have told the busy restaurant nor its diners of the world recession. Surely one could be forgiven for thinking that if we had less negative sentiment from the media etc we might be able to get through this more quickly and with less severity. Self fulfilling prophecies and reduced spending, but I’ll leave that topic for university professors. Certainly in some sectors – especially finance and banking, and more recently mining which must be seen as a particular concern – there have been job cuts and even companies becoming insolvent, but to a large extent Australia seems to have been somewhat sheltered. At least so far. And so with little optimism and cash payments for all on the way from the Australian Government, 2009 begins.