Coming between clients and cash
A mere six months ago, the common wisdom among financial planners was that most clients would be best advised not cashing out their investments lest they miss the inevitable recovery in the market. For many clients this may still represent sound advice.
What we now know, as a result of the latest Wealth Insights research, is that many planners now believe the advice was flawed because it was premised on analyses provided by dealer groups but sourced from fund managers — entities with a strong vested interest in keeping investors away from cash.
Of course, it is very easy for planners to be wise with hindsight and to seek to make fund managers scapegoats, but the sentiment revealed in the Wealth Insights research is telling: planners have clearly identified what represents a serious shortcoming in the existing structure of the financial planning industry.
Indeed, it is arguable that the planners’ misgivings about the nature and source of the intelligence they are required to use is entirely legitimate and warrants some close and objective examination.
Financial planners should, of course, not be reliant on any one source of intelligence. The World Wide Web and the ease with which it can be used means there is simply never a shortage of information about either the state of the markets or the state of the economy.
Then, too, there is the assumption on the part of consumers that planners will use all the tools at their disposal and their own analytical capabilities in formulating a strategy for their clients, particularly at a time of extreme market volatility.
The fact that many planners obviously feel they cannot follow their own analysis and instincts is not healthy for the financial planning industry, particularly when those very same planners may have based the building of their own personal wealth on instinct and analysis.
While it is arguable that Australian financial planners are experiencing a once in a lifetime event in the current global financial crisis, it does not alter the fact that many of them have clearly found themselves constrained by inappropriate rules and structures.
The flaws in any system are most often revealed when it is subjected to real stress.
— Mike Taylor
AUTHOR
Mike Taylor
Recommended for you
In this week’s episode of Relative Return Unplugged, AMP chief economist Shane Oliver joins the show to unravel the web of tariffs that US President Donald Trump launched on trading partners and take a look at the way global economies are likely to be impacted.
In this episode of Relative Return, host Laura Dew is joined by Andrew Lockhart, managing partner at Metrics Credit Partners, to discuss the attraction of real estate debt and why it can be a compelling option for portfolio diversification.
In this week’s episode of Relative Return Unplugged, AMP’s chief economist, Shane Oliver, joins us to break down Labor’s budget, focusing on its re-election strategy and cost-of-living support, and cautioning about the long-term impact of structural deficits, increased government spending, and potential risks to productivity growth.
In this episode of Relative Return, host Laura Dew chats with Mark Barnes, head of investment research, and Catherine Yoshimoto, director of product management, from FTSE Russell about markets in Donald Trump's second presidency and how US small caps are faring compared to their large-caps counterpart.
