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 episode, hosts Maja Garaca Djurdjevic and Keith Ford take a look at what’s making news in the investment world, from President-elect Donald Trump’s cabinet nominations to Cbus fronting up to a Senate inquiry.
In this new episode of The Manager Mix, host Laura Dew speaks with Claire Smith, head of private assets sales at Schroders, to discuss semi-liquid global private equity.
In this episode of Relative Return, host Laura Dew speaks with Eric Braz, MFS portfolio manager on the global small and mid-cap fund, the MFS Global New Discovery Strategy, to discuss the power of small and mid-cap investing in today’s global markets.
In this episode, hosts Maja Garaca Djurdjevic and Keith Ford are joined by special guest Steve Kuper to dive deep into the recent US election results and what they mean for the world.
