Planners on commissions have ‘axe to grind’
Australian investors “ought to be aware” of financial advisers who get paid on a commission basis, according to US investment expert and author of the bestseller, ‘Random Walk down Wall Street’, Burton Malkiel.
Speaking during a visit to Australia last week as a guest of Vanguard Investments, Malkiel said he “tends to favour fee-only advisers because they have no axe to grind”.
“Whenever anybody gets paid a commission for selling you something, there is at least a possibility that the decision has been made in the interest of the seller rather than the client.
“In general, I worry about some financial planners who want to have you (clients) do a lot of switching, particularly when they are making a commission on the switching they are doing.”
Malkiel also told a Sydney conference on Friday that the best way for investors to generate long-term wealth from the share market is by investing in index funds.
He said index funds have beaten 60 per cent of average fund managers in the US over three years, and 80 per cent of active mutual funds in the US were beaten by a low cost index fund over 10 or 20 years.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
