I just came accross a great post, on Australian Small Business I know the people who have set up this resource and are aiming to build it into an "open source" business resource to try and really drive Small Austrlian Small Businesses forwards, hopefully with quality information and not too much spam?
Anyway keep an eye on it..
Saturday, November 6, 2010
Wednesday, November 3, 2010
What Should You Expect from Your Financial Adviser?
Every year millions of investors have high expectations when they select their latest and greatest financial advisers. Where do the expectations come from? Research shows financial planners, financial advisers, sales representatives, and money managers create excessive expectations when they use sales tactics to convince investors they are:
Competent investment experts
Ethical professionals who put investor interests first
Capable of producing exceptional investment returns
Excellent communicators who keep investors fully informed
Why do advisers create high expectations? They increase their odds of winning when they create high expectations. They reduce their odds of winning if they do not create high expectations. Win, they make a lot of money Lose, they make nothing
Paladin research shows investors should establish relationships with financial advisers that are based on four “realistic” expectations.
Competent Advice
Investors have the right to expect competent advice from advisers that will help them achieve their financial goals. For example, they need a specific amount of money for a financially secure retirement. Advisers should provide specialized knowledge and services that help them realize their hopes and dreams
Ethical Advice
Investors should expect advice that is free of conflicts of interest and puts their financial interests first. When advisers have to choose between doing what is best for investors and what makes them the most money, they should choose to do what is best for investors.
How do investors know their advisers are providing ethical advice? Most of the time, they do not know. Investors’ best protection is doing their homework when they select advisers and limit their selections to advisers who have clean compliance records, are Registered Investment Advisers and are compensated with fees like other professionals, and are acknowledged fiduciaries. Most investors use the services of experienced professionals to conduct background checks for them to validate the accuracy of adviser claims and data.
Investors should also expect meetings with advisers on a regularly scheduled basis and the professionals should be readily available when investors want to talk to them. Too many investors experience adviser disappearing acts during down markets. Advisers should meet with investors on a quarterly basis to review investment returns and meet annually to update their financial plans.
We make a real effort in our financial planning business to act in our client's best interests make sure you keep us in mind
Competent investment experts
Ethical professionals who put investor interests first
Capable of producing exceptional investment returns
Excellent communicators who keep investors fully informed
Why do advisers create high expectations? They increase their odds of winning when they create high expectations. They reduce their odds of winning if they do not create high expectations. Win, they make a lot of money Lose, they make nothing
Paladin research shows investors should establish relationships with financial advisers that are based on four “realistic” expectations.
Competent Advice
Investors have the right to expect competent advice from advisers that will help them achieve their financial goals. For example, they need a specific amount of money for a financially secure retirement. Advisers should provide specialized knowledge and services that help them realize their hopes and dreams
Ethical Advice
Investors should expect advice that is free of conflicts of interest and puts their financial interests first. When advisers have to choose between doing what is best for investors and what makes them the most money, they should choose to do what is best for investors.
How do investors know their advisers are providing ethical advice? Most of the time, they do not know. Investors’ best protection is doing their homework when they select advisers and limit their selections to advisers who have clean compliance records, are Registered Investment Advisers and are compensated with fees like other professionals, and are acknowledged fiduciaries. Most investors use the services of experienced professionals to conduct background checks for them to validate the accuracy of adviser claims and data.
Investors should also expect meetings with advisers on a regularly scheduled basis and the professionals should be readily available when investors want to talk to them. Too many investors experience adviser disappearing acts during down markets. Advisers should meet with investors on a quarterly basis to review investment returns and meet annually to update their financial plans.
We make a real effort in our financial planning business to act in our client's best interests make sure you keep us in mind
Saturday, October 30, 2010
Update
Sorry for the delay in getting some content up on here, we have been very busy strengthening our range of accounting services, for those of you who don't know as well as my financial planning business we are also small business accountants
our more ethical approach to advice is starting to pay off for us especially with clients who have self managed super funds or are interested in self managed super, more and more clients are realising the best option for them is to take control of their super and with it their future. If you are intersted make sure you drop us a line!
our more ethical approach to advice is starting to pay off for us especially with clients who have self managed super funds or are interested in self managed super, more and more clients are realising the best option for them is to take control of their super and with it their future. If you are intersted make sure you drop us a line!
Thursday, July 15, 2010
TV Life insurance
It seems every day there are more TV ads advertising life insurance, and every month a new life insurance company! Now Australians as a whole are under insured so I guess there is nothing wrong with encouraging us to think a bit harder about insurance.
The main problem I have with this is Life insurance is just one type of insurance, certainly an important one where kids, houses and mortgages are involved but in some cases there are other insurances that are as important if not more important than life insurance. Almost exclusively all of the TV ads are pushing life insurance only and many of the companies involved don't even offer any of the other personal insurances.
The problem I have is where is the duty of care to consumers? As advisers we are expected to put our clients interests ahead of our own and yet the same expectation does not apply to large corporates? Now maybe I am naive but I think there are very few advisers out there that would recommend life insurance only without at least discussing if not recommending other personal insurances such as TPD, Trauma or Income protection!
Last night i even saw an ad basically recommending everyone should have a life insurance policy in the value of 10 X their income, yes this is a good benchmark and for many people a policy of 10 X their income may be appropriate but again where is the duty of care, what about people with very large debts, no debts or even no income? At times my wife has not brought in an income but we have a mortgage and two young kids, if she was to die I would be severely disadvantaged.
Everyone is different and deserves proper financial advice and in an era where the standard of financial advice and ethics as a whole are improving it is interesting to see that this is one clear area where the quality of "advice" (if you can call a TV ad advice!) seems to be declining.
Do yourself a favour and get some financial advice
The main problem I have with this is Life insurance is just one type of insurance, certainly an important one where kids, houses and mortgages are involved but in some cases there are other insurances that are as important if not more important than life insurance. Almost exclusively all of the TV ads are pushing life insurance only and many of the companies involved don't even offer any of the other personal insurances.
The problem I have is where is the duty of care to consumers? As advisers we are expected to put our clients interests ahead of our own and yet the same expectation does not apply to large corporates? Now maybe I am naive but I think there are very few advisers out there that would recommend life insurance only without at least discussing if not recommending other personal insurances such as TPD, Trauma or Income protection!
Last night i even saw an ad basically recommending everyone should have a life insurance policy in the value of 10 X their income, yes this is a good benchmark and for many people a policy of 10 X their income may be appropriate but again where is the duty of care, what about people with very large debts, no debts or even no income? At times my wife has not brought in an income but we have a mortgage and two young kids, if she was to die I would be severely disadvantaged.
Everyone is different and deserves proper financial advice and in an era where the standard of financial advice and ethics as a whole are improving it is interesting to see that this is one clear area where the quality of "advice" (if you can call a TV ad advice!) seems to be declining.
Do yourself a favour and get some financial advice
Wednesday, June 30, 2010
Cheap Tax Returns
Today we were checking though client files and we found that one of our clients had 2overdue tax returns (we check this sort of thing all the time) and we called the client and he is 100% sure the returns were lodged by HR Block. Now obviously the client could very easily be wrong (we are talking about 3 years ago).
Unfortunately this is the second time in as many months we have come across this sort of error. The last one was ITP and on calling the ITP office who supposedly lodged the missing returns we were told the office in question had been sold and re-located so there was no way they would have kept any files from past clients!
These organisations are large and often do their work for pretty low prices but unfortunately these things do happen, i would recommend you always get your tax returns done by a reputable Accountant rather than shopping around for the cheapest price. As an added bonus you will probably get a better refund and the Accountant will lodge your return!
While many fully qualified Accountants spend a lot of their time dealing with more complex business and strategic issues as an Accountant they are required to do 30-40hrs of CPD per year and also have regular quality control audits so you can be sure they have the skills and knowledge to prepare your tax return.
Quality Tax Returns Melbourne
Unfortunately this is the second time in as many months we have come across this sort of error. The last one was ITP and on calling the ITP office who supposedly lodged the missing returns we were told the office in question had been sold and re-located so there was no way they would have kept any files from past clients!
These organisations are large and often do their work for pretty low prices but unfortunately these things do happen, i would recommend you always get your tax returns done by a reputable Accountant rather than shopping around for the cheapest price. As an added bonus you will probably get a better refund and the Accountant will lodge your return!
While many fully qualified Accountants spend a lot of their time dealing with more complex business and strategic issues as an Accountant they are required to do 30-40hrs of CPD per year and also have regular quality control audits so you can be sure they have the skills and knowledge to prepare your tax return.
Quality Tax Returns Melbourne
Wednesday, June 23, 2010
Life in a post Rudd world...
Wow what a day, i don't think that anyone has ever been as interested in politics as today.(at least in my lifetime) It's also the first time i have received breaking news via Facebook!
The big question for businesses both large and small is where do we stand with the many Tax changes announced by the Rudd Government? Presumably Julia must make some changes if for no other reason than to put her stamp on Australian Politics.
If Julia really wants to differentiate herself from Kevin07 i think she needs to act in a clear and decisive way to give the business community certainty about the tax and legislative environment we are operating in.
And as always remember if you are left wondering what is going on and what this means for you and your business don't hesitate to get in touch! www.smallbusinessworks.com.au
The big question for businesses both large and small is where do we stand with the many Tax changes announced by the Rudd Government? Presumably Julia must make some changes if for no other reason than to put her stamp on Australian Politics.
If Julia really wants to differentiate herself from Kevin07 i think she needs to act in a clear and decisive way to give the business community certainty about the tax and legislative environment we are operating in.
And as always remember if you are left wondering what is going on and what this means for you and your business don't hesitate to get in touch! www.smallbusinessworks.com.au
Thursday, June 17, 2010
End of year time for us Accountants and Financial Planners can be a real handful at times. No matter how many times we tell clients they always leave planning to the last minute.
When you are sitting down in front of a client with hundreds of thousands of dollars of taxable income that they need to get rid of with a few days before June 30th it is really easy to see why so many advisers take the easy way out and place their clients funds into Agri investments! In the office we are not taking that option and instead looking at more complex multi product strategies with a range of capital protected products that are based on equities.
When you are sitting down in front of a client with hundreds of thousands of dollars of taxable income that they need to get rid of with a few days before June 30th it is really easy to see why so many advisers take the easy way out and place their clients funds into Agri investments! In the office we are not taking that option and instead looking at more complex multi product strategies with a range of capital protected products that are based on equities.
Wednesday, June 9, 2010
Networking and the dying art of referrals
In a world where people are more likely to check your references on google than they are by picking up your phone is the age old business stalwart of the "qualified referral" dead and buried?
These days it seems harder and harder to just to keep track of my friends birthdays (unless facebook reminds me) let alone establish if they need a good electrician. I think more and more this referral function for better or worse is being replaced with facebook, linked in and especially twitter. I have actually lost track of the number of times someone has told me they found so and so through twitter!
So what is the new referral etiquette? Do you need to actively network on these mediums so that people will then refer work to you within the platform or can you rely on having a more passive presence to attract and secure work?
Small Business Accountants
These days it seems harder and harder to just to keep track of my friends birthdays (unless facebook reminds me) let alone establish if they need a good electrician. I think more and more this referral function for better or worse is being replaced with facebook, linked in and especially twitter. I have actually lost track of the number of times someone has told me they found so and so through twitter!
So what is the new referral etiquette? Do you need to actively network on these mediums so that people will then refer work to you within the platform or can you rely on having a more passive presence to attract and secure work?
Small Business Accountants
Friday, June 4, 2010
Mining Super tax
Wow the mining industry must really care about the "super tax" they even have their own ads! Industry is normally hesitant to get involved in politics, at least in public.
I wonder if the Rudd Government will run a matching campaign?
I wonder if the Rudd Government will run a matching campaign?
Wednesday, June 2, 2010
Why don't clients recognise that commisions are a problem?
I had an interesting chat with a buyers advocate this morning and she is coming up against a commission issue, she has a client who has been told by their advisor to buy an off the plan property no doubt heavily influenced by the fact the advisor will receive a very healthy commission cheque.
When offered the option of having a third party review the deal to ensure it stacked up their reply was "we trust the financial planner". This comment is the problem, clients inevitably trust their advisers who have more knowledge and experience about financial matters than them.
The problem occurs because these commission payments DO influence advisers and the advice that they give, any advisor who says it doesn't is either crooked or kidding them selves.
When offered the option of having a third party review the deal to ensure it stacked up their reply was "we trust the financial planner". This comment is the problem, clients inevitably trust their advisers who have more knowledge and experience about financial matters than them.
The problem occurs because these commission payments DO influence advisers and the advice that they give, any advisor who says it doesn't is either crooked or kidding them selves.
Tuesday, June 1, 2010
Crunch time
In the next week or so I have to explain to my first existing client who is used to commisions paying for my work that all of a sudden he needs to fork out $1000+ for me to do the work he has asked me to do.
I"m sure he will be fine just all the other clients I have expelained fee for service to so far have been distinctly better off with fee for service whereas this client will be worse off both in real $ terms.
Small Business Accountants
I"m sure he will be fine just all the other clients I have expelained fee for service to so far have been distinctly better off with fee for service whereas this client will be worse off both in real $ terms.
Small Business Accountants
Sunday, May 30, 2010
Start up capital for super clinics
One of the Announcements on budget night was that the Government will spend $ 355 million on multidisciplinary super clinics. This funding is being made available in the form of grants for both the private and not for profit sector to build new multidisciplinary super clinics.
If you are a Doctor or associated practitioner then our advice is that you should be looking very hard at this round of grants to see if you can take advantage of them, it is not very often that the Government supplies start up capital to businesses of any description. Under the current round of funding it appears the Government will supply 50% of the start up capital to successful projects up to $ 2.5 million. We have extensive experience in putting together business plans in the medical industry and have access to all the resource you need put together a successful project including specialist lenders to fund the other 50% of the required funding.
If you are looking at these grants it is important to understand the Governments objectives and make sure you align your porject with them, also make sure you understand it the project that matters to the Government and not the business case. (unlike when presenting deals to banks or venture capital firms)
Source: www.smallbusinessworks.com.au
If you are a Doctor or associated practitioner then our advice is that you should be looking very hard at this round of grants to see if you can take advantage of them, it is not very often that the Government supplies start up capital to businesses of any description. Under the current round of funding it appears the Government will supply 50% of the start up capital to successful projects up to $ 2.5 million. We have extensive experience in putting together business plans in the medical industry and have access to all the resource you need put together a successful project including specialist lenders to fund the other 50% of the required funding.
If you are looking at these grants it is important to understand the Governments objectives and make sure you align your porject with them, also make sure you understand it the project that matters to the Government and not the business case. (unlike when presenting deals to banks or venture capital firms)
Source: www.smallbusinessworks.com.au
Thursday, May 27, 2010
Referall Fees
I have an ethical Dilemma;
We receive referal fees for some referral's we give, in most cases the referral fees have little $ value so we have refused to accept them going forwards as it is just easier but for one service we receive very high referral fees. The service is good for our clients but if we do not get paid for the referral there is little reason to refer or market the service leaving our clients potentially disadvantaged or us working for free.
What should we do?
Small Business Accountants www.smallbusinessworks.com.au
We receive referal fees for some referral's we give, in most cases the referral fees have little $ value so we have refused to accept them going forwards as it is just easier but for one service we receive very high referral fees. The service is good for our clients but if we do not get paid for the referral there is little reason to refer or market the service leaving our clients potentially disadvantaged or us working for free.
What should we do?
Small Business Accountants www.smallbusinessworks.com.au
Tuesday, May 25, 2010
Industry Funds Marketting
Once commisions become illegal what will Industry funds use in their TV advertising? It will be interesting to see what happens, I don't really mind but i do think it is a bit of a fear/scare campaign (no doubt it is extremely effective).
The new BT ad (i think only on foxtel) is a lot nicer, re-enforcing the positives and good strategy of long term investing.
The new BT ad (i think only on foxtel) is a lot nicer, re-enforcing the positives and good strategy of long term investing.
Saturday, May 22, 2010
Ongoing service fees
There is a lot of talk in the Industry about "defining your service proposition" to help justify the fact advisers receive trailing commissions. Many of these ongoing service offerings include things like e-mail newsletters, free seminars and annual meetings to discuss the economic environment.
I think that education is very important for clients so that they better understand what is happening with their money however how do you cost these services? Clients of my Accounting practice get newsletters, daily updates on our website, you tube videos and free seminars all for free and all without me charging them a monthly fee. Now i could charge them a monthly fee, some would accept and some wouldn't and there is not doubt this would make my business more profitable but my question is why would I charge my clients for this service?
Sure there is a cost but I believe it is part of my Marketting and Client retention strategy as much as it is a "service" for clients. Now I could easily be missing the point here as I am new to Financial Planning but it just strikes me as odd?
What do you think? What ongoing service(s) do you expect from your financial adviser and what would you pay for them?
I think that education is very important for clients so that they better understand what is happening with their money however how do you cost these services? Clients of my Accounting practice get newsletters, daily updates on our website, you tube videos and free seminars all for free and all without me charging them a monthly fee. Now i could charge them a monthly fee, some would accept and some wouldn't and there is not doubt this would make my business more profitable but my question is why would I charge my clients for this service?
Sure there is a cost but I believe it is part of my Marketting and Client retention strategy as much as it is a "service" for clients. Now I could easily be missing the point here as I am new to Financial Planning but it just strikes me as odd?
What do you think? What ongoing service(s) do you expect from your financial adviser and what would you pay for them?
Thursday, May 20, 2010
More lunacy from the FP industry
I recently became privy to an arrangement between a dealer group and a service provider that sent shivers down my spine, now this may be an isolated instance of this sort of behaviour but i think it says something about the state of our industry and really shows why the government wants to outlaw commisions and overrides. The scam/legitimate business arrangement works like this;
The product provider normally charges lets say $100 per for a product/service and presumably margins are quite tight so there is little or no slack available to pay referal fees/commisions through to advisers and the dealer group in question so to make it worth while the product provider has created an alternative price schedule especially for clients of the dealer group in question so instead of paying $100 the client pays lets say $150. The dealer group and the adviser then split the $50 premium between them! (the actual figures involved have been changed and i have deliberately not identified the providers in question)
Now I do understand that in some instances paying a referall fee may a legitimate product distribution method but i think the deliberate over inflation of the normal costs of the product is a form of misleading and deceptive conduct and advisers should be forced to inform their clients that they are paying over standard rates for the service/product in question. What do you think? It truly stuns me that arrangements like this even exist!
The product provider normally charges lets say $100 per for a product/service and presumably margins are quite tight so there is little or no slack available to pay referal fees/commisions through to advisers and the dealer group in question so to make it worth while the product provider has created an alternative price schedule especially for clients of the dealer group in question so instead of paying $100 the client pays lets say $150. The dealer group and the adviser then split the $50 premium between them! (the actual figures involved have been changed and i have deliberately not identified the providers in question)
Now I do understand that in some instances paying a referall fee may a legitimate product distribution method but i think the deliberate over inflation of the normal costs of the product is a form of misleading and deceptive conduct and advisers should be forced to inform their clients that they are paying over standard rates for the service/product in question. What do you think? It truly stuns me that arrangements like this even exist!
Industry Funds as a Financial Adviser
Many of my clients ask why we don't recomend Industry funds as advisers, there are or can be a lot of reasons for this;
For one thing they do not pay commisions, adviser service fees or any other trailing income which is obviously a big issue for advisers whose main abjective is to build their trail book
There is also real difficulty in sourcing up to date research and information in industry funds, industry funds do not like advisers and because advisers don't generally use industry funds research houses do not cover them. This is slowly changing though and we are slowly get more information allowing us to compare industry and retail funds more easily.
Obviously different funds suit different people but I for one am looking forward to using industry funds more often in a world without bias and conflicts between my advice and my need to feed family.
Alan Maddick
www.smallbusinessworks.com.au
For one thing they do not pay commisions, adviser service fees or any other trailing income which is obviously a big issue for advisers whose main abjective is to build their trail book
There is also real difficulty in sourcing up to date research and information in industry funds, industry funds do not like advisers and because advisers don't generally use industry funds research houses do not cover them. This is slowly changing though and we are slowly get more information allowing us to compare industry and retail funds more easily.
Obviously different funds suit different people but I for one am looking forward to using industry funds more often in a world without bias and conflicts between my advice and my need to feed family.
Alan Maddick
www.smallbusinessworks.com.au
Wednesday, May 19, 2010
Commisions & Life Insurance
The Australian Government has not made any changes to the existing commision structure for Life Insurances (Income Protection, Disability Insurance, Life Insurance, Trauma or Critical Illness insurance etc) the argument being that people need these insurances and without the incentive of sales commisions there would be no reason for advisors to recomend life insurance to clients.
I think this is a load of crap! As an accountant I don't get paid commisions for any of the work I do but I still push for more clients, more work etc. Sure for financial reasons (to grow my business) but in an unbiased way.
The reality is that financial protection is really important but perhaps everyone does not always need the most expensive products with all the bells and whistles that pay the highest commision...
In the past we have accepted and still accept commisions from life companies but we are transitioning away from them and hopefully from the 1st of July all commisions will be creditted against work done for clients and excess refunded to clients.
Alan Maddick
www.smallbusinessworks.com.au
I think this is a load of crap! As an accountant I don't get paid commisions for any of the work I do but I still push for more clients, more work etc. Sure for financial reasons (to grow my business) but in an unbiased way.
The reality is that financial protection is really important but perhaps everyone does not always need the most expensive products with all the bells and whistles that pay the highest commision...
In the past we have accepted and still accept commisions from life companies but we are transitioning away from them and hopefully from the 1st of July all commisions will be creditted against work done for clients and excess refunded to clients.
Alan Maddick
www.smallbusinessworks.com.au
% Based Adviser Service Fees
From 2012 the Goverment wants to ban commisions including what are know as trailing commisions often paid from Superannuation and Investment products. Much of the industry spends a lot of time building their "book" of trails which is to some degree passive income.
What much of the industry is now doing is switching from percentage based trailing "commisions" to percentage based "advisor service fees" there seems to be no difference?
Also is there are a meaningfull ethical issue? I think there is as it skews the focus of advisers from giving advice to trying to place clients funds into products.
Opinions?
I can be contacted at www.smallbusinessworks.com.au for more information.
What much of the industry is now doing is switching from percentage based trailing "commisions" to percentage based "advisor service fees" there seems to be no difference?
Also is there are a meaningfull ethical issue? I think there is as it skews the focus of advisers from giving advice to trying to place clients funds into products.
Opinions?
I can be contacted at www.smallbusinessworks.com.au for more information.
Is there such a thing as ethical financial advice?
I have started this Blog to explore the ethical issues within the Australian Financial Advice industry and my Practice. I am a public accountant and recently decided to add financial advice to our business as our clients definetly need financial advice.
Now one year on and I have realised I take my fiduciary duty to my clients seriously and cannot have any conflict of interest perceived or real in my business. So begins my journey to build an ethical advice business.
Now one year on and I have realised I take my fiduciary duty to my clients seriously and cannot have any conflict of interest perceived or real in my business. So begins my journey to build an ethical advice business.
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