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)


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

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.

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?

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!

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

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

% 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.

I can be contacted at 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.