Three problems with financial advisers
I enjoy your Saturday missive. It has become part of my weekly reading list. I don't, however, enjoy your tirades against financial advisers. There are many good ones out there, and the vast majority are dedicated to doing the best for their clients. This week you asked for the views of financial advisers in relation to the Coalition's review of Labor's financial advice reforms. So here goes.
There are three fundamental problems with our industry: it is too easy to become a financial adviser, 'unserviced clients' (not a typo) account for a significant part of the revenue of too many firms, and product commissions create unwanted conflicts of interest.
The concept of an 'unserviced client' may seem oxymoronic, but they comprise a significant chunk of many firms' profits. However, the fee disclosure statement should make clients aware that they are paying fees every year to a mysterious financial adviser, often in another state!
The ban on investment product commissions is welcome and long overdue. There should be no back tracking here. In fact, the legislation should be extended to all investment products, including the sale of residential property to SMSF owners.
Jonathan Hoyle, Partner and Chief Investment Officer, Stanford Brow
Online retail’s impact on transport stocks
It seems to me that the transport sector of the ASX is well positioned for long term growth, underpinned by the growth in online retail sales and therefore freight volumes. Do you agree?
Editor’s response: Thanks for your letter. Logistics and transport companies are recognising the growing demand from online retail and are adapting their businesses to handle more parcel deliveries. As Robert Gottliebsen says in Lighten the retail property load, you will begin to see more transport trucks on the road as a replacement for people behind the counter.
Property – helping the next generation
I just watched a Eureka TV episode and was somewhat disappointed to find that, contrary to the episode title, it did not actually say anything about how the next generation might be helped into the property market. I was hoping for some suggestions as to how parents can help their children without "giving away the farm" as it were.
Editor’s response: Thanks for your letter. As discussed in Inside Line, it is difficult for young people to purchase their first property as prices have escalated to much higher multiples of income than they were decades ago. It’s not ideal, but given house prices are tipped to keep rising, first home buyers need help from their parents.
However, the federal government has made it slightly easier for young people through the First Home Saver Scheme (see Scott Francis’s Helping the next property generation).