Letters: SMSF kits, Aberdeen LIC, risky finance products

Readers suggest the need for cheap SMSF set-up products, ask about LICs, and express concern about the risks of the financial industry today.

Costly kits

Thanks for championing the SMSF movement. Our family SMSF is nearly ready to go. The law firm that set up our deed has sent us a list for their “kits”, and prices were a bit rich. For example, to roll-back a pension the cost was $330 for “kit”. Could one of your writers address this problem?  Alternatively, I suggest Eureka have kits available to subscribers attached to website; I would be glad to pay extra for this.

JW

Editor’s response: While it can be costly sometimes to go down the SMSF path, the benefits in percentage terms can be vast. Robert Gottliebsen wrote on this back in August, and this article is still worth a read for those looking to see just how much an SMSF should cost.

Aberdeen LIC?

How about Aberdeen Leaders as a LIC, or is it different from an LIC?

H Thompson

Ian Verrender’s response: Yes, Aberdeen Leaders is an LIC. It is managed by Aberdeen Asset Management. Like I said in the story, there are more than 60 listed on the exchange. Unfortunately the research I had from Bell Potter and from Morgan Stanley did not include Aberdeen so it clearly isn't one of the standout performers.

Indefensible risk

Having operated a SMSF since 1996, I am appalled the finance industry is still ripping off super fund members.

I honestly believe the financial industry, and this includes investment advisers, have retained the fundamental concepts held before the GFC of 2007/8. The industry might be more transparent but the financial products and the cost associated with delivering them are unchanged. 

There are too many layers between the investor and the investment. The fees are structured and subject to shareholders’ and corporations’ need for return on equity.

Large financial corporations like banks and insurance companies offer limited financial products and the fees are not in proportion to the service offered or the returns received.

The three main options offered by the finance industry are shares, fixed interest and cash, all are main-stream investments and accessible to anyone as an investment option in any percentage you care to name. Just because you wrap these products into a financial instrument does not automatically increase their value and, more importantly, their security.

Speaking as a retiree with all the caveats applied to investing as a retiree, the fundamental criteria are capital preservation and a reasonable return.

The return on capital is proportional and inverse to the risk one is prepared to take and to add an extra layer of cost and risk via any current financial instrument is, in my opinion, indefensible.

Name withheld

Lynas and the market playing field

The facts as we know it: A trading halt was issued by Lynas on November 8. The Trading halt was lifted five minutes before close of trade the same day. Morgan Stanley, I believe, was able to sell up to five million shares in these five minutes.

Before trade on November 9, another trading halt was issued regarding raising capital.

I am sure there are thousands of investors that are very unhappy about what has happened. The sharemarket should be an even playing field and in this particular case it was not, in my opinion

I believe the evidence lies in the timing of the trading halts and Morgan Stanley’s actions. Somebody needs to take a stand for retail investors. The only way these sort of actions can be stopped is through informing the public!

M Woolford

Collected confusion

I am new to Eureka Report, does "Collected Wisdom" mean you tip stocks to buy, sell and hold on a regular basis? Is it eureka or the author of this "Collected Wisdom" who is responsible for the recommendations? If the latter, what are his experience/qualifications and why does he not issue a disclaimer/caution about acting on his “Collected Wisdom"?

J Kiernan

Editor’s response: Over the past three weeks the explanation and disclaimer usually appended to the Collected Wisdom column was unfortunately replaced with a different introduction by mistake. The column is an edited summary of other recommendations in the investment press and wider media, and may not represent the views of Eureka Report. This has now been corrected, and we thank you for alerting us.

Hybrid questions

Several advisers I deal with have questioned the correctness of the message presented by Philip Bayley on the hybrid issue. I ask you to study that article and if you feel it is misguiding then a more classified report on hybrids would be appropriate.

R Regan

Drop the honourifics

Please ask Ian Verrender to stop his forelock tugging. His references to “Sir Ron”, rather than ‘Ron Brierley’, or, what everybody else gets, ‘Brierley’, really grate. This is Australia, and 2012, for goodness sake.

B Miller