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Financial Services Industry

Photo Credit: Auntie P

Photo Credit: Auntie P

To many people, commission is a dirty word.  It is synonymous with a back hander or under-the-table payment.

And for good reason.

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enate Inquiry into ASIC

Update, 26 June 2014:  Today the Senate’s Economic References Committee released its report on the performance of ASIC and referred to two of my suggestions when making their recommendations.

An effective financial services regulator means you get better advice.

Over the last few months, two Fairfax journalists, Adele Ferguson and Chris Vedalago, exposed some of the inherent problems within the bank-owned financial planning groups.  Their expose uncovered some terrible advice given by CBA and brought into question the ability of ASIC to regulate the industry effectively. Their efforts not only won them a well deserved Walkley Award nomination, but resulted in a Senate Inquiry into the Australian Securities and Investments Commission.

Submissions are welcome from the public or anyone in the industry who wants to have their say.  Sadly, despite criticism from around the industry for ASIC’s handling of such issues, there have been no submissions from the banks, industry associations or lobby groups.  And hardly a practical or constructive submission from any individual working in financial services who might have some insight into why ASIC has failed to deal with issues such as those at CBA.

If people don’t speak up publicly and provide thoughts on how ASIC might become more effective, nothing will change and you remain in danger of getting bad advice.

With that in mind, this week I made the following submission to the Inquiry.

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Photo Credit: Eric Flexyourhead via Compfight cc

Photo Credit: Eric Flexyourhead

Update (September 2020):

Over 32,000 people have read this article, after searching for information on financial advice fees. If you’re like them, and concerned you’re not getting value for your financial advice, call me on 1300 369 045 or email contact@justinbrand.com.au – and get a second opinion. 

At some point in the last few years, you may have received a Fee Disclosure Statement from your financial planner.  If you know what to look for, this statement will help you work out if your financial adviser is worth their money.

As a part of Future of Financial Advice (FOFA) reforms, all financial planners who charge an ongoing fee for their service must give their clients a Fee Disclosure Statement (let’s call it an FDS).  That’s for any advice fee your planner charges you on an ongoing basis, beyond 12 months.

This law is supposed to ensure you are told what you’ve paid for ongoing services and list what services you actually received. This should help you decide if you’re getting value.

But, the Fee Disclosure Statement is very basic.  You need to ask additional questions to ensure you are not wasting your hard earned money on support that doesn’t benefit you, doesn’t suit your needs or is simply overpriced.

The FDS will give you key information for the preceding 12 months:

  •    Fees you have paid for ongoing service
  •    Ongoing service you should have received
  •    Ongoing service you did receive

So lets look at each section.

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