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"It is really great to discover that there are some gems in the industry with great ethics who can guide you and give you great advice. Thanks Justin for your blogs and time with me".

Photo Credit: mtlchiconline

Photo Credit: mtlchiconline

Noel Stevens was dying when CommInsure rejected his insurance claim.  The NSW District Court ruled the insurer was right to turn down the claim.

Mr Stevens passed away, but not before taking Commonwealth Financial Planning to court as he believed he had been given bad insurance advice. The court agreed.

Commonwealth Financial Planning (CFP) appealed the ruling and recently lost when defended by Noel Stevens’ daughter (CFP v Couper). The evidence in this case showed it’s possible to receive insurance advice that leaves you uninsured, where you were previously covered.

This client had no idea his insurance advice was poor. The CFP advisor didn’t know he’d given the wrong advice. In fact, the advisor followed a process you could find in any bank across Australia.

When your advisor is none the wiser, how can you check you have received proper advice?

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Using a fee based broker who gives back commission will take years off your mortgage

               Photo Credit: claudia.susana

 

Failing to use a mortgage broker who will refund commission is one of the biggest mistakes people make when they choose a loan. 

Commission refunds are probably the easiest way to put $10,000’s back into your pocket over the life of your loan – reducing your loan term by years, if you use the cash to make additional payments.

It’s the strategy that’s possibly the most effective and least utilised, as not many people know about it, or how to use it properly.

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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: Alex E. Proimos via Compfight cc

Photo Credit: Alex E. Proimos

You can take $100,000 off the cost of your mortgage with surprisingly little increase in repayments, at least when compared to the savings.

You probably understand how compound interest affects costs exponentially.  But, if you’re like most people, you may not realise how much the total interest cost increases over the loan term.  And, you might not know how little the corresponding weekly repayments decrease as you lengthen the term beyond 15 years.

As you extend the loan term of a mortgage beyond about 15-20 years, your minimum repayments tend to level out and, at the same time, your interest costs start to skyrocket.

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Questions to Ask Your Financial Adviser

What questions can you ask a financial adviser to help ensure you get advice that suits your interests and not theirs? 

There are some great checklists available to help you choose a financial adviser, especially if you have no idea where to start.  But, most focus on basic questions such as experience, professional membership and the services they offer.

While these are helpful as a starting point, they don’t get to the heart of what determines the quality of the advice and service your financial adviser provides.

I think there are a few additional questions you can ask to help ensure you get great advice and support.

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Photo Credit: Eric Flexyourhead via Compfight cc

Photo Credit: Eric Flexyourhead

Update (March 2018):

Over 20,000 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 over the next year, you may receive 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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Get Financially Savvy with these Free Financial Blogs

Beyond gaining the knowledge to make better day-to-day financial decisions, teaching yourself to be more financially savvy will make it far less likely that you will get ripped off or make an error costing you tens of thousands of dollars.

And you don’t have to read a tonne of books or study a diploma.  Fortunately, there is an excellent source of free information on the net in the form of blogs and financial websites that provide regular advice and tips.

If you are not familiar with modern blogs, don’t dismiss the idea because you think the content is only written by amateurs.  Many of the best financial commentators provide their thoughts and insight via their own blogs. There are also newspaper and magazine websites with financial sections that produce great content aimed at the everyday Australian.

And you only need 15 minutes a week.  Join the email list of 2-3 blogs that you feel speak to your values or meet a gap in your current knowledge.  Then simply leave time each week to review any updates.

There are several benefits of reading financial blogs and websites.

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