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News Bulletin : ADA News Bulletin May 2011
48 MAY 2011 Compiled by Michael Lannon investment insight Making investment decisions that allow you to SLEEP AT NIGHT www.2020directinvest.com.au/ada | 1800 352 021 100% entry fee rebate on managed funds Last month, during the Australian Dental Congress held in Brisbane, I had the opportunity to talk to members about their investments and their experiences with investment advisers. It is always useful to have a first-hand account of how members perceive the financial services industry and its products and services. Most people I spoke to had a very cautious view of financial advisers and the financial services industry. The overwhelming perception was the 'best interests of the client' was not a top priority, advice was expensive and it was nearly impossible to get unbiased advice. Despite the widespread distrust and disillusionment with financial advisers many members were not confident in their investment skills to make changes to their existing arrangements. The most common reasons for doing nothing or continuing with an adviser were as follows: • I do not have the time or knowledge to look after my investments and instead I put my efforts into the practice of dentistry. • Investments and superannuation simply hold no interest for me and I am happy to pay someone to look after it. • I realise I am probably paying too much in fees but what choice do I have? I simply have to choose the best from a bad lot. Fortunately, there are now other options. After many years of lobbying for change the government is finally addressing some of the conflicts of interest currently existing in financial services. New laws are currently being drafted for implementation on 1 July 2012 to eliminate commissions and require customers to opt in to advice. Whilst reform is a good thing the cynic in me is convinced that these changes will be a little like 'putting lipstick on a pig'. As long as the banks and insurance companies manufacture the products and control distribution via ownership of 80% of the advisers they will simply find a new way of charging fees. These will likely be in the form of an adviser service fee for accessing products. Consumers need access to tools that allow them to change the way they access advice and investment products. Rather than wait for these reforms now is the time to take action. This month's article provides an outline of an innovative program that will give you the knowledge and confidence to engage a financial adviser on your own terms and become a better investor. You can then access advice when you require it as opposed to as a requirement of making an investment. THE EUREKA MOMENT A 'eureka moment' is the moment of a sudden unexpected discovery. While most people understand the issues with financial services, they want help before they will consider taking any action to initiate change. For many, implementing this program will become a part of an already too long 'to do' list. Many say to me "Just tell me what to do and I will do it". Despite the positive feedback received from these articles most people tend to stick to the status quo. The main reason for lack of action is insufficient reason for taking action -- the pain of the high fees is not painful enough. Somehow better access and understanding of investments is a 'nice to have' and not a 'must have'. For many investors their 'eureka moment' comes late in life when there is a
ADA News Bulletin April 2011
ADA News Bulletin June 2011