When is advice not advice? When it’s a sales pitch

Stop calling a sales pitch advice, for goodness sake. Photo: istockIt’s funny how those who whinge most about their bank will often make it their first port of call when they need financial advice. What’s an ATM fee or a late payment charge – and let’s not dwell on whose fault that might have been – got on losing your life savings?

As one of the witnesses said at the Senate inquiry into the Australian Securities and Investments Commission (ASIC), which perhaps luckily for it turned into an inquisition into the CBA’s Commonwealth Financial Planning, there’s more consumer protection buying a fridge than in financial advice from a bank.

And don’t think the so-called Future of Financial Advice (or FOFA) reforms introduced by Labor or the, um, reform of its reforms the Coalition is pushing through, changes things one iota.

Or that the Commonwealth Bank of Australia is the only bank guilty of dodgy advice. The Senate inquiry names Macquarie and in 2009 ASIC fingered ANZ Custodians as well, though all the banks are in the same boat, perhaps not to the same degree of dodginess but of being compromised.

An ASIC survey at the time found one in five advisers were giving “poor” advice.

Yet Labor spectacularly missed the point that banks having advisers push their products can never be ridgy didge because of the inherent conflict of interest, and the Coalition seems set on hiding the fact by tinkering around the edges.

Unfortunately opposing the Government’s reforms is seen as supporting the original so let me say I don’t like either.

FOFA is so bound in red tape that it’s driving independent advisers to the banks, which is not without its irony, with the unsurprising result of increasing the cost of advice.

In one way or another the banks and AMP have more than three-quarters of financial planners under their thumb, something which doesn’t seem to trouble either Labor or the Coalition.

You can have all the regulations in the world, and the voluminous FOFA legislation didn’t miss many, but an adviser employed by a bank is going to be more interested in selling you one of its products than, say, recommending you pay off the mortgage sooner.

And so-called investment platforms or wraps have allowed the banks to infiltrate non-aligned advisers for the privilege of an additional fee, the first of many if a managed fund is involved.

To their credit an increasing number of independent advisers are refusing to use wraps.

But aren’t commissions banned? That’s the biggest con of all. They’ve just gone underground. Instead of commissions being paid to them advisers can charge the fund a service fee instead. Same difference.

And sales bonuses for flogging products, so long as the adviser goes through the motions of considering your best interests, which are also a commission by another name are fine.

Oh, and there’s nothing to say the advice has to be right. It just has to appear to be in – or in the words of the legislation “identify” – your best interests.

This seems to boil down to the adviser writing down what you think are your financial goals and needs which are then regurgitated in your statement of advice.

By the way, since the best interests rule, however it might work in practice, wasn’t around when the Commonwealth Financial Planning scandal erupted it’s going to be tough for the bank or anybody else to be objective about whether advice was appropriate even with the benefit of hindsight.

Harder still when 284 client files appear to have gone walkabout.

There’s nothing wrong with banks selling financial products, especially when they have the expertise to offer good value.

And yes let them pay commissions so long as they’re declared. But stop calling a sales pitch advice, for goodness sake.


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Insight: Financial inequality

Peak performersFirst the good news: Australians are getting richer.

Average net worth per person hit a record high of $327,263 in the March quarter, according to CommSec: a rise of $4,248 on the previous quarter. It’s been a dramatic recovery from the global financial crisis when average wealth dropped to near $250,000.

The main reason for rising wealth has been the boom in house and share prices, both of which grew by double digits in the financial year just ended.

But as anyone who is struggling to enter the housing market and therefore doesn’t benefit from rising prices can attest, averages can be deceptive.

We may be getting richer as a whole, but more and more of the gains are going to people who are already relatively well-off.

A recent report from the Australia Institute highlighted the gaping chasm between our poorest and richest. It said the seven wealthiest billionaires in the country hold more wealth than the poorest 1.73 million households combined. Another study by Oxfam earlier this year found the rise in income that the top 1 per cent have enjoyed in the last three decades was second only to the increase experienced by their peers in the United States.

There are clearly some divergent trends at play here. As the country gets richer, it is becoming more unequal.

This is hardly unique to Australia – it’s happening around the world. But it’s still worth pausing to consider these change in how the wealth is shared, for a number of reasons.

For one, it’s an economic risk. More and more economists around the world are now reaching the conclusion that an ever-growing gap between rich and poor is bad for growth.

Even the hard-headed economists at the International Monetary Fund now acknowledge that prolonged growth in inequality is bad news because it tends to breed instability.

At the same time, it’s worth thinking about these trends because there appears to be a gap in public awareness about how the wealth is shared. The figures suggest most of us don’t really know how wealthy we are compared with others.

The Australia Institute’s survey found that when we are asked what the average income is, most of us tend to think it’s similar to our own.

Most people earning less than $20,000 thought that was average. More than two thirds of people earning $40,000 to $60,000 thought that was average, while 61 per cent of the people on $60,000 thought they were average. Obviously these can’t all be right. For the record, the latest figure from the ABS on average household income is $47,000.

But the point is, many of us have a limited idea of what is a typical amount of wealth or income, and how our circumstances compare to “normal.”

As a result, we may underestimate the extent to which the country is getting more unequal, even if it is also getting richer.

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Give Jesse a fair go, Ronan

AH YES, you’ve gotta love a bit of contrivance on reality television.

Jesse Teinaki

Especially when you can get firmly on one side of a clash of male egos.

So here goes …

Ronan Keating I used to think you could sing a bit, but now I think that you’re a bit of a fridge magnet.

Yep, to be sure.

A poster boy for ageing boy bands.

Your schmalzy ballads are not all that bad; nope, just a tad boring.

So lighten up, you’re rich and famous.

Could you stop moaning Ronan?

Give North-West Tassie heart-throb, apprentice sparky, Jesse Teinaki, a fair go.

Libby Bingham

He’s only 22 and he is giving life a red hot crack.

Jesse’s hard work and talent got him onto a television stage with 1.5 million watching.

For Ronan Keating, judging The X-Factor is a bit of lucrative fun and it keeps your name relevant with the younger audiences.

With the other judges calling you “Mr Cranky Pants” it’s clear that you’re playing Simon Cowell’s “hanging judge” role.

We’re meant to enjoy booing and hissing at you as much as applauding the talent.

However, this moment on The X-Factor was young Jesse Teinaki’s make-or- break moment.

He wants a career from this.

And there you were unfairly dishing it up to him from the get go.

Singing Sex on Fire was asking for it, but Jesse’s young and good-looking.

He wanted to milk the moment just like you did, Ronan.

When you said Jesse was not as good as he thinks he is, geez that was a tad personal and nasty.

Jesse’s mother Trish Machen was “floored” by your negativity after her son’s audition.

She knows Jesse best and could tell he was nervous.

You could have tempered your attitude and suggested he could do better.

Jesse needs to know where he went wrong, but don’t crush him with a sledgehammer.

Poor Jesse said afterwards that he was absolutely nervous up there.

You’re a philanthropist, Ronan.

You raise a lot of money for cancer research having been touched by the loss of your mother who died when you were 20.

Jesse also uses his talent to perform at charity gigs.

In February, Jesse was part of a fund-raising event at Queenstown which was held by the community to reach out to those affected by the tragic Mount Lyell mine deaths.

Jesse said at the time: “I’m pretty honoured to be part of it.”

Come Together charity concert committee chairwoman Melissa Budgeon said she had never met a more humble young man than Jesse.

Perhaps, Ronan, you might come to Tassie and join with Jesse at a charity gig playing with your former The X-Factor team finalist Taylor Henderson in concert at the Ulverstone Sports and Leisure Centre on November 15.

Funds raised go to the North-West Cancer Centre in Burnie.

Meantime, Jesse did the right thing. He has copped your critique.

Jesse said you are there to judge and he intends to prove you wrong.

With 110,000 Coasters like me cheering him on.

Jesse Teinaki picked for XFactor boot camp | video’Get back in your box’: Coaster fires up after Teinaki’s performance criticisedJesse Teinaki’s rise to fame | photos, picturesThis story Administrator ready to work first appeared on 苏州美甲美睫培训学校.

Tulip seats beg ‘rest your weary legs here, petal’

THE tulips bloomed early at Wynyard yesterday as tulip- shaped seats were unveiled.

BLOOMIN’ COMFY: Jaiya Donovan, 5, tries out the new tulip seats with Waratah-WynyardDeputy Mayor Alwyn Friedersdorff. Pictures: Grant Wells.

Cr Friedersdorff showsoff the new tulip seatsoutside Woolworths.

Waratah-Wynyard Deputy Mayor Alwyn Friedersdorff saw the tulip seats on her Facebook page one day and said: “We have to have them”.

So began the year- long journey of scraping together money to buy and have them shipped from Holland.

Each seat cost $2000 to buy and ship, so it was no easy feat.

However, with the help of Judy Peck, from Wynyard Lifeline, and Cynthia Chappell, from Our Creations Little Shop of Shops – who put out donation tins – and major donations from other community members, the seats have arrived and were “planted” yesterday.

Vibrant pink and red, these quirky seats complement Wynyard’s image as the tulip town.

Cr Friedersdorff stood back and admired the seats, which are situated on Goldie Street, along the Woolworths wall.

“It adds colour to this part of town and once we have definite plans for the Woolworths wall, everything will look improved,” Cr Friedersdorff said.

Now Cr Friedersdorff has seen the seats in their place, she said: “we have to have more”.

Mrs Chappell and Mrs Peck will keep on with the donation tins, with the hope to see more tulip seats scattered around Wynyard in the years to come.

The seats were designed to stay dry, swivel and spring back into the closed, tulip shape to ensure water and leaves don’t collect in the seats.

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Tasmanian new vehicle sales take a slide

TASMANIAN new vehicle sales are continuing to fall as four- wheel-drives keep increasing their market share.

Overall new vehicle sales fell marginally, but to a 20-month low, in June, in trend terms figures from the Australian Bureau of Statistics.

Total sales were down by two to 1491.

Their recent peak was 1648 in May last year.

Sales of new passenger vehicles fell by four to 674.

Four-wheel drive sales increased by two to 445, while sales of “other vehicles” were down by one to 372.

Four-wheel-drive sales are not far off their monthly record (480, set twice last year), but new passenger vehicle sales are well down on their record of 1016 in September 2003.

Records go back to January 1994.

A snapshot of June 1994, June 2004 and June 2014 shows the huge growth in four-wheel-drive sales.

In June 1994, 860 new passenger vehicles were sold, 61 four-wheel- drives and 216 “other vehicles”.

In June 2004, passenger vehicle sales were similar, at 869, but four-wheel-drive sales had surged to 295, with “other vehicles” at 381.

Those compare with 674 passenger vehicles, 445 four-wheel-drives and 372 “other vehicles” in June this year.

The figures do not cover used vehicle sales.

According to the ABS, “other vehicles” include “utilities, panel vans, cab chassis, goods carrying vans, rigid trucks, prime movers, non-freight carrying trucks, and buses”, plus four-wheel drive light commercial vehicles not classified as sports utility vehicles.

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