Financial planning gone bad

You are the only person responsible for your financial future. If it all goes belly up the buck ultimately stops with you.

Even if you have been given dodgy advice from a financial manager, it’s your responsibility to do your homework and take responsibility for your investment choices.

No one else has an incentive to grow your wealth, not your fund manager, not your financial planner, not your accountant or your tax lawyer. No one else that is except you.

For example, do you know how much you are paying in fees, both upfront and ongoing?

Commissions are now banned on superannuation and investment products, but can still be recieved on insurance products.

Advisors on commission selling insurance actually have a conflict of interest, and the only person who suffers will be you.

Here is what happens when commissions were paid on investment products. (Fortunately it's now illegal to sell commissions on investments and superannuation)

In the months before October 2008, numerous bank customers had been persuaded to switch from the safety of term deposits to these funds with higher rates, which gave the financial planner and the bank a nice trailing commission that they didn't get from a humble term deposit sold by a teller over the counter at some suburban branch across Australia.

The bonus incentive - planners go rogue

As Charlie Munger said

“Show me the incentives and I'll show you the outcome”

What can you do about it?

One alternative may be to see a centrelink financial advisor for free and unbiased advice or a financial advisor who charge a flat fee with no incentive to recommend one investment option over another.