Australia

Financial planning gone bad

Baron Barnett

05 Feb 2025 — 1 min read

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.

For example, do you know how much you are paying in fees?, does your advisor get trailing commissions? Why have they recommended a certain product over another?

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

Imagine the situation during the GFC where you have just lost 50% of your super annuation balance, the financial advisor just shrugs their shoulders and blames it on the market crash. How would you feel about your future now?

Read more about the outcome resulting from these perverse incentives for investment managers.

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

What can you do about it?

One alternative may be to see a centrelink financial advisor for free and unbiased advice or an honest financial advisor (there are some around) who are paid a flat rate up front and do not accept commission.

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