YourShare Blog

Your Future Nest Egg

A site called FutureNestEgg explains Management Expense Ratios and Trailing Commissions. Below is an extract from the article relating to trailing fees and commissions

"Another fee hidden inside the management fee is the ‘trailing commission’. It is usually between .25% and .88%.

Not all fund managers charge a trailing commission fee but most do. This is the ongoing fee paid to the adviser by the fund manager (the financial adviser who recommends you the fund). This fee is supposed to cover the ongoing service offered by the adviser to you.

He is supposed to periodically review the portfolio and how the fund is fitting in there…It is for this service the funds pay the advisers.
The reality is much different…The fee is actually being paid to thank the advisers for the loyalty (for picking this fund). It is a rip off….Even the people who go direct to the fund manager (without an adviser) have to pay this fee (because it is hidden inside the MER)."

For the full article go to http://futurenestegg.com/management-expense-ratios-trailing-commissions/

The Price of Advice

The Brisbane Times - Darin Tyson-Chan - August 22, 2007

"In a move towards greater transparency, the Financial Planning Association of Australia is in the final stages of implementing a code to give consumers a clearer idea of how planners are paid. From January 1 next year, its members will have to disclose the commissions they receive for ongoing advice separately from those they get from product providers such as fund managers. However, not all planners are members of the FPA and for many consumers it has been difficult to identify the different fees and commissions that might apply on their investments."

For the full story see: http://www.brisbanetimes.com.au/news/planning/the-price-of-advice/2007/08/20/1187462174442.html

New ASIC handbook helps consumers

A new handbook developed by ASIC can help to check out the references of advisers.

Per the Herald Sun 15/11/2007 - Picking out the rotters

"Investment watchdog the Australian Securities and Investments Commission recently launched the new book to help people check the references of financial advisers."

"The handbook, developed jointly by ASIC in consultation with a panel of industry representatives and with assistance from Standards Australia, is designed to encourage people in the finance industry to get and, when requested, provide reference-checking information to help identify dishonest, incompetent or unethical financial advisers."

This is a great step forward to help consumers know who they are dealing with. There are some great advisers out there, and its reassuring to be able to check who you are dealing with.

For the full story see http://www.news.com.au/business/money/story/0,25479,22768258-14327,00.html

How to reclaim trail commisions

An article published by financialfuturist.com sets out some basic rules to help you get back as much of your trailing commissions as possible;

"Do you have investments, superannuation accounts and/or insurance policies sitting around? If you’ve had them for years then it’s quite possible that some company somewhere is receiving an ongoing (trail) commission from that product, and you possibly don’t know who they are.      

If you’ve had no contact from them then they are just receiving the commission rather than earning it. Would you like to reclaim that money and put it towards your own wealth creation?"

The article is a great starting point in understanding the levels of fees and commissions you may be paying right now.

http://financialfuturist.com/2007/09/how-to-reclaim-trail-commissions

What to Pay your planner

An article by Bruce Madden helps us to understand the web of fees in our system.

Fees are not a bad thing. The key is to know whats being paid, who is being paid to, when and how often these payments are made, and what you should be getting for that payment.

http://www.assetmag.com.au/financialplanners/article2.asp

Broadly speaking, trail commissions are under market pressure and falling. The average cost is in the vicinity of 0.4 to 0.6 per cent of the total investment for most managed funds. Many fee-based financial planners will rebate the trail commissions back to the investor - however, they would most likely charge a higher plan fee to compensate for this. "Retail funds, master trusts and some wrap accounts sometimes usually pay between 0.25 per cent and 0.75 per cent as a trail fee," one adviser says.

Get what you pay for

A new article lists the pro’s and con’s of paying for financial advice.

As a good rule of thump do your own research also. Its your money, be proactive with your financial decisions. Remember no one is going to care as much about your future as you do.

Thousands of Australians have been piling money into superannuation to take advantage of tax changes announced in the Federal Budget, and before doing so, many have turned to financial planners for advice.
But how objective is that advice? ......

Now you might think a licensed planner would be bound by law and honour to give the best possible advice, but that is not the case. Many financial planners are better described as salesmen, and their advice can be tainted by commissions planners get for convincing you to put your money in a certain scheme.

http://www.abc.com.au/news/stories/2007/07/17/1981106.htm?section=business

There are hundreds of sites with free funds and superannuation information. The YourShare site lists some here, www.yourshare.com.au/free_managed_fund_research.php Have fun building your future.

Is it too easy to be qualified to give advice?

Giving someone advice on their life savings should be taken very seriously, and there is some concern in the industry that the level of qualifications required are not high enough.... The tongue in cheek article Raising the Bar on Planner Qualifications by Michael Dale (Money Manegement.com.au) really made me laugh!

The financial services industry commonly refers to this as PS 146, and to legally work as a financial planner one is required to become PS 146 compliant.

There is no shortage of providers offering PS 146 compliant courses, their duration ranges from two days to three months. I guess it was one of the two-day courses that my future son in law’s friend completed.

A weekend course! Considering that in years to come we will be expected to live off our savings.......

At YourShare we are a no advice service. We believe that to be an exceptional financial adviser, you need to understand every clients individual needs like they were your own, and the choice and complexity of products is huge. Our focus is on those clients who make their own financial decisions and we facilitate you taking control of your future. And getting cashback......