We've talked to 4 financial planners.. should we?

[4GH1RH]

Hi

Quicky Summary:

- My fiance (37) and I (40) have been together for 2 years.
- We plan to marry this year and so want a clear financial plan.
- We have a 3 year old son and are trying for another child.
- We have 7 investment properties and bought PPOR.
- We have a SMSF.
- We have a trust fund (that owns one of the properties).

Because we have a large amount of debt (which is currently all offset), we wanted to see a financial planner to help us plan our way forward for our new family. We realise we are not diversified as nearly all our eggs are in the property basket, and we want to move the offset funds into other investments.

We have seen 4 financial planners including 2 independents and Westpac and NAB. It seems that there are only limited options really, as at the end of the day the independents were owned by Westpac (Magnitude) and by TMP by AMP I think. So you always end up at the big 4.

The banks planners seem better to be honest, asking more questions in the initial interviews and looking at the broader picture of not only investment planning but also insurance, legal planning, estate management, education planning etc. The independents only seems to look at statement and cashflow and investment.

My fiance is very literate financially (and passsionate). We are both frugal however will invest in quality products including advice. But after all these meetings with financial planners, I still have a hunch this is something we can do without a $5,500 finacial plan (bank quote) plus entry fees and trailing commissions possibly.

Anyone?

 

[Terryw]

Firstly, sounds like you should see a solicitor and get an estate plan in place, including wills. You also need a succession plan for the trust too and some good planning for the succession of the SMSF and tax advice on the death benefits. You should consider a enduring power of attorney and guardianship in case one of both of you end up incapacitated. Also need to consider guardian's for your children etc.

Financial planning is changing and soon (or now?) planners will not be able to get any commissions from recommending products - no upfronts or trails or other incentives. So expect to pay around $5000 for some advice.

What sort of advice are you hoping for anyway? Where to invest your money?

 

[Aaron_C]

We realise we are not diversified as nearly all our eggs are in the property basket, and we want to move the offset funds into other investments.

Hi 4GH1RH,

I think you're thinking the wrong-way round here. You shouldn't diversify just for the sake of diversification. If your investments in property are doing well so far, and that is your expertise, then it would be a bit irresponsible (I think) to go into other asset classes. As Warren Buffett said - diversification is just an excuse for ignorance.

If, however, your property investments aren't doing well for you, then trying to reinvest your money into other asset classes might be a good idea.

 

[wylie]

Are you wanting the planner to "tell" you to sell one or more houses and invest in something else? How would you feel if you are given this advice?

Are you wanting the planner to "tell" you to leave this as they are, but invest the money in the offset into something else? Again, how would you feel?

What about if the planner suggested you to sell everything and invest in something you are not comfortable with?

We went to a "fee for service" planner when they were as hard to find as needles in a haystack. Their advice sucked. They suggested we sell our IPs, reduce our housing loan and what was left over (about $50K back then) into some sort of fund.

As soon as the planner opened his mouth with his recommendations, I knew he was looking at a young couple with three little children and wanting to protect us. He hadn't listened at all to the fact that we were happy to be aggressive in our investing, had a few IPs already, had parents to back us if things turned nasty, our kids would not be on the street etc. So we ignored his advice and kept doing what we had been doing.

About five years ago, my parents went to RetireInvest to plan their way forward, estate planning to cover a few thorny family issues and make things easy for us to manage their estate when the time came.

I think from memory this advice cost maybe $6K but it involved at least half a dozen one/two hour appointments, and a LOT of investigation on the part of the planner. He was fantastic. He liaised with my parents, their accountant, their solicitor and EPAs were also done and new wills so everything tied in.

There was no selling of any products, or trying to steer money into anything other than what my parents were comfortable with. Timing of selling, superannuation situation, age of parents, work rules even though they were retired... plenty of things that had to be considered.

The cost covered however many appointments were needed to steer them through the transfer of assets into a trust, the timing of those transfers to minimise any taxes and manage the cost of stamp duties. We worked with him for several years. It included many phone calls, emails with more information and he really worked for it.

It was worth every cent. But I suppose it was more "estate planning" rather than "financial planning" in that they had an end goal and needed professional help to get there.

With hubby (52) not working at the moment (IPs in his name), and neither of us knowing if he will work again, or work part-time or just warm the couch for a while, we are thinking of going back to RetireInvest. We are negatively geared, but with no income to gear against our whole investing needs to be looked at, and possibly a new direction taken.

 

[willair]

Hi

Quicky Summary:

- My fiance (37) and I (40) have been together for 2 years.
- We plan to marry this year and so want a clear financial plan.
- We have a 3 year old son and are trying for another child.
-

Anyone?

If you have been together for 2 years,and have a 3 year old,7 ip's plus ppor,why would you need another F/P as you would have had to have some serious plans in place when you started..

 

[Rolf Latham]

Well done I say on 3 fronts

1. Miles ahead of normal folks with 7ips "fully paid off"
2. You have obviously done something with ur resources that has really worked
3. That you are looking at other options and understand that " you dont know, what you dont know.

I am making an assumption here that all your property is Resi

have you considered some nice commercial, either outside or inside your SMSF. I suspect this will not be something thats forthcoming in any planners plan, because long ago when I held ps146 compliance, anything that wasnt on the "approved product " list was an "unresearched investment" and was a No No as a recommendation.

On the surface, a decent comm investment could be nice chunk of low risk diversification for you where u still retain direct control, and the right choice of asset will provide 10 % plus rental rtn day in day out plus whatever cap gain it may make.


PS
5.5 k + comms for a full service financial plan seems a little on the heavy side.....im sure there will be some rebates on risk packages chosen etc

ta
rolf

 

[Rolf Latham]

Financial planning is changing and soon (or now?) planners will not be able to get any commissions from recommending products - no upfronts or trails or other incentives. So expect to pay around $5000 for some advice.

sad state of affairs really

Australians are historically really really bad at paying for anything directly..........

ta

rolf

 

[agent007]

Hi

Quicky Summary:

- My fiance (37) and I (40) have been together for 2 years.
- We plan to marry this year and so want a clear financial plan.
- We have a 3 year old son and are trying for another child.
- We have 7 investment properties and bought PPOR.
- We have a SMSF.
- We have a trust fund (that owns one of the properties).

Because we have a large amount of debt (which is currently all offset), we wanted to see a financial planner to help us plan our way forward for our new family. We realise we are not diversified as nearly all our eggs are in the property basket, and we want to move the offset funds into other investments.

We have seen 4 financial planners including 2 independents and Westpac and NAB. It seems that there are only limited options really, as at the end of the day the independents were owned by Westpac (Magnitude) and by TMP by AMP I think. So you always end up at the big 4.

The banks planners seem better to be honest, asking more questions in the initial interviews and looking at the broader picture of not only investment planning but also insurance, legal planning, estate management, education planning etc. The independents only seems to look at statement and cashflow and investment.

My fiance is very literate financially (and passsionate). We are both frugal however will invest in quality products including advice. But after all these meetings with financial planners, I still have a hunch this is something we can do without a $5,500 finacial plan (bank quote) plus entry fees and trailing commissions possibly.

Anyone?

If you check the financial planning curricula, you will notice that there is a lot of material about compliance, some about estate planning, and some about comparing financial products. Notice that there is nothing related to resi property investment. Thus, as already voiced here, What exactly is what you are looking for? Most probably you and your fiance are more wealthy than the planners you are talking to. Thus, why would you get financial input from them? Having a financial planning "title" means nothing or next to nothing per se. I remember reading the book "Next door Millionary" in where a fellow prior to engaging a financial adviser asked them to show evidence that they have made their wealth by following on the advise they were about to give him. Why don't do the same?
Quoting R. Kiyosaki: Diversification = Diworsification. That's really what financial advisers are in the business of.
What Terry suggested above makes sense to me. Contact your solicitor and accountant and make sure you have all the required legal paper work and financial structures.

 

[4GH1RH]

Thanks for the prompt input everyone, I will reply to most tomorrow when I have not been on the end of several hours of talking to financial planners and also four hours of theology studies with an assignment due on Monday. You definately all have food for thought! It's been a few year since i was on this forum, but I remember how much I enjoyed it.

Most probably you and your fiance are more wealthy than the planners you are talking to. Thus, why would you get financial input from them? .

He he, yes, actually the very first question (no lies!) my fiance asked the NAB financial planner was "So how come you are not retired?". He stated a divorce, and made a practical point when talking about risk that yes, marriage is a financial risk. He also mentioned building up a client base and increasing income which I assume is based on trailing incomes and annual fees. He has been with NAB for 12 years, so well established.

 

[4GH1RH]

I am making an assumption here that all your property is Resi

Yes correct, all Resi. Two units and two houses in Penrith, NSW, a house in Brisbane, QLD, and two houses in Cairns,QLD.

No we have not considered commercial property, I guess because we never though it was in our league. We are currently based in Cairns but most likely don't want more property in QLD, definately not in Far North.

 

[Rolf Latham]

He he, yes, actually the very first question (no lies!) my fiance asked the NAB financial planner was "So how come you are not retired?".

Objectively I can understand that question.............the obvious retort would be, with your great resources and age advantage, why arent you retired today , but that wouldnt be PC, nor acceptable sales practice


Im going to go out on a limb here............and I may cop a caning but so be it.

1. People work for reasons other than money. In fact, research shows money is one of the lowest motivators in jobs.
2. I am blessed to know people that are worth 100 mill plus, AND have good stewardship of that blessing. They can stop work yesterday. But they like what they do............ i find it odd that folks question the motives of those that still "work" when they no longer have financial need to do so.
3. Never assume that a more broad based planning fact find will result in a better solution. The only thing that will actually determine if its a better solution mostly is time............and most of us dont have the 10 years + to make that assessment, and collect $ 200 as we pass GO on the monopoly board.

As one of my educators used to say


Results..........often harsh, always fair


ta
rolf

 

[agent007]

Australians are historically really really bad at paying for anything directly..........

ta

rolf

I'm no sure what study was used to substantiate above statement. However, anecdotal evidence seems to suggest that the opposite is true. There are and there have been many self professed gurus that make/made their living in AUS by teaching the "secrets of the rich" in turn for thousands of dollars. There are other gurus that build 'wealth structures" for clients however, those structures mostly assist in making the guru wealthier These gurus give themselves fancy job titles that are recognised by no formal institution whatsoever. The only support to their claims is they word and a couple of quotations from the head lines of the "Financial Review". I can't understand why people feel so small and consider it so improper to ask the right questions before handing over their $? Let's no talk about gurus that are currently alive but, dead ones. Henry Kaye was one of them. By memory I believe that he charged $10k (this was about 10 years ago) for a course at his "National Investment Institute" (pls, notice the word "Institute"). What about the boys at Opes Prime? And there are more examples of people paying directly (even borrowing to pay) to the so called gurus and financial messiahs in AUS.

 

[Mr. Fabulous]

Hi 4GH1RH,

I work in the financial planning industry and would strongly recommend you avoid going to any bank/insurance company affiliated planner. If I was in your position, I would seriously look at Rolf's suggestion and consider commercial property. You don't need a financial planner.

If you decide you do want a planner, PM me, I can recommend someone to you who not only understands, but also recommends direct investment property to clients and he's a straight shooter (a rarity in this industry). Note: I am in no way affiliated with this person, nor will I receive any compensation of any sort if you do business with him.

He is based in Brisbane though, so if face to face is important to you, it may not work (unless you're willing to fly down).

 

[Rolf Latham]

I'm no sure what study was used to substantiate above statement. However, anecdotal evidence seems to suggest that the opposite is true. There are and there have been many self professed gurus that make/made their living in AUS by teaching the "secrets of the rich" in turn for thousands of dollars. There are other gurus that build 'wealth structures" for clients however, those structures mostly assist in making the guru wealthier These gurus give themselves fancy job titles that are recognised by no formal institution whatsoever. The only support to their claims is they word and a couple of quotations from the head lines of the "Financial Review". I can't understand why people feel so small and consider it so improper to ask the right questions before handing over their $? Let's no talk about gurus that are currently alive but, dead ones. Henry Kaye was one of them. By memory I believe that he charged $10k (this was about 10 years ago) for a course at his "National Investment Institute" (pls, notice the word "Institute"). What about the boys at Opes Prime? And there are more examples of people paying directly (even borrowing to pay) to the so called gurus and financial messiahs in AUS.

No study, just reality...............or at least my experience, which may not be everyone's reality I agree.

I dont dispute for one minute the dollars being paid for education. .......different beast to planning though. Planning is well regulated............. "education is barely so".

This doesnt mean I have an issue with all education of the ilk described. There is some good value for money and time stuff out there, and there is some rubbish.


Getting back to "direct investment advice" which is where my comment was directed.



Many will gladly pay 40 k over market for an IP rather than pay 10 k in FEES to a Buyers Agent.

Many will gladly run the risk of a mortgage broker loading trailing rates on a mortgage managed product than pay a "moderate" fee for service and and/or a management fee.

Australian in general are grossly underinsured..........even though with a bit of rejig of what they are paying already they can have better cover.......if they were prepared to pay a little fee for service.

Im sure we can produce many more examples..........


Again, being a heavy user personal development and finance/investment education I cant rubbish this area in general, but yes, one needs to do their homework.

The average 10 k HK punter was not ( and is not) your average financial planning client. The average 10 k punter borrowed the 10 k..........

I think most financial planners wont like the parallel being drawn between them and the likes of Henry Kaye (and rightly so I feel) .

ta
rolf

 

[evand]

I think most investors on this forum shoud be advising the o called advisors. Who are - in my experience- mostly clueless. And mostly not very wealthy themselves.

There is a big difference between financial advising for a job/wage/commission with no accountability to the outcome of that advice and doing it for your own financial health &wealth with huge consequences if you stuff up.

It's all just finacial common sense. Most wealthy people never saw a financial advisor. Why would they take advice from the non wealthy.

As an aside, I just thought of a great quote from Warren Buffett.

"Wall St is the only place where People ride to work in a Rolls Royce to get advice from those that catch the subway"

I couldn't have put it better myself.

 

[investor2009]

May I say, well done.
IMO, You should be seeing the financial planners the OTHER way round'
I doubt any of the ones you saw would have the wealth you guys have.

Either way, you're already set for life. Good luck on whatever else you decide to do with your money, just don't blow it.

 

[Terryw]

May I say, well done.
IMO, You should be seeing the financial planners the OTHER way round'
I doubt any of the ones you saw would have the wealth you guys have.

Either way, you're already set for life. Good luck on whatever else you decide to do with your money, just don't blow it.

The planner should be taking advice from them!

 

[pully]

Objectively I can understand that question.............the obvious retort would be, with your great resources and age advantage, why arent you retired today , but that wouldnt be PC, nor acceptable sales practice


Im going to go out on a limb here............and I may cop a caning but so be it.

1. People work for reasons other than money. In fact, research shows money is one of the lowest motivators in jobs.
2. I am blessed to know people that are worth 100 mill plus, AND have good stewardship of that blessing. They can stop work yesterday. But they like what they do............ i find it odd that folks question the motives of those that still "work" when they no longer have financial need to do so.
3. Never assume that a more broad based planning fact find will result in a better solution. The only thing that will actually determine if its a better solution mostly is time............and most of us dont have the 10 years + to make that assessment, and collect $ 200 as we pass GO on the monopoly board.

As one of my educators used to say


Results..........often harsh, always fair


ta
rolf

well said. i agree her question was...silly/not relevant and a little ignorant.

 

[pully]

Firstly, sounds like you should see a solicitor and get an estate plan in place, including wills. You also need a succession plan for the trust too and some good planning for the succession of the SMSF and tax advice on the death benefits. You should consider a enduring power of attorney and guardianship in case one of both of you end up incapacitated. Also need to consider guardian's for your children etc.

Financial planning is changing and soon (or now?) planners will not be able to get any commissions from recommending products - no upfronts or trails or other incentives. So expect to pay around $5000 for some advice.

What sort of advice are you hoping for anyway? Where to invest your money?

also agree estate planning advice is required as well as other related legal issues, insurance etc, especially since their are children to be considered.