No adviser fallout from fund collapses

Leading players in the financial planning industry have indicated that the recent collapses of the Fincorp Group and Australian Capital Reserve have actu_ally served to strengthen their positions in the minds of consumers rather than diminish them.

Speaking at a recent Money Management/Fidelity Round Table discussion, Fiducian Portfolios Services managing director Indy Singh said: “Some of our clients have actually said ‘thank you, for not letting us be involved’, so it’s been positive for us staying away from these investments.”

Associate director of wealth management with Macquarie Equities Doug Webber said the effect of these types of events usual_ly serve to make clients appreciate the quality of advice they are receiving from their chosen adviser.

“The unfortunate reality is that it takes one or two of these events every now and then to refocus a client’s mind to say, ‘I actually understand now why I’m talking to you on an ongo_ing basis and the value that you add. As much as you lead me to new opportuni_ties, you’re also keeping me out of trouble’, and that’s really powerful from a client’s point of view,” he said.

Webber also feels these incidents highlight the fact that, while members of the public are better educated on financial matters than ever before, the financial services industry still needs to devote a lot of attention to increasing consumers’ levels of knowledge.

“The thing I find amazing is that people will walk into your office and they’ll ask you all sorts of questions, but I don’t think they know what answers to look for,” he observed.

Ipac Securities manager, planning strategy, John Dani pointed out that despite an increased amount of infor_mation being disseminated by the industry, Australian investors still don’t seem to be grasping the most funda_mental concepts of wealth creation.

“Thousands upon thousands continue to break the two immutable laws of investing; one, you can_not receive a higher return without higher risk, and secondly, diver_sification. I just shake my head in disbelief when you not only hear reports but see people on TV weeping over the fact they have invested all their life savings into that single investment,” he said.

Dani believes the sit_uation has challenged the financial planning industry to modify current advice models to allow a broader range of consumers access to quality advice.