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Living in hope

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By Julia Newbould
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4 minute read

It's been more than seven months since I last wrote an editorial for IFA. Since late last year I have been focused on retail investors and what they want to know about their finances.

It's a very different focus and one that has taken a bit of adapting to, but I have learned a thing or two about what they are most interested in.

For one thing, they are very interested in their finances. They want to know the things you know about markets, stocks and asset classes.

They want to know what the big managers are thinking - where the big super funds are putting their money. They want to know what economists are thinking about when things are likely to start improving.

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In fact, it seems that more than anything else, they want to know when to put their money back into the market. So for planners there are definitely some opportunities.

That's the good news.
Unfortunately it's tempered with quite a bit of not-so-good news.

Looking at the general media, there are still many stories focused on planners and commissions.

For a long time, it seemed the media in the trade space only was focused on the idea of commissions, even when clients of planners were not as concerned. Things certainly seemed to have changed with the collapse of Timbercorp and Great Southern.

Since these were two companies that had been recommended by planners who received large commissions for placing funds in these investments, the focus is back on commissions.

According to research this week, Professional Investment Services had invested around $100 million of client funds into Timbercorp and Great Southern.

Again it's the perception of how advisers may be swayed by the commissions, as much as the reality of whether this really affected their decisions that is relevant here.

It is the perception that will remain in the minds of consumers and your potential clients.

A Bloomberg report this week said Legal & General Group expected costs to drop dramatically in the next three years as the payment of sales commissions to consumer advisers was banned in a regulatory overhaul.

The report said there were currently around 15,000 authorised retail intermediaries selling investments and providing financial advice in the United Kingdom, with around 33,000 working as financial advisers.

It quoted Ernst & Young saying that as much as one-third of these would exit the industry following the Financial Services Authority review, which required all advisers to pass an exam equivalent to the first year of a university degree.

When Australian qualifications were enacted around eight years ago it also led to predictions of our industry also being decimated, but for the time I've been in the industry, numbers have remained fairly static. Perhaps we're just getting a more highly qualified planner.

We live in hope. And millions of Australians who need financial advice hope that as an industry we are going to give them what they need and present a profession that will put clients and good advice above commissions and kickbacks.