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 Financial Happenings Blog 
Thursday, June 05 2008

The 2nd article in Wednesday's Australian Financial Review Portfolio Liftout that was of interest provided advice to readers about seeking advice from the right planner - Take counsel, wiser the better.

 

In terms of our business, it provided a neat summary of some of the offerings of other financial planning firms but more importantly for those who are seeking to find the right financial planner it provided a range of alternatives and benchmarks to consider.

 

An early suggestion from the authors that I wanted to address is the proposition that "few planners want to deal with people who have less than $20,000 to invest".  At A Clear Direction we are keen to work with clients across the whole spectrum.  We are equally excited to work with wealth accumulators, those just starting their climb to financial independence, as we are with working with those who have reached the peak and are enjoying the view!!  We structure our business to ensure that we appropriately look after all clients

 

(Let me jump off my soap box and get back to the topic.)

 

The article outlines a range of financial advice offerings from an accountant, a financial services firm owned by major financial institutions, a stock broking firm, an independent planning firm, a private bank, a firm who services members of the industry and public sector superannuation funds and a major retail bank financial planner.

 

So what were the differences?

 

The major differences tended to be around what type of clients were targeted by each group including the type of advice they were mainly giving and how each was remunerated.  It was also clear to see the investment preference of each of the options.  The following table provides a brief summary of these 3 criteria.

 

 

Accountant

Owned by a major financial institution

Stock broking firm

Independent

Private Bank

Industry & Public Super Planner

Major Retail

Bank

Target Market

More than $200k to invest

Business professionals & business owners

 

Earn more than $200k

$1m to invest

More than $1m to invest

 

Investing for the medium to long term

People over 55 years with between $400-800k to invest

Min $5m to invest

Members of these super funds, particularly blue collar workers

 

Mainly $400-500k

Existing bank customers

 

Retirees or baby boomers

 

Av - $200-300k to invest

Focus

of

Advice

Accounting

Taxation

financial planning &

investment

Investments

estate planning

tax & debt structures

insurance

Listed investments

Works with legal and accounting advisers

Mainly

super

Structure of investments

Estate planning

Asset protection

Employee equity schemes

Philanthropy

Super

Wealth accumulators

Insurance

Super

Managed Funds

Insurance

Gearing

Centrelink benefits

Invest

Pref

SMSF

Products offered by parent institution

Direct share ownership

Outsources to fund managers

Shares, property and private equity

Industry super fund

Largely their own products

Fees

0.5% of assets under management including trailing commissions + hourly fee for accounting & tax advice

 

(Higher for smaller investors)

Min $5k up to $30k

 

$4k for SOA

 

+ costs for implementation

Assets under management at 1 - 1.5%

 

Assets under management at 1% up to $500k

 

0.8% on $500k-$1m

 

0.5% on $1-2m

Min $50k based on 1% of funds

 

0.75% for more than $30m invested

Fee for service

 

$220 per hour

 

Full plan typically $2,200

Fin Plan fee - $330-$5k

 

Ongoing service capped at $5k per year

 

There are obviously some clear differences between the alternatives including some clear biases in terms of investment preferences.

 

So how do we summarise ourselves on these three issues?

 

Target Market

Our target market is anyone who can see the benefit of investing according to our scientifically based investment approach with as little as a couple of thousand of dollars to invest or millions.

 

Focus of Advice

We cover the full range of financial advice services focussing first on strategy and structural issues before turning our attention to investment advice.  Our passion is having ongoing relationships with clients in assisting them to build and maintain highly effective investment portfolios within and outside of superannuation.

 

One area that we do refer clients to other sources is with regards personal insurances.  We see this as a very specialist area of advice.  However we continue to work closely with our preferred insurance advisor to make sure clients are being well looked after.

 

Fees

We realise that the costs of advice and investment management is extremely important.  We have built our business to minimise unnecessary costs without compromising the service any client of a financial services firm should expect.  This allows us to offer a very competitive fee structure.

 

Our fees are capped at $4,400 per annum with the most any client will pay is 0.55% on funds under management.  This fee reduces for clients with more than $500,000 of assets under management.  We generally do not charge upfront fees unless requested by clients.

 

Apologies for what might seem a bit of a sales pitch but we are certain that we have an approach that is valid for anyone looking for relevant financial and investment advice.

 

Please be in contact if you would like to know more.

 

Have a great weekend.

 

Regards,

Scott Keefer

Posted by: Scott Keefer AT 08:58 pm   |  Permalink   |  Email
 
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