A prospective client recently approached us and showed us the Statement of Advice prepared by an institutionally aligned planner. We were disgusted by what we read.
It was a complete sham. The document was 79 pages of nonsense and the worst part is that it didn’t actually contain any strategic advice. The document may as well have been named ‘Our template pre-packed solution with your name on it’. The sad thing is we see this all the time.
The client was looking to retire in five years and wanted to know what options were available given his timeframe, resources and risk tolerance. His particular concerns were whether or not he should be holding or selling his investment property and how he should structure things to minimise his future tax liabilities.
The ‘advice’ was to rollover his Super from the existing low cost product to a new high cost product owned by the institution and pay a massive 3.3% contribution fee (each and every time he made contributions) and an ongoing fee of 1.1% per year to the advice firm.
Our disgust turned to anger when the client told us of how they were pressured to sign the authority to proceed in the presentation meeting without having fully read the entire document or had it explained to them. He told us he wanted to get a second opinion from an independent firm, one that had no conflicts of interest.
We explained that if you’re going to be paying someone fees you should know exactly how much that’s going to cost you and what value you are going to get. The problem with percentages is it sounds small but it all adds up. We are indeed a rare breed – we do not charge percentage based fees and do not receive commissions on any product recommendations including insurance.
We worked out that if the client went ahead with this ‘advice’ they would end up paying $72,855 in total fees over the next five years, an average of $14,571 a year.
The client engaged our services and we delivered a Game Plan that set out a number of different options that they could pursue in order to accomplish their goals. It explained the risks of each strategy and we guided them through the maze of options. They picked a path that worked for them and that they were comfortable with.
They also decided to retain our services to help implement the plan and keep them focused.
It’s been three months now and we have already received several referrals from the very satisfied client. They trust us because we put their interests ahead of our own and they want their family and friends looked after rather than taking their chances out there with the sharks.
Share this story with your friends or family who are looking for an adviser so they know what they should be looking out for.
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