Okay, before I begin – If I have written anything misleading, inaccurate or untrue please put it in a comment below and I will retract and/or alter the statement. I am not an expert in financial planning, but I have been a consumer. So what I write is simply my perspective of the current state of the industry in light of my experiences of it.

I’ll admit upfront my experiences (all of them) weren’t good. But I think the concerns I express below still deserve answers.

Alright, that said I have just been reading the Knightcorp webpage. Knightcorp are a financial planning and insurance brokerage business in Perth W.A. I followed the links to read the Financial Services Guide (which all financial institutions are required to present). And these are my musings on the subject:

I think all financial planners should be paid $100,000 a year. They should be employed by the government and their positions tenured; so that they have their salary regardless of the amount of advising they do. Once these conditions are in place I think financial planners should be held legally responsible for the advice they give.feature1

As it stands now financial planners can accept payment for the advice they give and then walk away from the consequences. Could you imagine a Doctor doing this? Even lawyers and politicians (though they wriggle and squirm) are held to some sort of nod-and-a-wink accountability. But paying a financial planner for advice is like paying someone for betting tips at the track.

Worse, so far as I can ascertain, there are no legal conditions stipulating a financial planner must put your interests before their own. But even if there was it would be all but unenforceable. Trying to prove one stockpick instead of another was a result of self-aggrandizement and not oversight would be near-on impossible.

So what are we left with? On one side, we have businesses trying to raise capital so they can grow. On the other, we have investors prepared to lend them this capital on the understanding they get it back plus a little more. In the middle we have financial planners taking from both sides and avoiding all the consequences.

It is unreasonable to expect a financial planner, or anyone else for that matter, to foresee the future. And yet they are being paid to advise us on just this. They believe all their elaborate financial modelling and information gathering allows them to better forecast the likely chances of a business’s success. As though keeping track of all the numbers spun on a roulette wheel will somehow lead you to correctly predict the next winner. But planners keep no records of their predictions and their outcomes. Even punters do that.feature3

By making financial planners public servants we wipe out any motive for self-gain. They will be held accountable for their predictions, reviewed, and allowed to pursue their researches without having to hussle for a living. Everything is out in the open. Everyone is better served – the people who avail themselves of their advice, the people who court extra funds for their business, the planners themselves. In this way an industry with a long, sordid history of charlatanism, double-dealing, and subterfuge can be of benefit to the people they purport to serve.

But don’t take my word for it. Here’s the Knightcorp webpage and here is their Financial Services Guide. The latter is a hell of a slog, but buyer beware.

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