Every time the market has a big drop, there are the cowboys, the ponzi scheme operators, the incompetents, the dodgy brothers operations that all seem to fall out of the woodwork. Inevitably there are people that are hurt from this. Retiree's who will now struggle to make ends meet, people who lose their life savings, their houses, forced into bankruptcy etc, etc.
Inevitably what then seems to happen is a bit of a witch-hunt, we want someone to blame for the loss, those dodgy operators MUST PAY, and we crucify people like Alan Bond, Christopher Skase, Eddy Groves, Phil Green, Emanuel Cassimatis etc etc.
For all these people, they were lauded when the sun was shining, when it rains they are despised. In a similar vein Financial Planners cop some of the same emotions.
When things are good Planners and Brokers get asked questions like...
A mate of mine was getting 60% last year - how come I didn't?
ABC Learning Centres went from $2.00 to $8.00 - how come I don't have any of that?
Babcock and Brown floated at $8.00 and went to $30.00 - why do I have NAB/CBA/WBC/ANZ when I could have bought that one?
What's this Margin Lending I keep hearing about?
I went to this seminar on options and want to know why you don't use them to get me 3000% per annum?
But I don't want to sell my RIO at $150.00 I'll pay too much capital gain won't I?
(In January) Is this a good time to be buying more on margin?
When things are bad they get asked questions like...
Why didn't you predict that things would get this bad?
Why didn't you convince me not to buy BNB, CNP, ABS....?
How could you let me get so much margin lending?
Why do I pay you fee's if you can't tell what is going to happen before it does happen?
What then ends up happening after a drop is that the Government then steps forwards in the best traditions of the nanny state saying that it must protect people and makes further draconion legislation, that the brokers and planners must respond to.
20 years ago, there was no such thing as a statement of advice in it's current format.
10 years ago you'd have been lucky to get 30 pages from a planner or a broker.
5 years ago, when the legislation started coming in some SOA's blew out to +100 pages, professional indemnity insurance started to increase dramatically and a lot of quality old school planners and brokers said things along the lines of... Screw this, the amount of paperwork needed means that I'll spend 15 hours at the office instead of 10 - and a lot of talent left the industry.
I expect that cuttlefish will get his desire when the government next steps up with legislative changes, and make changes that will entitle clients to have my left nut in a vice with their hand on the lever.
What would I like to see?
Subjects on finance being taught from grade 8 so that people don't repeat the same mistakes with the same dodgy operators....
I'm not holding my breath though.