Trust in financial adviser

[Julia]

After such debacles as Storm, I'd have thought most people would be pretty vigilant about managing their assets.

Talking with a friend, I was astonished that she should tell me she and her husband pay a financial adviser who "looks after everything for us". She said:
"I have no idea how much money we have or what we spend during the year".
She had no idea whatsoever what percentage return on capital had been achieved in any of the nearly 15 years they have had their money managed by this person.

They travel frequently and apparently when they decide they want to do another cruise or whatever they just say to the adviser: "Can we afford to spend $40K on a cruise?"
He says yes, and away they go.

I find this level of blind trust incomprehensible.
What are others' views?

 

[basilio]

Your friend obviously has far, far too much money...

But it must make you grind your teeth when you see them so obviously well heeled and being so blithe about being ripped off (which they almost certainly are) - while you so canny.

 

[Julia]

Your friend obviously has far, far too much money...

But it must make you grind your teeth when you see them so obviously well heeled and being so blithe about being ripped off (which they almost certainly are) - while you so canny.

Well, no, basilio. It just totally puzzles me. They are otherwise pretty sensible and intelligent people and I wouldn't care how much money I had, I'd still want it all accounted for and I'd want to know it was being properly managed.

 

[So_Cynical]

I think for some people investing money is a lot like dentistry or plumbing....if you have a broken tooth/pipe you go to the dentist/plumber cos he's the expert.

What you get from the expert is their attention to your needs...you have money in the bank your toilet is unblocked and your tooth has stopped hurting and you get on with life only later discovering what sort of a job your expert has done for you.

 

[skc]

I find this level of blind trust incomprehensible.
What are others' views?

+1.

I think for some people investing money is a lot like dentistry or plumbing....if you have a broken tooth/pipe you go to the dentist/plumber cos he's the expert.

What you get from the expert is their attention to your needs...you have money in the bank your toilet is unblocked and your tooth has stopped hurting and you get on with life only later discovering what sort of a job your expert has done for you.

Yeah but this is like going to the dentist every year, getting completely gased, waking up, paying the bill and walking out without asking what the dentist has done or ever looking in the mirror to see if their teeths are missing. Then calls the dentist next week and ask if they could eat an apple...

 

[Starcraftmazter]

Sounds crazy, hope they get what's coming to them. That level of incompetence must not be rewarded.

 

[wayneL]

Sounds crazy, hope they get what's coming to them. That level of incompetence must not be rewarded.

You're so charming.

 

[pilots]

After such debacles as Storm, I'd have thought most people would be pretty vigilant about managing their assets.

Talking with a friend, I was astonished that she should tell me she and her husband pay a financial adviser who "looks after everything for us". She said:
"I have no idea how much money we have or what we spend during the year".
She had no idea whatsoever what percentage return on capital had been achieved in any of the nearly 15 years they have had their money managed by this person.

They travel frequently and apparently when they decide they want to do another cruise or whatever they just say to the adviser: "Can we afford to spend $40K on a cruise?"
He says yes, and away they go.

I find this level of blind trust incomprehensible.
What are others' views?

Julia, We know a financial adviser who lives in a rental property, which he tells people that it is his, he drives a lease car, he is 58 years old. What we can not believe that people go to some one like him for advice. We lived in Singapore for ten years b4 I retired, The best advice I got was from a old Asian was, you only take advice from people that have more money than you.

 

[rumpole]

The best advice I got was from a old Asian was, you only take advice from people that have more money than you.

I like that.


If people depend entirely on a financial advisor they are incredibly stupid. At the least I'd want a second independent opinion, and I would probably change my advisor every few years and pay a private eye to check them out first if I had that much money.

 

[Gringotts Bank]

Overall, for the 15 years to June 2011, the average ROR for the superannuation industry was positive, with a 15-year average ROR of 5.2 per cent per annum. The average industry-wide ROR, when adjusted for the 2.7 per cent per annum inflation, provided a real return of 2.5 per cent per annum.

Most funds which existed for the whole period had a 15-year average fund-level ROR of between 3.9 and 6.5 per cent per annum.

APRA: Annual Superannuation Bulletin (June 2011)




taken from: http://goldstocksforex.com/2012/03/31/australia-super-fund-returns/

 

[Gringotts Bank]

Compared with this, a system I came up with that is so basic any doofus could operate it. 10%pa (compound) since 1984. Only 100 trades in that period. Max DD 27%. Instrument = asx200 cfd. Brokerage= .11%.


Statistics | Charts | Trades | Formula | Settings | Symbols

Statistics
All trades Long trades Short trades
Initial capital 50000.00 50000.00 50000.00
Ending capital 682462.05 507852.76 224609.29
Net Profit 632462.05 457852.76 174609.29
Net Profit % 1264.92 % 915.71 % 349.22 %
Exposure % 99.33 % 64.09 % 35.24 %
Net Risk Adjusted Return % 1273.40 % 1428.68 % 990.98 %
Annual Return % 10.11 % 8.92 % 5.69 %
Risk Adjusted Return % 10.18 % 13.92 % 16.16 %

--------------------------------------------------------------------------------

All trades 106 53 (50.00 %) 53 (50.00 %)
Avg. Profit/Loss 5966.62 8638.73 3294.51
Avg. Profit/Loss % 3.02 % 4.95 % 1.09 %
Avg. Bars Held 65.77 84.60 46.94

--------------------------------------------------------------------------------

Winners 50 (47.17 %) 31 (29.25 %) 19 (17.92 %)
Total Profit 1071307.17 678125.85 393181.32
Avg. Profit 21426.14 21875.03 20693.75
Avg. Profit % 9.76 % 10.81 % 8.06 %
Avg. Bars Held 107.50 122.00 83.84
Max. Consecutive 4 5 3
Largest win 171556.61 171556.61 128316.02
# bars in largest win 214 214 201

--------------------------------------------------------------------------------

Losers 56 (52.83 %) 22 (20.75 %) 34 (32.08 %)
Total Loss -438845.12 -220273.09 -218572.03
Avg. Loss -7836.52 -10012.41 -6428.59
Avg. Loss % -3.01 % -3.31 % -2.81 %
Avg. Bars Held 28.52 31.91 26.32
Max. Consecutive 6 3 7
Largest loss -39854.02 -36996.38 -39854.02
# bars in largest loss 37 35 37

--------------------------------------------------------------------------------

Max. trade drawdown -61140.07 -61140.07 -57294.28
Max. trade % drawdown -10.43 % -10.43 % -9.42 %
Max. system drawdown -135550.29 -99843.42 -98553.92
Max. system % drawdown -27.76 % -22.16 % -83.57 %
Recovery Factor 4.67 4.59 1.77
CAR/MaxDD 0.36 0.40 0.07
RAR/MaxDD 0.37 0.63 0.19
Profit Factor 2.44 3.08 1.80
Payoff Ratio 2.73 2.18 3.22
Standard Error 82281.19 45976.94 43976.20
Risk-Reward Ratio 0.23 0.34 0.07
Ulcer Index 8.84 8.27 32.59
Ulcer Performance Index 0.53 0.43 0.01
Sharpe Ratio of trades 0.31 0.42 0.05
K-Ratio 0.0217 0.0321 0.0070

 

[tech/a]

Very few Financial Advisers are licensed to advise.
They have dealer principals who hold the license and who allow them to place funds into their stock of managed funds.

I have 3 such friends who simply shuffle clients funds from Fund to fund and charge them for the privilege every time they do because they make an appointment for them to come in and "discuss" their portfolio!!

They of course make their income from trailing commish.

They have absolutely no idea how to trade long term/medium Term or any term.
They are regurgitators of news feeds.

They could develop a trading system which returns 50% a year and they CANNOT put their cleints funds in it.

They are dead set scared of litigation.

There are a very few who can though one I know has 5 operative methods for SMSF participants returning well over 50%.
Best to sniff them out!

 

[Julia]

What gets me about these people who just hand it all over to someone else is that without any financial literacy of their own, they are in no position to even know if they are being ripped off. They simply don't know what they don't know.
Just nuts imo.