The One Person You Can Trust with Your Finances

Scandal. Fraud. Impropriety. Deception. Greed. Theft.

These aren’t words you’re likely to see stencilled on the doors of Australia’s financial planners and fund managers. But judging by the news coming from the industry on a daily basis, maybe they should be. And we’re not just looking at a few rogue, dishonest planners.

The swindles and trickery are endemic.

In a moment, we’ll take a look at a few recent headlines and quotes. If you want more, just copy and paste ‘Australia financial planning scandals’ into Google…and watch the results roll in. My own search just popped up 3,240,000 results.

Now admittedly there haven’t been over three million separate cases of large scale fraud in the Aussie financial planning industry. At least not ones we know about. But the key words here are ‘large scale’. On a smaller scale, that number might be conservative.

If you’ve engaged a financial planner or fund manager, you’ll know the following terms all too well — active management fees, annual maintenance fees, performance fees (if they manage to outperform the market). The list goes on. Even when there’s no fraud involved, the fees that most planners charge you for their ‘expert’ advice are often nothing less than highway robbery.


First, because the vast majority of fund managers fail to outperform a simple index tracking fund. That’s right.

According to Standard & Poor’s annual scorecard, 74.9% of active fund managers in Australia failed to beat the ASX 200 index over the five years to June 2014. Do you think these managers returned their lucrative fees to the clients that were shafted by their poor advice?

Me neither.

The second reason paying thousands of dollars to a fund manager is akin to highway robbery is that you can do better…for much less. All you need to do is get in touch with the one person that you can trust with your finances. Who is that person? I’ll get back to that in a second.

Scammers and fraudsters and thieves, oh my!

But first, we were discussing the scandalous results from Google. The instances of actual robbery.

On the first page of results alone you’ll find names like CBA, NAB, Macquarie, and ANZ. Click through to the next pages and you’ll find slightly older, but no less relevant names like Storm Financial and Timbercorp.

Now I didn’t make it through all three hundred thousand pages, but it’s a fair bet that these big names are just the tip of a much larger iceberg of lesser known fraudsters.

Let’s have a look at a few of those results now. This from the Sydney Morning Herald, ‘Banks’ rotten financial planning structure is teetering’ (emphasis mine):

Thousands of clients placed their money with ANZ and were told they would get an annual review by a financial planner. They received some of the services but not all and were charged regardless of whether the annual review happened… it puts the spotlight firmly on the conflicts of interest inherent in vertically integrated businesses, where the emphasis is more on product sales than financial advice.

The crisis in confidence springs from a series of exposes in the financial planning arms of some of the country’s biggest banks, including allegations of forgery and fraud, a cover-up by management, advisers cheating on exams and excessive churning of insurance products. ANZ expands that to charging fees for no service.’

Or this one from Business Day, ‘Senate banks inquiry may not fix advice malaise’ (emphasis mine):

Queensland businessman John Belling is suing Westpac for misleading and deceptive conduct after the bank slotted him into highly leveraged financial products and blew up $4 million in savings. Grazier and businessman Raymond "Curly" Tatnell is also suing Westpac and Macquarie Group for investing his savings in structured products. He lost $3 million…

Commissions lie at the heart of the problem with financial advice. Bankers are richly rewarded for selling complex structured products. A former Macquarie banker with knowledge of the MQ Gateway product sold to Curly Tatnell estimated that, in selling the farmer a $12.5 million "Structured Product Investment Loan facility" and a "Capitalised Interest Assistance Loan", the Westpac salesmen stood to make $543,000 in advance fees and trailing commissions from Macquarie.

Did you get that last bit? The bankers stood to pocket more than half a million dollars for losing $3 million of Curly’s hard earned cash!

And this from the Sydney Morning Herald just last week, ‘ASIC investigates Collins Street broker Bradley Grimm, lawyer Vanessa Ash’:

Collins Street broker Bradley Grimm and former Australian Securities and Investment Commission lawyer Vanessa Ash have been ordered to hand over their passports in the wake of a major investigation into an alleged $2 million funds transfer from their firm Ostrava Equities…

Court documents show Mr Grimm and Ms Ash could be subject to criminal charges, including theft, obtaining a financial advantage by deception and criminal breaches of directors’ duties. ASIC is also investigating whether the two engaged in misleading and deceptive conduct or made false statements to clients.

Does that surprise you? It shouldn’t.

Please don’t confuse frankness for cynicism when I say, of course they’re ripping you off! It’s human nature to look out for number one. And you’re not number one to anyone except yourself — and perhaps your mother.

To be fair, it’s not just financial planners. As I said, it’s human nature. Everyone will try to get an extra buck out of you, whether your haggling over the price of a bag of oranges with a vendor at your local farmer’s market, or working out the fee for new tyres with your mechanic.

Now I can hear you saying, surely that’s not the case across every industry. Not, for example, upstanding citizens like school leaders or public servants.

Hmm. Let’s return to some headlines. This from The Age, on April 27: ‘IBAC to detail $28m rort’. ‘…millions of dollars meant to benefit students has been stolen or fraudulently misused by a ring of allegedly crooked senior public servants and school leaders.’

Or this in the very same issue of The Age: ‘Tax man loses $400m annually as employers rob staff of super’.

If you’re like me, the ATO may not be your favourite entity. But the gist of the story is that thousands of employers across Australia are cheating workers out of their 9.5% guaranteed super contribution. Apparently they’re unfamiliar with the term ‘guaranteed’.

According to the article ‘…a report in October by Tria Investment Partners found employer non-compliance amounted to $1.3 billion a year. Those affected by companies that did not allocate a super contribution were, on average, $3750 a year out of pocket.’

Those are no small figures.

What this all boils down to is that when it comes to your money it’s just plain naïve to blindly trust someone else to look out for your best interests. Because you really don’t know who you are dealing with. Who you are trusting with your future…and with your family’s future.

There is only one person you can trust absolutely to look out for your best interests. And that person is you.

But I understand that managing your own investments can be a daunting task. There is a lot of complex industry jargon out there intended to confuse you and drive you into the arms of the financial planning industry. And you probably don’t have the time, or maybe the interest to plough through piles of research reports to find quality stocks with large gains ahead of them.

But you don’t have to. There’s a much better way. A way to beat the Aussie stock market by a factor of six, trusting no one other than yourself.


The answer is coming to your inbox tomorrow. Stay tuned!


Bernd Struben,
Managing Editor, Australian Investors Club

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Bernd Struben

Bernd Struben

Bernd Struben is the Managing Editor of Port Phillip Publishing. Bernd has worked on four different continents, and has more than 20 years of professional finance, editorial, and management experience. He holds a degree in economics.

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