My Conversion to INDEX FUNDS made me a better Financial Adviser

May 1, 2007

I have worked with and used managed managed/mutual funds for much of my professional career. Most, if not all my clients use them in some form or another. Early on in my career as an adviser I would try and stay afloat of all the funds which would come onto the market, promising above market returns via hedging, absolute returns or some other creative investing style. However, after much research and viewing of the “fund manager” market, I have come to the realization that most funds will become index if they are already not. The major exception to this are pure hedge funds, which in my opinion haven’t done all that well considering the risk return ratio applicable to them also their relatively high fee’s can be somewhat disconcerting.

I felt that as an adviser it was my responsibility to keep actively looking for the highest returning funds for my clients. Then I came to 3 major realizations about what I do and how I should go about it.

Firstly, I came to understand that most actively traded funds will eventually start to perform as as an index fund would, either because of their higher associated costs or that they fear not having certain stocks in their portfolio.

Secondly, once it occured to me that generally it would be in my clients interest to use INDEX funds, I found that clients appreciated their financial STRATEGY more than the actual investments themselves. This is because the STRATEGY is what sets them up for the future, it sets the path for their financial future and gives them clear direction. They can see how things will interact and work together to form a total financial package, from retirement funding to personal insurance to budgeting/cashflow management. ALL good financial advisers/planners should concentrate on STRATEGY first, the investments will follow.

Thirdly, having had my first 2 break throughs, it came to me that clients want contact, not everyday or even every month, but consistent contact even if you state at the beginning that it will be every 6 months, make sure it’s done. The clients will feel better that their money is being taken care of and actually being monitored and that you actually care about their situation. CARE, it’s a simple word but very powerful. I use to be somewhat of an “client churner”, new client came in, file was put away, next client please. It was a real, dare I say it, “car salesman” style of thinking and way of doing business, I didn’t particularly care about ongoing contact, big mistake, it’s usually the clients that you take care of that will provide you with the best leads down the track


Picking A Good Financial Planner/Adviser

February 5, 2007

There are many ways to educate yourself on personal finance and wealth creation, read books and look up some websites, like this one hehe.

But 1 step I think that would benefit a large majority of people would be to seek the advice of a Financial Planner.  I know for a fact that in Australia, Financial Planner’s are required to attend ongoing financial training, either in the form of written tests, assignments or seminar workshops.  This allows them to keep up-to-date with the latest information and rule changes.  I know because as indicated in my about me section I am a Financial Planner by trade, have been for many years.

But let me tip you on how to find the best of the best financial planners, no matter what country your in.

When you initially meet with your planner, the only things you should be talking about are STRATEGIES.  Because at the end of the day, it’s really the one of thing which will keep your dreams of financial prosperity afloat, because no matter what the markets are doing, if you have a solid financial strategy in place, you should come out a winner in the end.

If the planner you are talking to begins to straight away talk about, you should invest in company XYZ or fund manager ABC, it’s a definite sign that the planner is just a pure salesperson with no real technical savvy or skills.  I mean it is definitely fine to approach the subject of product types like, superannuation or 401k accounts, but if the talk turns towards specific fund managers, steer clear friend, DON’T DO BUSINESS WITH THEM, there interests are will never be aligned with your own, because they are in the business of getting rich through commissions as opposed to getting you rich through proper planning.

Remember a GOOD FINANCIAL PLANNER, talks STRATEGY FIRST, the PRODUCT and PRODUCT PROVIDER choice should be a by-product of your agreeance to the strategy meeting YOUR NEEDS!!

Laughing Buddha Small Post VersionFinancial  Knowledge is the  key to Financial Prosperity