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Tuesday 31st March 2015 - 11:59 am
Comments Off on Choosing a financial adviser? What you should know

Choosing a financial adviser? What you should know

by Alan Thornhill

The troubles many Australians have had with their financial advisers suggest that checking out the one you might use might well be a good idea.

That will be possible, from today, as the financial watchdog, the Australian Securities and Investments Commission, has now published a register of financial advisers, on its MoneySmart website.

It already has some 19,000 advisers listed there.

Even though this is just the first stage of its operation.

Bank – and other – financial advisers have been sharply criticised over recent months, mostly for offering advice that suited their own financial needs, better than those of their clients.

That controversy is still unresolved.

But efforts to improve the situation are progressing.

ASIC’s announcement today is part of that.

It said:”ASIC has today launched the first stage of the new Financial Advisers Register.

“It is now available to search on ASIC’s MoneySmart website, moneysmart.gov.au.

“The new register, which contains more than 19,000 appointments, meets the Government’s commitment to provide an industry-wide public register of financial advisers by the end of March 2015.”

But that’s not all.

ASIC also said it has updated the information for consumers on its MoneySmart website about choosing financial adviser including what questions to ask.

“The register contains details of persons employed or authorised – directly or indirectly – by Australian Financial Services licensees to provide personal financial advice to retail clients on investments, superannuation and life insurance.”

ASIC Deputy Chairman, Peter Kell said:”The new register enables consumers to find out information about their adviser before they receive financial advice.

“It also gives employers greater ability to assess new financial advisers and will improve ASIC’s ability to identify and monitor financial advisers.

“ASIC encourages consumers to visit ASIC’s MoneySmart website to check out a financial adviser they are thinking of dealing with, and do some homework before they proceed.

“This way, consumers can give themselves the best chance of getting financial advice that meets their needs.”

And it added:”ASIC will now focus its efforts on the second stage of the register which will capture financial adviser qualification, training and professional membership details to be completed and on the register by end May 2015.”

It also said that there is a small number of advisors who are not yet on the register.

While late appointments will continue to be accepted, advisers who are not on the register may potentially lose clients.”

ASIC also has some tips MoneySmart tips for those choosing a financial adviser.

They are:-
• Work out what you want financial advice about; what are your financial needs and objectives?
• Search ASIC’s Financial Advisers Register to check out the current employment status and history of a financial adviser.
• Ask about a financial adviser’s experience and qualifications to help you achieve your financial goals.
• Check whether a financial adviser can provide advice about the financial products you currently own.
• Understand how your financial adviser will be paid before you engage them; every dollar in fees is a dollar less to invest.
• Get informed about your finances, and the financial advice process, to give yourself the best chance of reaching your financial goals.

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Tuesday 24th March 2015 - 5:30 pm
Comments Off on PM quails – and survives

PM quails – and survives

by Alan Thornhill

Tony Abbott quailed – before a determined woman – and survived.

The drama began yesterday, with a story predicting that there would be “a small cut” in Australia’s foreign aid funding, in the upcoming May budget.

It appeared in the Prime Minister’s favourite newspaper, The Australian, and his Foreign Minister, Julie Bishop was embarrassed when she had to admit, on air, that she had no knowledge of it.

But – just back from the cyclone devastated Pacific Island state of Vanuatu – Ms Bishop also let it be known – in no uncertain terms – that she was having none of it.

She did that in her now legendary eye-rolling episode in Federal parliament later that day, as the Treasurer, Joe Hockey, spoke warmly of Malcolm Fraser’s cost cutting razor gang, the Expenditure Review Committee.

Ms Bishop’s grim response, which also included dropping her head into her hands, quickly went viral on the net.

To his credit, Mr Abbott saw that he was beaten.

So envoys were sent to Ms Bishop, to assure her that Australia’s foreign aid funding wouldn’t be cut, in the upcoming May budget, after all.

Naturally, there is a political price to be paid for such reversals.

That soon became clear, as question time opened in parliament this afternoon.

This happened as the Opposition Leader, Bill Shorten, and other Labor MPs, pressed the government repeatedly for similar assurances, declaring that spending wouldn’t be cut on pensions, education, schools or hospitals, either.

Mr Abbott replied that pensioner couples are now receiving $78 a fortnight more than they were, when his government came to power late last year.

So that kind of spending was not being cut.

In fact it was rising, Mr Abbott said.

He said, too, that his government it would be spending more, not less, on schools in New South Wales, too, over the next three years.

These replies were true enough, as far as they went.

But Mr Abbott – and other ministers omitted so much from what they said that Labor MPs described their replies as “misleading.”

But that’s another story.

And having yielded to Ms Bishop, Mr Abbott deftly evaded other action that might have been taken, at today’s Liberal party meeting in Canberra.

There was no move, in the party room today, for another spill of leadership positions.

That’s important, because today’s meeting was the last scheduled one for Liberal MPs, before the government presents its budget to parliament in May.

Indeed today’s party meeting proceeded so peacefully that the Treasurer, Joe Hockey, was able to present a slide show to his colleagues, explaining why he would be making fresh cuts, in his upcoming budget.

He insisted, though, that these – unspecified – cuts would be both “fair and reasonable.”

The Treasurer expanded on that – a little – at question time, later in parliament.

He said, then, that families looking for a little help, to get mothers back into the nation’s work-force, would not be disappointed.

But the Liberal party’s all-too-apparent leadership issues, both with Mr Abbott and Mr Hockey, were quietly put aside, for another day.

Friday 20th March 2015 - 11:04 am
Comments Off on Australia’s most controversial PM – Malcolm Fraser – dies

Australia’s most controversial PM – Malcolm Fraser – dies

by Alan Thornhill

Former Prime Minister, Malcolm Fraser, died early today, at the age of 84, after a brief illness.

The cries of “shame, Fraser, shame,” which followed his most famous action, back in 1975, had long faded, after his subsequent retirement.

That was to was to persuade the then Governor General, Sir John Kerr, to dismiss the Whitlam government.

Even though Mr Fraser was just Opposition Leader at the time.

While that – clearly unconstitutional – action has never been forgotten, Mr Fraser has won wide admiration – over recent years – for his quiet advocacy for better treatment of asylum seekers.

Even those who had once believed that they would always view Malcolm Fraser- through Whitlam’s ringing description of him as “Kerr’s cur,” found themselves, perhaps grudgingly, respecting him for that.

Mr Fraser was Australia’s 22nd Prime Minister.

He was sworn in as caretaker prime minister in 1975 after the Whitlam government was dismissed in a constitutional crisis that followed months of budget deadlock in the Senate.

He led the Liberals to victory in the 1975 election before being defeated by Labor’s Bob Hawke in 1983.

While the political left loathed Mr Fraser for his role in the 1975 coup against Gough Whitlam, the two men developed a close friendship in retirement.

Born into a wealthy pastoral family in 1930 he first entered Parliament in 1955 as its youngest MP.

He became Opposition Leader facing off against Gough Whitlam in 1975.

The dismissal later that year led to persistent debate about the new government’s legitimacy and Mr Fraser’s role.

But he went on to win the next three elections.

He embraced multiculturalism and Aboriginal land rights, led the Commonwealth push to end apartheid in South Africa and argued for an independent Zimbabwe.

The nation’s finances were managed with traditional conservatism and cutbacks at first but later the political pressure grew and the purse strings loosened.

However in 1982 the country was facing recession, drought and social unrest.

After suffering a back problem and being treated in hospital, Mr Fraser called a snap election on the same day Bob Hawke became opposition leader.

But the strategy backfired and Mr Fraser was defeated.

Life after the Lodge remained busy for Mr Fraser.

He became a key figure in humanitarian and diplomatic circles.

But the former PM always kept an eye on politics.

He became a staunch critic of the Liberals under the next Coalition PM, John Howard, speaking out particularly on indigenous issues, refugees and antiterrorism laws.

And just last month Mr Fraser launched a scathing attack on Tony Abbott over the Government’s treatment of the Human Rights Commission and, in particular, its president Gillian Triggs following The Forgotten Children report.

“If the Government had wanted to handle the matter sensibly, they would have said they recognise there have been abuses,” Mr Fraser said at the time.

Friday 13th March 2015 - 3:36 pm
Comments Off on How to avoid battered investor syndrome

How to avoid battered investor syndrome

by Alan Thornhill

How can, often unsophisticated, investors protect themselves against the possibly devastating consequences of bad advice from trusted sources, like banks?

That question has never been more urgent than it is now, with two of our biggest banks facing major scandals over the performance of their investment advisers.

Especially as our watchdog, the Australian Securities and Investments Commission, has been sharply criticised, by people who believe that it just watched while that was happening.

ASIC Commissioner, Greg Tanzer, tackled these touchy issues, at a Financial Risk Day event, at the Macquarie University in Sydney today.

He spoke of a “mismatch” between the “expectations that many people have about what ASIC is able to achieve, with our resources and powers, and what we actually can achieve.”

And he tried to alert investors to the kind of risks they face.

He said we should watch for:-

* poor gatekeepers – in particular poor cultures among advisers

* innovation driven complexity in financial product design and

* risks arising from globalisation, particularly cross border transactions that can lead to “compromised results.”

He also defended ASIC.

Mr Tanzer acknowledged that his organisation has disappointed many people – not least over their perceptions that it failed to act fast or hard enough – to protect investors misled by bad advisers, at two banks.

He did not mention either the Commonwealth or National Australia Banks, by name, in his speech.

Nor did he say, in his speech, that ASIC is already seeking stronger powers to stop Australia’s banks selling poorly designed financial products.

Its request is in line with recommendations of the Financial Systems Inquiry, chaired by David Murray.

Similar provisions already exist in Britain.

But the Treasurer, Joe Hockey, is understood to be cautious about granting such powers in Australia.

Sunday 8th March 2015 - 4:58 pm
Comments Off on Pensions:what’s behind all this talk?

Pensions:what’s behind all this talk?

by Alan Thornhill

Analysis

How perceptions change.

Even among the good and the great.

As recently as last May, Tony Abbott and Joe Hockey were determined to keep Australia’s pension system “sustainable.”

Even as cynics argued that this was just a three syllable word for “cuts.”

But something that many people did not notice happened this weekend.

The Abbott government reached the half-way mark in its first term.

And suddenly the word – from the top down – is that the government is now prepared to discuss what happens to pensions in future.

Could the underlying figures have anything to do with that switch?

After all, some 4 million voters rely on the pension.

That’s a little more than one in four.

Clearly, a constituency that’s too big to set offside.

Yet that’s the risk Mr Abbott and Mr Hockey were once prepared to take, in pursuit of sustainability.

As you will no doubt recall, the pension rate is adjusted twice a year -in March and September – to match both price rises and national prosperity, reflected in wage rises.

Whichever is higher.

But Mr Hockey announced, in his first budget last May, that from September 2017, pensions would be adjusted only for inflation.

His critics – and they are many – argued that this would exclude pensioners from any share in rising national prosperity, even though most had contributed to it, through their long working lives.

Those in the Senate, where the government lacks a majority, argue that this is plainly unfair.

And this is one measure that the government has not been able to get through the Senate.

Nor is it likely to in the months ahead.

Acknowledging that, the government is now signalling that it is prepared to soften its stance, on future pension policy.

Some say that the recent defeat of Campbell Newman’s State Liberal government in Queensland, might have helped a little in that regard.

Be that as it may, Mr Hockey has certainly been sounding very reasonable, over the past few days.

“We’re prepared to discuss these issues with the Labor Party, the Greens, the independents,” he said.

“We need to have change, we want to make sure that change is as fair as possible.

“But we’re the only ones that are offering a proposal,” he added, just a little peevishly.

But Jenny Macklin, Labor’s families spokeswoman, seized on a new analysis which found the government’s budget proposal would drive pensioners into poverty over the coming decades.

“This confirms what Labor has been arguing for nearly a year,” she said.

“If Tony Abbott and Joe Hockey get their way, millions of pensioners will be driven into hardship and poverty,” Ms Macklin said.

She was speaking of figures produced by Australian National University economist Peter Whiteford which show that the pension would drop from 28 per cent of average weekly earnings today to just under 16 per cent by 2055.

So there’s a lot at stake.

Particularly as Mr Hockey points out, with some pride, that Australians are now living longer – and healthier – lives than ever.

It is hard, though, to escape the thought that there is an element of realpolitik, too, in the government’s sudden change of heart, on this issue.

After all, it is widely believed that people, generally, do tend to become more conservative, as they age.

So why risk alienating some 4 million likely supporters, for the sake of a somewhat abstract concept, like sustainability?

Particularly when you know, in your DNA, that the alternative would be so much worse.

Thursday 5th March 2015 - 1:19 pm
Comments Off on Your part in Australia’s future – the Treasury’s view

Your part in Australia’s future – the Treasury’s view

by Alan Thornhill

Women, young workers, older workers and those with disabilities will need to take bigger roles in the nation’s work-force in future, according to a new report.

The Federal government’s Intergenerational report, which takes a 40 year look into Australia’s future, was released by the Federal Treasurer, Joe Hockey, today.

The report, prepared by Treasury experts, makes recommendations on what should be done, to ensure that Australians continue to enjoy high living standards, in the years ahead.

It urges continued steps to improve productivity and broaden work-force participation.

The report also says Australia needs to “harness the full potential” of its demographic groups.

And it acknowledges that policies to support parents and prospective parents will be needed to achieve that objective.

The Treasury said: “To enhance productivity, government will need to continue to focus on reforms that can improve the competitiveness of our businesses and markets.”

It would also need to:” provide an environment that encourages entrepreneurship and innovation.”

The Treasury said: “This will also include taking advantage of opportunities presented by changing technologies and new markets, both at home and abroad.

“In addition to these policies, the Budget must be balanced to avoid ever-increasing deficits and spiralling debts,” it added.

Thursday 5th March 2015 - 8:13 am
Comments Off on A tightly controlled look into our future

A tightly controlled look into our future

by Alan Thornhill

Analysis

“The only function of economic forecasting is to make astrology look respectable:” John Kenneth Galbraith

The Treasurer, Joe Hockey, says the Intergenerational Report, that he will release later today, will have people falling from their chairs, in surprise.

The Prime Minister, Tony Abbott, says the report ” which has been prepared by experts in Treasury” will “detail the economic challenges that Australia will face over the next 40 years.”

Those “Treasury experts” will, indeed, be looking 40 years into the future, in their report.

They don’t, of course, have any special powers of prediction.

Economists, generally, lack that skill, as Professor Galbraith freely admitted.

However they do have some – less than comforting – words to cover that shortfall.

“Ceteribus paribus.”

That small Latin phrase means “other things being equal.”

Which, of course, they never are.

This time, though, they have something extra.

A set of instructions from the government.

Mr Abbott was kind enough to spell those out, at question time in Parliament yesterday, even though some might say he damaged the credibility of the report by doing so.

There were three.

“The first is: what would happen to the budgetary position under the policies that this government inherited?” Mr Abbott declared.

“The second is: what would happen to the budgetary position under the structural reforms that this government proposed last year?

“And the third is: what would happen to the budgetary position under the measures that have already been passed by this parliament?” he concluded.

These were the marching orders the government gave those Treasury experts.

There’s an old saying in the world of inquiries.

“Rubbish in.

“Rubbish out.”

Even the government’s harshest critics, in the Labor party, aren’t invoking that one, this time.

What they are saying, though, is that the report that is to be released today, flows from “a Treasurer’s” study not a “Treasury” study.

There is a difference.

And that comment has some power.

It was, after all, the government that set the basic rules, which its “Treasury experts” had to follow, in conducting their inquiry.

Labor has also accused the Prime Minister of trying to gloss over that fact.

But our political leaders would never do anything like that, would they?

That would be misleading.

But the Shadow Treasurer, Chris Bowen, persisted.

‘The Abbott government will today release a politicised Intergenerational Report, designed to salvage is failed, unfair budget,” he declared.

Really?

These politicians will say anything, won’t they?

Anyway, remember this.

No matter how surprised you might be, when you see the report later today, stay firmly in your chair.

Falling off it isn’t worth the risk.

Not for this report, anyway.

Wednesday 25th February 2015 - 7:18 am
Comments Off on Labor urges restraint on welfare

Labor urges restraint on welfare

by Alan Thornhill

Labor is urging the Federal government not to use a report – that is due to be released today – to slash welfare payments.

The McClure report is expected to recommend a major simplification of Australia’s complex welfare system.

But Labor fears the government might want more.

Jenny Macklin, the Shadow Minister for Families and Payments, is urging restraint.

She says:” Vulnerable Australians do not deserve another round of Abbott cuts.

Ms Macklin said Australians are “rightly concerned that the McClure Review will be used by the Abbott Government as justification for another round of savage cuts to vulnerable Australians.

“It looks almost certain that people with disability will be the big losers, as the Government moves to push them onto different levels of payments,” she said.

“Scott Morrison must immediately rule out leaving any Australians worse off as a result of the McClure Review,” she said, referring to the Social Security Minister.

“He must also guarantee that there will be no cuts to payment rates or benefits that go to the most vulnerable Australians.

“And he must explain how the Abbott Government’s response to this review will tackle poverty, spread opportunity and provide support to people who need it.

“To prove they are serious about supporting low income Australians, the Liberal Government should also use this opportunity to drop its $5.5 billion worth of cuts to family payments, its cuts to pension indexation and its savage attack to rip unemployment benefits away from jobseekers for six months at a time, currently before the parliament.

“Nine months after the Abbott Government’s horror budget last year, vulnerable Australians are still reeling,” Ms Macklin said.

“Tony Abbott has already attacked the living standards of pensioners, young people on Newstart and low and middle income families,” she added.

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Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

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