E- Book The Truth About Financial Planning

The Truth About
Financial Planning

By Andrew Bowring B.Ec.(Syd) Dip FP

T h e T r u t h A b o u t F i n a n c i a l P l a n n i n g Page 1

Index
1. How it all started
2. Selling is Not Planning
3. Know Your Rights
4. What it Looks Like When it is Good

T h e T r u t h A b o u t F i n a n c i a l P l a n n i n g Page 2

1. How it all started

Financial Planning really started in Australia when the Australian Economy was
restructured by the Hawke Keating governments of the 1980’s. Before that
there were not many financial products available in the Australian market, but
that all changed with restructuring with significant moves like:

 Floating the Australian Dollar
 Allowing foreign banks to operate in Australia
 Nationalisation of the Companies Act

These reforms opened our eyes to alternative investments, property trusts,
share market investments and gearing products were open to everyone, not
just the “already wealthy”.

The problem was that all these changes were happening but there was nobody
really trained to explain how investors could get a slice of the action. The
Financial Planning industry just exploded with participants given very basic
product training and these people were unleashed on the market offering high
returns without much explanation of risks.

During the 1980’s and 1990’s, a period of significant expansion in the
Australian Economy the financial landscape became complicated and
populated with complex products. Products like:

 Estate Mortgage
 Tricontinental
 Pyramid Building Society

And these were accompanied by some of the more epic corporate failures:

 Christopher Skase (Quintex)
 Alan Bond (Bondcorp)

All of this came from a rapid expansion of credit in Australia, where business
empires could be built on debt.

T h e T r u t h A b o u t F i n a n c i a l P l a n n i n g Page 3

Financial Planning started in the era and was really just a sales process. Clients
with money to invest were sold a wide range of investments built around the
two primary personal motivators:

 Fear – the fear of missing out
 Greed – the fear of not getting enough

Investment products were sold with little or no regulation, governments had
struggled to regulate a market that they did not really understand.

The major banks and insurance companies saw the opportunity to cash in on
this lack of regulation and went about building Financial Planning divisions as a
means of selling their own investment products.

By 2010 the major banks and insurance companies provided advice to 80% of
Australians who felt they needed advice. This was the case even though these
banks had overseen massive disasters like the Opus Prime scandal (ANZ) and
Storm Financial (CBA) where customers lost millions of dollars.

The jig was finally up when the Liberal Government finally conceded that a
Royal Commission was required.

2. Selling is not Planning

This statement really sums up the problem with Financial Planning in Australia.
Forever advisers have sold products to clients and received a commission to do
so. Often, they received other payments and incentives as well to sell those
products.

The end result is that the client has received a product that may, but probably
won’t go anywhere near delivering them what they actually wanted.

Planning is defined by the Business Dictionary as:

Planning is the process of thinking about the activities required to achieve a
desired goal. It is the first and foremost activity to achieve desired results. It
involves the creation and maintenance of a plan, such as psychological aspects
that require conceptual skills.

T h e T r u t h A b o u t F i n a n c i a l P l a n n i n g Page 4

Planning your finances is a process that will deliver financial outcomes.
Unfortunately what we have seen in Australia is definitely NOT Financial
Planning.
To establish a financial plan you must first segment the areas that you feel
make up your financial life, for us that is the financial wheel:

Your plan should involve each segment of this wheel. Each division needs to
have a separate solution, which, when combined with the rest delivers a
comprehensive financial plan.

3. Know Your Rights

Since the end of the Royal Commission the major banks and AMP have started
a program of “remediation” – repaying fees back to clients who were sold
inappropriate products.
This process is costing the banks incredible amounts of money, NAB made an
allowance in their accounts for $700 million in remediation and the others are
set to follow.
If you feel you have been adversely affected you can approach the newly
formed Financial Complaints Authority (FCA) and they will look at your case.

T h e T r u t h A b o u t F i n a n c i a l P l a n n i n g Page 5

4. What it Looks Like When it’s Good

We have a clear vision of what financial planning should really look like:

 Would you like to know that the solution you receive is free from any
commission or back-handed payments to your adviser?

 Would you like to have a person that you can trust to help you with
financial decisions as they arise?

 Would you like a financial professional who knew what you were looking
to achieve and was working with you to make that a reality?

 Would you like a facility that allowed you to see how you were
progressing – right on your mobile phone?

Yes? Well the answer is CS Capital Life Stream.

Life Stream is a solution that delivers the following:

 A full analysis of your financial life
 A method of determining exactly what your financial goals are and

delivers a plan on how to make that a reality.
 Independent people to advise and recommend strategies as you go.
 A true financial planning experience where the plan is central to you

continuing to achieve your financial goals.
 A simple, transparent fee structure that you to pay the adviser based on

results.

If this sounds like where you need to head check out:

www.cscapitalgroup.com.au

Disclaimer

This book is presented solely for educational and entertainment purposes. The author and publisher are not offering
it as legal, accounting, or other professional services advice. While best efforts have been used in preparing this book,
the author and publisher make no representations or warranties of any kind and assume no liabilities of any kind
with respect to the accuracy or completeness of the contents and specifically disclaim any implied warranties of
merchantability or fitness of use for a particular purpose. Neither the author nor the publisher shall be held liable or
responsible to any person or entity with respect to any loss or incidental or consequential damages caused, or alleged
to have been caused, directly or indirectly, by the information or programs contained herein. No warranty may be
created or extended by sales representatives or written sales materials. Every person is different and the advice and
strategies contained herein may not be suitable for your situation. You should seek the services of a competent
professional before beginning any investment program. The story and its characters and entities are fictional. Any
likeness to actual persons, either living or dead, is strictly coincidental.

T h e T r u t h A b o u t F i n a n c i a l P l a n n i n g Page 6