Chris Joye (who is director at YBR funds management) wrote another barn burner over the weekend about the Government’s’ super reforms:
The far-reaching nature of the government’s desired changes could result in the development of vast sales forces of spruikers working for vertically integrated institutions that both build and distribute products.
…my concern is that consumers may think they are getting reliable “advice” from these conflicted sales agents, better characterised as product dealers. A related worry is that those hard-working professionals who today furnish genuinely independent personal advice on your specific needs will have an incentive to engage in more direct product-flogging under general advice because they can earn extra money doing so.
As an investor, the next question you should reflect on is why large institutions have gobbled up or aligned 80 per cent of bona fide advisers out there. Inextricably intertwined with this is the concept of a vertically integrated business.
…Much retail money is invested by advisers via a platform of choice – a reporting and administration hub often owned by the institution the adviser works for…
Inside the platform, the default cash account is often the platform owner’s own deposit facility…Entry is controlled by the platform operator, and there may be many products not listed on the platform that best meet your goals…the platforms also offer their own internal super funds where the choice of products is even more restricted and controlled…If you break open the asset allocation, you often find a big bias to the super fund owner’s deposits, managed funds and fund of funds, all of which supply it with further fees.
Thus a vertically integrated institution could capture returns via its adviser, platform and super fund, as well as the layers of investments the super fund directs capital to.
Ah, phooey! You too can profit from this riotous gouge by following Aussie John’s s shining example and radically over-investing your retirement in big four bank shares.
