One of the odd things about financial planning is that the public’s confidence in its practitioners is lowest when investment markets are firing (“Why do I need to pay someone to do this?”). However, it’s just as low when investment markets have tanked (“Planners – what are they good for if they didn’t see this coming?”).
So I must admit that the timing of the Financial Planning Association (FPA) launching “Ask an Expert Week” and the release of Chant West’s latest superannuation fund performance figures – on the same day, within an hour of each other – made me laugh.
“A positive surprise in 2012 rewards pick-and-stick investors” said Chant West in a press release.
Chant West director, Warren Chant, added: “With listed shares and property performing so well, those members in more growth-focused funds fared better in 2012. That should help drive home the message that it is dangerous to try to ‘time’ investment markets.
“If you got nervous at the end of 2011 after a negative year and with so much uncertainty in the air, you might have been tempted to switch to cash. If so, you’d have missed out on the bounce-back in growth markets and ended up considerably worse off, because cash produced the worst return of all asset sectors.”
Inaction is a kind of action, so why not?
So, who needs a financial planner if the best course of action over the past year was to do nothing? Except that doing nothing can be just as active a decision as doing something. Sometimes it takes just as much courage or foresight to stay the course as it does to jump ship.
Meanwhile, over at the FPA, its chief executive Mark Rantall was ruminating on why more people do not seek out professional help. High on the list, I suspect, is a strong performance by their superannuation fund.
“There are various reasons people do not seek advice on their finances,” Rantall said. “Some feel that financial advice is something that only high net-worth individuals can access, others are simply not aware of the value advice can add and some just don’t know where to look.
“January’s “Ask an Expert Week” is the perfect opportunity for every Australian to test out trusted financial advice and reap the benefits,” he said.
One of the issues yet to be overcome is a perception in some quarters that investment advice is the be-all and end-all of what planners do.
Rantall knows that’s not the case; hence his comments above about high net-worth individuals and the value of advice.
It will be fascinating to watch, as investment markets recover, to see if the take-up of financial planning services increases in coming months and years.
Chant West says that since the heights (or perhaps that should be depths) of the global financial crisis (GFC), the so-called growth funds that it analyses have returned 7.3 per cent a year over the four subsequent calendar years.
“That’s a cumulative gain of 32.7 per cent,” Chant said.
Having suffered reputational damage due to clients’ losses through the GFC, we’ll have to wait and see if the industry can survive the recovery.
It is not just the recovery we need to survive, it is the constant undermining of financial planners from members of our own industry, and the political infighting – not to mention the Governments determination to make business more costly for practitioners with an abundance of unnecessary red tape; which appears to be aimed to increase complexity and cost for everyone in the retail world.