I'm going to give you some financial advice...

Put 10% of your savings into silver and 10% into gold. Take a small position in alternate energy 5%(DYESOL)and uranium 5%(Paladin) and a larger one in NewCrest or Lihir.10%. Put the rest in the bank. I once also recommended a position in Oz Minerals, forgive me. Should have got out with Hegarty and not stayed with the nickel and zinc plated greedy idiots. Don't trade and DON'T go long on margin! I have given more or less the same general advice for the last five years and its been good for a 15% or so return. Due to the timing issues some people are down a bit in the worse meltdown in seventy years.

The regular financial advisors, meanwhile, are moonlighting as grief counsellors and really good people with sense (Simon, NOOOOoooo!!!) were going long on margin right up to the end of 2007 on the advice of self interested clowns.

The aussie financial advice industry is a large parasite infected shark with low life expectancy.

I see carnage.

The dirty secrets of financial planners
Stuart Washington
July 8, 2009 - 11:52AM

The financial planning industry has a series of dirty little secrets that make investment banks look like paragons of virtue. And that's pretty hard to do in this day and age.

Dirty little secret #1

Many financial planners work to sales targets. For these planners the need to increase revenues is included in financial planners' key performance indicators or in their job descriptions.

Have you experienced any tricks of the trade employed by financial planners? Have your say

In some cases these targets may be a figure - say $55,000 in revenue generated a quarter, breaking down to roughly $7000 a week. The way a planner gets to these targets is not by selling advice; it is by selling products with up-front fees and commissions.

Dirty little secret #2

Some banks' financial planners are ranked in "league tables'' based on who sells the most. This little secret blows away any thoughts that Joe Blow planner is a disinterested adviser.

If major planning groups keep and internally publish league tables on how their financial planners are performing in terms of "sales'' it is hard to see a workforce being motivated to offer impartial financial advice. It cements the above-mentioned industry bias towards sales people rather than advisers.

Dirty little secret #3

In the boom years, a planner on a $60,000 salary could earn up to $70,000 on top of that in commission-based payments.

Yes, we have heard a lot about commissions. Yes, we hear that commissions can lead financial planners to offer products they may not actually believe in.

But I wonder whether we fully understand that a planner regularly offering investors advice that is not attached to some form of commission are flirting with half their likely annual salary.

Dirty little secret #4

You can't go outside the system. I have spoken to two planners who left big planning groups because they felt they were unable to offer the advice they were required to (that is, sell more stuff) rather than the advice they felt they should professionally offer people (for example, go into a term deposit).

In both cases the planners say they were counselled about their perceived failure to convert existing clients into lucrative purchasers of commission-based products.

Dirty little secret #5

Churning = earning. A planner looking to lift earnings can simply recommend new clients switch from one superannuation fund to another. While this bumps the revenue up nicely for the planner, it has some particularly nasty consequences for the unwitting client.

One, they may lose the life insurance contained in the original industry superannuation. Two, if the planner offers a substitute insurance policy they frequently get the handsome up-front commissions on the new product (which are effectively paid for by the customer any way.)

While I freely accept there are honest, committed and sincere financial planners, they are currently caught in an industry structure so tangled that it's hard to pick the good from the bad.

And before those honest planners start crying foul about unfair generalisations (a big thanks to the planner who sent the e-mail with the subject line "Scummy journalism'' in response to a previous column), it's worth remembering that everything written above is based on criticism levelled by other financial planners.

These are not practices that appear in submissions made to the Corporations and Financial Services parliamentary committee currently charged with implementing change.

But it is worth spelling them out in some detail because they are practices that have threatened the integrity of the industry as a whole.

Both the industry and the parliamentary committee need to understand these practices and how they developed to fully comprehend the need for change. Let's hope they then make changes that put the industry on a completely new footing.