Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 297

Cuffelinks Edition 297

  •   15 March 2019
  •      
  •   

What is it about financial advice that many people devalue it compared with other forms of professional advice? I recently went to a dermatologist for a check on some sun spots. When he heard about this newsletter, we spent 20 minutes on his portfolio and investing. Then 15 minutes on my sun spots. I thought we were about even but I paid him $250 for the honour of his time.

Imagine the reverse where a dermatologist goes to see a financial adviser. Is there any chance they would spend more time examining the adviser's sun spots than the doctor's financial plan? No, the doctor would make an appointment in his surgery and bill accordingly. I've experienced similar discussions with lawyers and architects. 

I wonder what the Royal Commission's Kenneth Hayne does for financial advice, because he does not value it highly enough. For example, he says on page 119 of the Final Report:

"I do not believe that the practice of giving financial advice is yet a profession ... For some time now, a financial adviser has been something between a salesperson and a professional adviser. The industry has moved from scandal to scandal, causing financial harm to clients, and damaging public confidence in financial advice."

As I read through a hard copy of the Final Report, another highlight hit me. Kenneth Hayne's interpretation of the 'sole purpose test' limits the ability of an adviser to charge fees through a super fund, which is a common way of covering the cost of financial advice. This may redefine where some financial advice is heading and less people will receive advice. Are advisers too shell shocked to argue about this?

The sole purpose test requires that super can only be used to provide benefits for a member's retirement. Sounds simple, but how do funds justify giving members frequent flyer points? Adrian Urquhart wants a consistent approachbut regulators seem surprisingly unconcerned.

We like a good debate, and this week we check 'marketplace lending', sometimes called 'peer-to-peer' lending. It's a rapidly growing part of the market as investors look for alternatives to bonds and term deposits. John O'Brien advises investors to watch for the early stages of such innovations, while Daniel Foggo explains the protective mechanisms in the structures.

Aidan Geysen worries that the focus on dividends, especially in the franking credit debate, is overwhelming the need to think about total returns, while Brendan Ryan explains the new Pension Loans Scheme now it is open to far more people than welfare pensioners.

The franking credit debate remains as lively as ever, and Cuffelinks is clarifying as many issues as possible. John Kalkman describes the social pact that led to today's structure.

This week's White Paper from NAB/nabtrade is their hybrid pricing report. Given the value of hybrids in the portfolios of many of our readers, it's worth checking this report regularly for spreads, opportunities and price movements. The hybrid market often offers pricing anomolies.

Graham Hand, Managing Editor

For a PDF version of this week’s newsletter articles, click here.

 

  •   15 March 2019
  •      
  •   

 

Leave a Comment:

banner

Most viewed in recent weeks

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Lithium's rally is real this time – but no-one trusts it

The lithium rally mirrors the early-2010s tech stock surge, with demand set to double by 2030. Supply has been slow to respond, creating a market deficit for future tech like humanoid robotics and solid-state batteries.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

How inflation is quietly moving the goalposts on retirement

Inflation doesn’t just raise today’s bills - it quietly increases the amount needed to retire, while simultaneously making it harder to save. Three steps to take before June 30th to improve retirement outcomes.

How to minimise tax with a will

Inheritance tax implications in Australia may surprise some, as poor estate planning without proper wills or trusts can lead to costly tax bills and delays for beneficiaries.

Latest Updates

SMSF strategies

Meg on SMSFs: The CGT changes don’t impact super but what about Div 296 tax decisions?

New CGT rules could tip the scales in the super vs non-super debate. For those facing the Division 296 tax, the case for withdrawing has gotten more complex. A "comparison rate" tool may help assess decisions.

Planning

Testamentary trusts post-budget: Estate planning, tax reform and the ‘death tax’ debate

Proposed Budget changes to taxation are casting new uncertainty over testamentary trusts, prompting closer scrutiny of estate planning structures and the real implications of reforms still taking shape.

Taxation

Income tax and bracket creep

Examining how five "tax cuts" stack up against bracket creep. Why offsets and incremental changes may do little to ease rising average tax burdens, compared to structural reform through indexation over time.  

Exchange traded products

The limits of a quality investing approach in Australia

Quality strategies shine globally, but Australia's concentrated market tells a different story. Limited diversification and sector dominance can constrain the defensive outcomes investors have seen in broader markets.

Investment strategies

Balancing opportunity and complexity

As private markets expand, investors face a growing mix of structures, a stabilising private equity cycle and uneven AI disruption. Fresh questions are being raised about where the real opportunities now sit.

Investment strategies

Why strong returns matter as much as generosity

As EOFY approaches, structured giving offers a tax-effective way to support charities, while allowing donations to grow over time and play a longer-term role in family wealth and legacy planning outcomes.

Investment strategies

The most important investment decision you’ll ever make

Stock picking often gets the spotlight, but research shows asset allocation explains the vast majority of long‑term returns. Understanding your mix of growth and defensive assets is the real key to investment success.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.