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Cuffelinks Newsletter Edition 242

  •   2 March 2018
  •      
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Six months ago, I injured my hamstring on a long bike ride, and eager for a fix, I have seen three physiotherapists for treatment. One arranged steroid injections, another gave rigorous massage and acupuncture, while the third was all exercise. One wanted me back every few days, another after two weeks.

Should I think less of the profession because the solutions differ? Should I simply accept they have different experience, training and preferences for what works? Was the treatment in my best interests or to encourage further visits? Did I need expensive ultrasounds and injections? It's the same with many professions. Most of us don't know if we are overserviced or need the in-house tests.

Financial advice is being scrutinised and regulated far more intensely due to its conflicts. ASIC recently released a report on vertically-integrated financial advice firms which found:

"In 75% of the customer files we reviewed, the adviser has not demonstrated compliance with the best interests duty and related obligations." 

The files were 'non-compliant' because advisers were not considering all relevant circumstances and the customer's existing products.

Our first two articles shed light on some problems the advice industry faces. In the second part of the interview with Michael Kitces (pictured in Sydney), he says the industry caused such regulatory overview, and he suggests a better way forward.
   
Then Peter Thornhill takes an opposite view to the article written last week by Don Ezra. Both men have long backgrounds in asset allocation, and the fact that they can't agree on whether bonds or equities are riskier illustrates part of the advice dilemma. Warren Buffett weighed into the risk debate in his annual letter this week, and we also draw out his argument.

Please comment on any of these articles. There are no definitive answers, which is why investors should educate themselves about the choices available. 

Progress seems more promising on post-retirement investment products, but David Belloutlines five immediate hurdles. Given the Government has just appointed nine prominent experts to an advisory panel, David's caution is important. Then Sean Henaghan wants us to move on from the passive versus active debate and focus more on outcomes. 

On a cheerier note, Adrian Harrington shows which non-residential real estate sectors have performed best and the outlook for 2018, while Julia Stanistreet gives some pointers for selecting Listed Investment Companies trading at a discount to their NTA. Nigel Stewart offers tips to prepare for a market setback before it actually happens.

This week's Sponsor White Paper from BetaShares looks at how to use a 'bear' ETF in various ways, plus a video and background on the new hybrid ETF.  

Graham Hand, Managing Editor

 

Edition 242 | 2 Mar 2018 | Editorial | Newsletter

 

  •   2 March 2018
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