Mea culpa, it's worse than I expected. In August 2016, I wrote 10 reasons why a Financial Services Royal Commission was not necessary, but Kenneth Hayne and his team have taken discovery of malfeasance to a new level. Among other factors, I thought actions by ASIC and various reviews would uncover wrongdoings and lead to change, but a sledgehammer was required to break through to the facts. The consequences will be far-reaching for wealth management.
The Royal Commission is gripping viewing. I'm watching hours of it each day, not knowing whether to laugh or cry. The commercial channels should bid for the broadcasting rights over winter. It has everything: the forensic analysis and youthful confidence of bright QCs assisting the grumpy Commissioner; the hapless and bemused witnesses left out to dry by their superiors; and a script worthy of John le Carre with lies, deceit and incompetence.
So many lowlights. AMP giving 20 misleading statements to its regulator. The head of the financial advice business saying he had not "turned my mind" to thinking about adviser commissions. Charging financial advice fees but not meeting the client, with the Commission calling CBA the "Gold Medallist" in fee-for-no-service. An external "independent" board report for ASIC revised by AMP management through 25 drafts, including redacting the CEO's name. An executive unable to identify what he was apologising for. Using the ACCC acronym for the Advice, Culture & Compliance Committee. Counsel accusing a CBA witness of "dissembling" and "misleading". Really, you couldn't invent this stuff, and what a setback for vertical integration and financial advice!
The transcripts of witness interviews are here and videos plus the live webcast are here. Your comments on the Royal Commission are welcome on our website.
Not much Blue Sky now
On the subject of stuff ups, Blue Sky Limited (ASX:BLA) stumbles along while short sellers party, but Hugh Dive explains why shorting is not as easy as it looks. Miles Staude offers four rules to check when the current bull will finally run out of legs, while Tamar Hamlyn outlines the consequences for borrowing due to the recent rise in bank funding costs.
Blockchain founder writes for us
The initial idea behind blockchain can be traced to 1991 when Stuart Haber and W. Scott Stornetta described a cryptographically secured chain of blocks. Dr Stornetta writes his first article for Australia in Cuffelinks.
More on pensions and SMSFs
Our comments section often includes a high quality debate worth revisiting. In response to last week's lead article, some people argued that retirement is about living off income, not drawing down capital. Is that correct? We provide a case study on living off $50,000 a year and drawing a pension. Jon Kalkman also argues the case for tax-free pensions and receiving refunds, and Gemma Dale offers guidance on the merits of having two SMSFs.
Congratulations to Chris Cuffe on the 10th anniversary of his innovative Third Link Growth Fund which has now delivered over $7.5 million in donations to charities.
This week's White Paper from Vanguard Investments shows why core-satellite investing is a powerful approach to asset allocation. Our new feature below, NAB/nabtrade's weekly rate sheet on hybrids and listed bonds, is proving very popular.
Look out next week for a Special 250th Edition presented as an ebook, where over 30 market experts explain how a mistake made them better investors. Please invite your friends or colleagues to subscribe for free to receive these valuable lessons.
Graham Hand, Managing Editor
Edition 249 | 20 Apr 2018 | Editorial | Newsletter