In April and May of this year we were bombarded by front page hysteria about the Big 4 banks and AMP and the misconduct that the Hayne Royal Commission had uncovered. The behaviour of bankers and financial advisers ranged from continuing to charge deceased clients fees, to a conscious strategy of ‘fee for no service’, to forging home loan and superannuation documents. AMP executives took it one step further by admitting to lying to the regulators. Their Chairman was the first high profile casualty to fall on her sword.
So what happens now? Why has this now just gone away? Will we see any changes beyond a few new board members and CEOs?
The next hearing begins on Monday. The preliminary report is due in September. There will be more stories of deceptive behaviour, and this will go further into the Superannuation and Insurance sectors.
It is likely that more heads will roll. It is likely that the wealth management industry will unravel over time and the vertical integration of the big banks and AMP will be unbundled.
What will go unnoticed is how deep this problem really is. The big end of town is not just sitting in 5 boardrooms. The financial services industry feeds off the back of Superannuation Industry. Superannuation assets totalled $2.6 trillion at the end of 2017 quarter. Some economists are projecting this could be over $6 trillion by 2030.
This will ensure that the sector continues to grow. The sector will find new ways to charge fees and to make money out of clients. Industry funds can charge up to $50 if you want to change your name on a form. Insurers can flip you into a smoker’s rate and double premiums, if you don’t update your details when leaving an employer. The sector thrives on the lack of interest Australians have in their superannuation. The approach is to refund quickly on the small percentage who notice/complain and to continue with the practice on the 85% of us who don’t even look at our superannuation statements.
The Hayne Royal Commission will shed light on the problems. But an industry this big is influential. It will take time to implement any changes, and by the time the changes are in place the boardrooms will be already implementing new strategies to make money from uninformed clients.
The only way we can ensure there is change is to become more informed and ensure our money is invested correctly and we are taking control of our financial future.
A Self Managed Super Fund is now cheaper than ever to set up and is a vehicle many are looking at as the distrust of the Superannuation Industry increases.
Holding precious metals is also possible with a Self Managed Super Fund and as with any investment strategy they can form part of a balanced and diversified portfolio.
These are interesting times in Politics and Business. Changes are on the horizon, so stay informed and be aware of what you are paying for. Change will bring opportunity.
The Precious Metals Investment Symposium takes place at the Pan Pacific Hotel in Perth from the 2-5 October showcasing both mining and bullion companies and investment outlooks for the sector. To register go to goldevent.com.au