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I was chatting to a family member on the weekend.
He was telling me about a mate of his who went to see a financial planner.
The mate had his Super invested through an industry fund, AustralianSuper.
And the planner's advice?
"You should move it to a wealth platform. The fees will be higher, but at least we can keep an eye on it."
At this point, I should acknowledge that perhaps the story got twisted and miscommunicated by the time I heard it.
And thankfully I don't know who the advisor was, so it saves me getting into any legal trouble.
It also potentially protects the guilty.
Because, and I hope you're with me, paying more 'so I can keep an eye on it' was almost certainly terrible advice.
And it's unfortunately only too common.
I've written before – and I stand by this – there are some exceptionally good financial planners.
As I wrote yesterday, some people just need or want a financial coach. That's important, and though potentially costly, can be less costly (and end up with more wealth overall) than not doing it, for those people, because it might save them from some terrible mistakes.
Some people need advice on the right structure for their investments, and to make sure they have appropriate insurances and have considered estate planning. Some expert advice on these areas can be really useful.
But… and you knew this was coming, didn't you… there are some planners who seem to view their clients as meal tickets.
Now, it's possible that the planner in question was misquoted. It's possible that there are some good reasons that a planner would need to 'keep an eye on' the client's Super.
I just can't think of any.
So why would the advisor suggest a client pay more in fees?
I mean… I couldn't possibly guess…
But if I was going to, I'd suggest that 'keeping an eye on' the money is probably the worst possible reason.
It's not like AustralianSuper is some small, tinpot operation. It's not like you can't get regular reporting on the Super balance and alter the investment strategy, if deemed necessary.
Is it possible that the advisor was doing it for his own benefit? Because he stood to make more money, or to make his – the advisor's – life easier, at the client's expense?
I don't know the answer.
I do know that the most controllable part of wealth creation is fees, and that too many people pay too much because they don't know better or are actively misled.
Now, if a financial planner is important to you, and keeps you on the straight and narrow, it can still be money well-spent.
If not… then your planner will be enjoying a lovely holiday at your expense. A holiday that could have been yours.
It's at this point some planners are hitting the 'send angry email' button on their iPhones. Some because they didn't actually read what I wrote. Some because they're angry at having their behaviour highlighted.
And, I'm not resiling from the criticism. If you're taking advantage of someone based on information asymmetry – because you know more than them, and are profiting from shamelessly magnifying and exploiting that – then I'm more than happy to condemn you for it.
(If you're currently thinking: "Hang on, doesn't The Motley Fool charge for advice?", you're dead right. And as I've said, repeatedly, to our members, if we're not delivering value, they shouldn't renew their membership to our services, either. This is not about us… it's about them.)
But, rest assured, I get more supportive emails from planners than angry ones. Because, as I said, the good ones get it, and deliver more value to their clients than they cost.
Still, I hope it's a cautionary tale.
I hope you have a financial plan – either personally, or via a planner.
I hope it's a plan that is going to help you achieve your goals.
I hope you're paying what it's worth. And not a dollar more.
And I certainly hope you're not paying extra for someone just to 'keep an eye on' your investments!
Fool on!
