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

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

Shares

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

Investment strategies

Making a case for the 40 year mortgage

The housing debate tends to focus on prices, interest rates and deposits. Yet an overlooked feature of the mortgage itself could help buyers enter the market sooner without abandoning prudent lending standards.

SMSF strategies

Red flags to watch out for when considering an SMSF

Thinking about an SMSF? Before you sign anything, learn how to spot the difference between genuine advice and a sales pitch, understand the real costs, and avoid the compliance mistakes that attract ATO attention.

Investment strategies

Not all income is created equal

Market conditions are shifting as familiar yield sources quietly lose momentum. Australian public credit may be the most compelling source of income in today's market but many investors haven't noticed the shift. 

Investment strategies

The market paid for change, not comfort

Reporting season has delivered a clear message: the market is no longer paying simply for quality, resilience or an earnings beat. It is paying for change in earnings expectations and the outlook ahead. 

Investment strategies

Will AI destroy investor capital?

Some of history's most important innovations changed the world while leaving investors much poorer. As trillions pour into AI, a familiar pattern may be emerging, one that rewards society far more generously than capital.

ASX reporting season: Signals, surprises, stock stories

August reporting season delivered strong earnings and bigger-than-expected dividends, but beneath this, a more nuanced story emerged. First Sentier Investors’ David Wilson and Christian Guerra unpack the key trends.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 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.