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

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

How to minimise tax with a will

Inheritance tax implications in Australia may surprise some, as poor estate planning without proper wills or trusts can lead to costly tax bills and delays for beneficiaries.

Testamentary trusts post-budget: Estate planning, tax reform and the ‘death tax’ debate

Proposed Budget changes to taxation are casting new uncertainty over testamentary trusts, prompting closer scrutiny of estate planning structures and the real implications of reforms still taking shape.

Back to the future - Why indexing CGT is a good idea

A return to indexation of capital gains would be a fairer way to compensate households for the effects of inflation than the current discount. Importantly, it opens the door to future, broader reforms to stop the taxation of inflation.

Latest Updates

Investment strategies

Choose your hedges wisely… and often

A new market regime is exposing the fragility of static hedges. With correlations shifting and safe havens flipping, investors must rethink diversification and adopt more adaptive tools to protect capital.

Investment strategies

Yields take centre stage again

The Australian credit landscape is shifting. Yields are rising, issuance is strong and spreads continue to tighten. Income is re‑emerging as the dominant driver of returns, though pockets of risk may be building beneath the surface.

Investment strategies

The grass is always greener: Rethinking Australian vs global equities

Australia's once‑dominant sharemarket is losing ground as others surge ahead, prompting investors to question home‑bias instincts. Meanwhile, the US market appears attractive. Is it time to revisit your global equity allocation?

Investment strategies

Stop asking if there's a stock market bubble. Ask this instead.

Markets continue to push onwards despite valuations looking stretched by historical standards. Bubble talk is rampant, however investors may be focusing on the wrong thing. The real story sits deeper than the headlines.

Taxation

The GST cannot stop inflation

Raising the GST when inflation jumps sounds clever on paper, until we examine how it may play out in practice. What is pitched as a simple inflation fix can lead to a sharp turn in the wrong direction for prices.

Shares

Why SpaceX is coming to your super fund

SpaceX’s blockbuster debut is grabbing headlines, but the real story for Australian investors is much quieter. Giant listings eventually filter into super funds and ETFs, subtly reshaping portfolios long before most realise.

Taxation

Is the government being honest with us about its business CGT changes?

The government’s assurances on small‑business concessions don’t withstand the scrutiny. Token carve‑outs and a lack of credible rationale for CGT changes may reshape how Australia rewards long‑term value creation. 

Sponsors

Alliances

© 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.