Our #2 Daughter, the family’s leading actress, recently flew off to find work hopefully in Netflix’s expanding presence in Vancouver, BC.
Going for a couple of years, or longer based upon future stardom, the family wanted to hang around until her final few steps with us all together before crossing that yellow line into customs.
Sad, but happy too.
Until I got the bill for parking out there.
Based upon airport carpark profits (56%!), maybe stardom is right here running airport parking?
(It’s not just airports either. Similar parking premiums at hospitals too.)
Being charged a premium is one thing but being forced to pay a premium is another.
It’s like superannuation fees.
All working Australians are forced to have a superannuation fund.
All Australians are also forced to pay fees on those funds.
Listening to the Industry Funds, the fees charged for ‘running’ our funds are probably the most important aspect when determining who to trust with our superannuation.
Early last year, just before the start of Justice Hayne’s Royal Commission, the Industry Funds even suggested that the banks should not be allowed to offer for-profit superannuation funds considering their record of costs and scandals.
While the damaging headlines from Justice Hayne’s Report added some icing, the Industry Funds have won the retail versus not-for-profit battle for our superannuation using their lower fees approach. Last year’s KPMG Super Insight Report predicts the fee fight to gather more momentum as the superannuation victors turn on each other forcing consolidations and mergers into mega-funds.
What have we learned from this?
The best place to have your superannuation is in a fund with the lowest fees?
Or, the cheapest funds are the best funds?
What could possibly go wrong with that?
Meanwhile across town at a financial advice conference the delegates were bemoaning the fact that Australians won’t pay for advice. Due regulatory upheaval producing more red tape and compliance the delivery of advice is becoming unaffordable.
Some of the views from the conference suggest that the old, now outlawed, financial product commissions played a vital role by making advice accessible for those that couldn’t and didn’t want to pay for it.
Recent research provides some insights into the plight of these advisers.
Last month the Australian Securities & Investments Commission (ASIC) – released a new report – Report 627 – Financial Advice: What consumers really think.
It found 27% of those researched had received financial advice in the past.
It also found of those that didn’t get advice, 35% view costs as the main barrier to accessing advice, 29% didn’t believe advice would be worth it, 26% believed they could manage their own finances and 19% who didn’t trust advisers.
So, on the one hand, the industry funds ‘win’ over retail funds shows it’s clear we hate being forced to pay a premium for fees.
There’s also good money on the odds that the race to the bottom on fees will continue. This will force further consolidation of the product providers.
A bunch of advisers are saying that while their clients need advice, they can’t afford the advice because compliance is driving up costs too much. ASIC’s report might seem to confirm their view.
Something’s missing. Isn’t it?
There’s many things missing from this analysis, but my airport parking experience provides a possible clue.
Where’s the value?
Being expensive doesn’t make anything valuable.
Neither does being cheap.
The 25 year old superannuation and financial services industry is headlong into that painful period of growth – their 20’s – when good judgement comes from experience but experience comes from poor judgement.
Having achieved dominance, the industry funds now have a huge job changing perceptions if they want to be considered valuable rather than cheap and something we’ve been forced to pay for.
The advisers at conferences around Australia have a similar task – unless they can figure out how to make their advice valuable, they too are not immune from the same compliance, technology and consumer pressures restricting the growth options for industry funds.
For many advisory firms it’s potentially a perfect storm as their advisory firm valuations are fast eroding.
The future of advice is all about value.
Bring it on.
What do you reckon?
BTW – We haven’t heard much from our leading lady in Vancouver. She might call when we can provide value. Hope it’s soon.
About Jim Stackpool
For 30 years Jim has influenced, coached, and consulted to accounting & financial advisory firms across Australia. His firm, Certainty Advice Group supports a growing group of like-minded professional accounting & financial advisory firms seeking to deliver Australia’s highest and only ACCC/IP Australia accredited standard of comprehensive professional advice for advisory clients – Certainty Advice. He is also an author, blogger, columnist, and keynote speaker covering topics on his expertise – growing and developing professional advisory firms.