The role of a financial adviser is to look out for his clients’ interests. He should educate clients about their personal finances, discuss worst-case scenarios and outcomes of a certain strategy, and provide excellent strategic advice.
Australia (PRWEB) August 09, 2012
Members Alliance, an expert financial services business in Australia, has revealed the different characteristics that an investment adviser must possess.
This is in light of the recent turn of events that took place, where faulty advice of a financial adviser has led to severe losses and even closure of numerous businesses, as reported by an article from Smart Company.
According to the report, the financial advices provided by Storm Financial – a financial advice company in Australia now under voluntary administration – is what caused the investments of clients who took their services to go downhill, eventually causing financial stress to these people.
Among those greatly affected by Storm Financial’s erroneous advises was Phil Green, who is in debt of $1.5 million in investment loans, despite having an annual income of just $50,000.
There is also Gary Dietrich, who was advised by Storm Financial to invest the proceeds of his business sales into the market – and was also convinced by the company to borrow another $1.1 million and invest there as well. At present, Gary and his wife have lost their home and portfolio, and are now living in a caravan in their son’s backyard.
Another sad story to come out of the Storm Financial mess is that of a 68-year old farmer, who had lost $3.4 million - he was advised by the company to borrow a significant amount of money and invest it in the market. He now depends on his aged pension.
According to industry experts, Storm Financial had an obvious “formula” when dealing with their clients – double gearing. They advise clients to borrow against their family homes to buy shares in the market, and then borrow against those shares to make additional investments. Experts say that this specific strategy is a risky move and does not work best for most investors, except those earning lower incomes.
Unfortunately, when the share prices significantly decreased in the previous year, it also meant severe losses for investors. And when Storm Financial advised their clients to sell out their shares and turn the remaining into cash – this sealed the fates of the parties. Storm Financial is now under voluntary administration, while its clients each had to deal with their huge financial losses.
In response to this news, Members Alliance explained that financial consultants or advisers play a key role in the financial success (or failure) of a business or individual. And in order to protect one’s interest, one must carefully take note of certain aspects when picking out the right financial adviser – one that could provide a secured financial future for their clients.
Members Alliance explained that people seeking financial consultation should avoid financial advisers who have the tendency to encourage aggressive borrowing – especially if a business is suffering or a client is nearing retirement. In addition, aggressive borrowing can only be justified if the investor has many non-geared assets. Expert finance adviser and author Noel Whittaker said, “Always remember the golden rule of borrowing; only borrow when you need to.”
Members Alliance also believes that financial advisers must put into consideration the current situation of its clients, interest costs, where the investments will go to and other aspects meant to lessen risks and increase profitability for the investors.
David Domingo, CEO of Members Alliance, in explaining how to find a reputable financial or investment adviser, said, “The role of a financial adviser is to look out for his clients’ interests. This means that any financial advice given should take into account several factors, such as the client’s ability to pay and the current economic conditions affecting investments and markets. He should educate clients about their personal finances, discuss worst-case scenarios and outcomes of a certain strategy, and provide excellent strategic advice.”
Members Alliance Australia is an established finance specialist group that provides feasible and effective investment advices designed for debt conversion, debt reduction, cash flow management, tax correct structure, wealth creation and other financial strategies meant to help clients secure their financial future.
To start reducing your debt and building your wealth, give Members Alliance a call today. Contact them at phone number 1300 365 731 or visit their business website at http://www.membersalliance.com.au/about-us for more information about their services.