1 00:00:05,640 --> 00:00:07,920 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm sure 2 00:00:07,920 --> 00:00:10,039 Speaker 1: and Aylmer. Fear and Greed is working with the team 3 00:00:10,080 --> 00:00:13,119 Speaker 1: at Vanguard to bring you a series of episodes on investing, 4 00:00:13,480 --> 00:00:16,880 Speaker 1: giving you the information you need to help make informed decisions. 5 00:00:17,120 --> 00:00:20,599 Speaker 1: Today we're busting some of the myths around financial advice. 6 00:00:20,960 --> 00:00:24,520 Speaker 1: Vanguard knows this space well, working with financial advisors around 7 00:00:24,560 --> 00:00:26,640 Speaker 1: the world to provide them with research that can help 8 00:00:26,680 --> 00:00:31,360 Speaker 1: their clients. Libby Newman is an investment specialist with Vanguard Australia, 9 00:00:31,400 --> 00:00:33,800 Speaker 1: which is a great supporter of this podcast. Libby, Welcome 10 00:00:33,840 --> 00:00:34,520 Speaker 1: to Fear and Greed. 11 00:00:35,080 --> 00:00:36,440 Speaker 2: Thanks Sean, thanks for having me. 12 00:00:36,880 --> 00:00:39,000 Speaker 1: Before we get to the myth set the scene for me. 13 00:00:39,080 --> 00:00:42,479 Speaker 1: Financial advice covers a range of different services beyond what 14 00:00:42,520 --> 00:00:46,479 Speaker 1: many assume is the default comprehensive advice. What does it 15 00:00:46,560 --> 00:00:48,440 Speaker 1: financial advisor do for you? 16 00:00:49,240 --> 00:00:51,720 Speaker 2: Financial advice, Yeah, it covers a range of different things. 17 00:00:51,800 --> 00:00:54,400 Speaker 2: So it might be good to have an analogy and 18 00:00:54,440 --> 00:00:56,160 Speaker 2: think of it a little bit in the same way 19 00:00:56,200 --> 00:00:59,120 Speaker 2: that you might approach your health and fitness. Perhaps, so 20 00:00:59,480 --> 00:01:02,480 Speaker 2: at one and the spectrum you might have something akin 21 00:01:02,840 --> 00:01:06,240 Speaker 2: to a fitness trucker. So debt consolidation you know, things 22 00:01:06,280 --> 00:01:08,000 Speaker 2: like that that can really help you be aware of 23 00:01:08,040 --> 00:01:12,560 Speaker 2: your spending needs. There's general advice that's around that can 24 00:01:12,600 --> 00:01:16,360 Speaker 2: really give you some good information about specific products and 25 00:01:16,520 --> 00:01:18,920 Speaker 2: so you know, a little bit a little bit more elevated. 26 00:01:19,120 --> 00:01:21,959 Speaker 2: And then interfund advice is probably a little bit like 27 00:01:22,400 --> 00:01:25,160 Speaker 2: you wouldn't go to your yoga teacher for information about 28 00:01:25,160 --> 00:01:27,080 Speaker 2: a weight session, but you can go to your super 29 00:01:27,080 --> 00:01:31,120 Speaker 2: fund and get some good advice around contribution strategies perhaps 30 00:01:31,280 --> 00:01:34,320 Speaker 2: or about different options that might be within your superannuation fund. 31 00:01:34,760 --> 00:01:37,400 Speaker 2: And then there's the full scale personal advice, which is 32 00:01:37,400 --> 00:01:40,120 Speaker 2: probably a little bit akin to a personal trainer situation, 33 00:01:40,360 --> 00:01:44,479 Speaker 2: so really tailored to your specific needs. You might have 34 00:01:44,560 --> 00:01:47,039 Speaker 2: some injuries in a health situation, so you might have 35 00:01:47,080 --> 00:01:52,440 Speaker 2: specific you know, income, outgoings, assets, liabilities in a financial sense, 36 00:01:52,880 --> 00:01:54,600 Speaker 2: and then you might have some goals that you're looking 37 00:01:54,800 --> 00:01:59,160 Speaker 2: that you're looking to aspire towards and a financial sense 38 00:01:59,200 --> 00:02:03,360 Speaker 2: that might be getting a house, and in a fitness sense, 39 00:02:03,400 --> 00:02:05,280 Speaker 2: it might be something like checking up Kellman Jarrow. 40 00:02:05,440 --> 00:02:08,880 Speaker 1: So yeah, fantastic, I now understand what that's very good 41 00:02:08,919 --> 00:02:12,040 Speaker 1: analogy that one term, we're going to bust some myths. 42 00:02:12,080 --> 00:02:15,440 Speaker 1: Myth number one is financial advice for the wealthy only. 43 00:02:16,200 --> 00:02:18,919 Speaker 2: Yeah, that's that's a good question. A lot of the 44 00:02:19,360 --> 00:02:22,640 Speaker 2: advisors that I work with quite closely, that is a 45 00:02:22,639 --> 00:02:25,000 Speaker 2: lot of their business is around that that zone of 46 00:02:25,720 --> 00:02:29,960 Speaker 2: probably people who are wealthy and maybe nearing retirement. But 47 00:02:30,040 --> 00:02:32,839 Speaker 2: it's not necessarily the case that that's just that it's 48 00:02:32,919 --> 00:02:36,400 Speaker 2: just for the wealthy. I think there's been some some 49 00:02:36,639 --> 00:02:40,480 Speaker 2: interesting statistics. You know, even having those nudges or having 50 00:02:40,520 --> 00:02:43,960 Speaker 2: that information quite early on in your life can make 51 00:02:44,000 --> 00:02:47,600 Speaker 2: a significant difference to your financial outcome over the long term. 52 00:02:47,919 --> 00:02:51,160 Speaker 2: I know in my son's situation, he's had those nudges 53 00:02:51,200 --> 00:02:54,400 Speaker 2: into into his financial journey early on, and it's something 54 00:02:54,440 --> 00:02:56,760 Speaker 2: that I probably wish that I had done earlier as well. 55 00:02:57,160 --> 00:02:59,320 Speaker 2: So I think, you know, it's not just for the wealthy. 56 00:02:59,560 --> 00:03:01,920 Speaker 2: And it might be that you have, you know, you 57 00:03:02,000 --> 00:03:05,359 Speaker 2: engage a financial advisor, and it might be for one 58 00:03:05,360 --> 00:03:08,480 Speaker 2: off situation and doing as your needs change over time, 59 00:03:08,520 --> 00:03:10,919 Speaker 2: you might change that relationship. So it's not like it's 60 00:03:10,919 --> 00:03:13,960 Speaker 2: a said and forget relationship, and it's not just something 61 00:03:14,000 --> 00:03:16,560 Speaker 2: that's just for the wealthy. It's accessible to a lot 62 00:03:16,600 --> 00:03:17,040 Speaker 2: more people. 63 00:03:17,440 --> 00:03:19,880 Speaker 1: So me number two, and you've sort of alluded to 64 00:03:19,919 --> 00:03:22,200 Speaker 1: it here. It isn't just for someone like me. I'm 65 00:03:22,240 --> 00:03:24,280 Speaker 1: much closer to retirement the name to the starting my 66 00:03:24,440 --> 00:03:27,040 Speaker 1: working career. I think a lot more about it than 67 00:03:27,080 --> 00:03:29,160 Speaker 1: I ever did when I was twenty five. But that 68 00:03:29,400 --> 00:03:31,399 Speaker 1: may not be the best strategy. 69 00:03:32,000 --> 00:03:34,600 Speaker 2: Yeah, so I think, yeah, it's not just for the 70 00:03:34,639 --> 00:03:36,880 Speaker 2: older folk. It's never too early to start your financial 71 00:03:36,920 --> 00:03:39,320 Speaker 2: planning journey. There are a lot more advisors who are 72 00:03:39,360 --> 00:03:43,720 Speaker 2: catering to people who are in that younger demographic. Notwithstanding that, 73 00:03:43,760 --> 00:03:46,280 Speaker 2: there's probably a lot of people, you know, in maybe 74 00:03:46,320 --> 00:03:49,280 Speaker 2: you and my zone, who are approaching retirement. They're thinking 75 00:03:49,280 --> 00:03:51,440 Speaker 2: about a lot more closely. You know, a lot of 76 00:03:51,520 --> 00:03:55,480 Speaker 2: advisors that I talked to are having conversations with the 77 00:03:55,520 --> 00:03:59,080 Speaker 2: next generation. So we know that we're approaching a period 78 00:03:59,080 --> 00:04:01,600 Speaker 2: when there's going to be a transfer of wealth. So 79 00:04:01,640 --> 00:04:05,440 Speaker 2: there's a lot of advisors that are engaging that next generation, 80 00:04:05,840 --> 00:04:08,680 Speaker 2: which are kids, but not really kids, they're adults. So 81 00:04:09,240 --> 00:04:11,680 Speaker 2: you know, it's important just to get started. I think 82 00:04:11,960 --> 00:04:15,960 Speaker 2: the feedback that we've had is that for most advisors, 83 00:04:16,040 --> 00:04:18,880 Speaker 2: or for most people who had to enter an advice relationship, 84 00:04:18,880 --> 00:04:21,400 Speaker 2: they wish they've done it earlier. So get started and 85 00:04:21,400 --> 00:04:23,520 Speaker 2: get started earlier, I think is the takeout. 86 00:04:24,000 --> 00:04:26,919 Speaker 1: I'm talking to Libby Newman, investment specialist Vanguard and we 87 00:04:27,000 --> 00:04:36,760 Speaker 1: will be back in the moment. Okay, Libby, let's go 88 00:04:37,040 --> 00:04:40,160 Speaker 1: for myth number three, and this is a good one. 89 00:04:40,640 --> 00:04:45,000 Speaker 1: It costs more than it's worth and that's something that 90 00:04:45,040 --> 00:04:46,600 Speaker 1: has really been top of mind for people in the 91 00:04:46,640 --> 00:04:49,240 Speaker 1: last ten years, particularly because of some of the regulatory 92 00:04:49,320 --> 00:04:52,720 Speaker 1: changes that have come on board. Is it worth it? 93 00:04:53,440 --> 00:04:56,960 Speaker 2: Yeah, I think again it's important to consider it, not 94 00:04:57,040 --> 00:04:59,240 Speaker 2: just if you're looking just at the check that you're 95 00:04:59,279 --> 00:05:02,600 Speaker 2: cutting to your financial advisor. People often focus on that. 96 00:05:03,000 --> 00:05:06,360 Speaker 2: It's really about thinking about it from a long term perspective. 97 00:05:06,760 --> 00:05:09,480 Speaker 2: There was a research piece that was put out by 98 00:05:09,480 --> 00:05:12,720 Speaker 2: the Financial Services Counsel in twenty twenty one which had 99 00:05:12,760 --> 00:05:15,839 Speaker 2: a look at a number of different cameos and those 100 00:05:16,000 --> 00:05:20,200 Speaker 2: people who had engaged a financial advisor had accumulated more 101 00:05:20,240 --> 00:05:23,200 Speaker 2: than three times more assets over a fifteen year period 102 00:05:23,240 --> 00:05:25,520 Speaker 2: than those who had not. And that is I was 103 00:05:25,560 --> 00:05:28,480 Speaker 2: having a look at the paper behind that research this morning. 104 00:05:28,720 --> 00:05:32,120 Speaker 2: That is a significant difference between those who had not 105 00:05:32,200 --> 00:05:35,920 Speaker 2: engaged financial advisors to help with our decisions. And obviously 106 00:05:35,960 --> 00:05:38,800 Speaker 2: the decision to do nothing is a decision in itself, 107 00:05:38,880 --> 00:05:41,640 Speaker 2: So yeah, it really does make a significant difference. 108 00:05:42,320 --> 00:05:44,960 Speaker 1: Well, what about the emotional difference it makes, because anytime 109 00:05:45,000 --> 00:05:47,400 Speaker 1: I've seen a financial advisor, I just feel better about it. 110 00:05:47,440 --> 00:05:49,279 Speaker 1: I just think, well, I'm doing something about it, and 111 00:05:49,320 --> 00:05:50,920 Speaker 1: I'm more confident about what I'm doing. 112 00:05:51,160 --> 00:05:53,440 Speaker 2: Yeah. Yeah, and I don't think you can underestimate that. 113 00:05:53,760 --> 00:05:56,599 Speaker 2: I think that's another thing that we have a stream 114 00:05:56,600 --> 00:05:59,679 Speaker 2: of researchers that looks at investor behavior and certainly those 115 00:06:00,040 --> 00:06:03,799 Speaker 2: those intangible elements are really important elements of financial advice. 116 00:06:04,480 --> 00:06:07,920 Speaker 2: And if you think about the I guess the sense 117 00:06:07,960 --> 00:06:10,320 Speaker 2: of well being that you get knowing that you've got 118 00:06:10,320 --> 00:06:12,520 Speaker 2: plan A covered, but you've also got planned B and 119 00:06:12,520 --> 00:06:15,640 Speaker 2: plants C covered, because often the financial advice is not 120 00:06:15,720 --> 00:06:17,919 Speaker 2: just about the shares that all the funds that you 121 00:06:18,000 --> 00:06:20,840 Speaker 2: might have in your portfolio. It's all about protecting your 122 00:06:20,839 --> 00:06:23,560 Speaker 2: assets and protecting those for the next generation. So a 123 00:06:23,600 --> 00:06:26,680 Speaker 2: sense of wellbeing, you know, clearly flows through to your 124 00:06:26,920 --> 00:06:30,160 Speaker 2: probably back to my health analogy earlier, probably flows back 125 00:06:30,200 --> 00:06:32,640 Speaker 2: to your health and just a sense of well being 126 00:06:32,680 --> 00:06:35,200 Speaker 2: and probably a better you know, hopefully a better family 127 00:06:35,279 --> 00:06:37,760 Speaker 2: dynamic as well. Sort of understanding what is going to 128 00:06:38,160 --> 00:06:40,520 Speaker 2: go through the family. Haven't got all those things covered 129 00:06:40,560 --> 00:06:41,280 Speaker 2: off so. 130 00:06:41,279 --> 00:06:43,560 Speaker 1: Mith done before. I've come across a few times in 131 00:06:43,560 --> 00:06:45,440 Speaker 1: the last month. Believe it or not, people get in 132 00:06:45,440 --> 00:06:47,400 Speaker 1: touch with me because of my job here on fear 133 00:06:47,440 --> 00:06:49,400 Speaker 1: and greed and say, hey, have you got a financial 134 00:06:49,400 --> 00:06:53,159 Speaker 1: advisor you can recommend? And I refuse to recommend a 135 00:06:53,200 --> 00:06:55,800 Speaker 1: financializer to everyone because I don't know whether they're good 136 00:06:55,880 --> 00:06:59,160 Speaker 1: or bad, and inevitably go to a peak body ask them. 137 00:06:59,200 --> 00:07:02,839 Speaker 1: That's a good point what they inevitably say to me 138 00:07:03,240 --> 00:07:05,280 Speaker 1: my friends saying I've been to a couple, but they're 139 00:07:05,279 --> 00:07:07,360 Speaker 1: just trying to sell me stuff. I just don't believe them. 140 00:07:07,360 --> 00:07:10,280 Speaker 1: I just I think they're just looking after themselves. How 141 00:07:10,320 --> 00:07:11,720 Speaker 1: do you I mean, is that a myth or is 142 00:07:11,720 --> 00:07:12,240 Speaker 1: it the truth? 143 00:07:12,840 --> 00:07:15,280 Speaker 2: No? I think you know that a couple of years 144 00:07:15,280 --> 00:07:18,240 Speaker 2: ago that was certainly a concern amongst the general population. 145 00:07:18,440 --> 00:07:21,360 Speaker 2: I don't think that. I think importantly, you know, the 146 00:07:21,440 --> 00:07:23,160 Speaker 2: first thing that you need to do is make sure 147 00:07:23,200 --> 00:07:25,760 Speaker 2: that if you are looking to engage a financial advisor 148 00:07:25,840 --> 00:07:28,880 Speaker 2: that they are licensed. I know that's a hygiene factor, 149 00:07:28,920 --> 00:07:32,040 Speaker 2: but I have heard of a circumstance where someone did 150 00:07:32,200 --> 00:07:34,920 Speaker 2: receive financial advice by someone who looks like they were 151 00:07:34,960 --> 00:07:38,760 Speaker 2: a financial advisor, but they were not, and that's resulted 152 00:07:38,800 --> 00:07:42,080 Speaker 2: in not great situation for that person. So you need 153 00:07:42,120 --> 00:07:44,720 Speaker 2: to check that they are firstly a licensed financial advisor. 154 00:07:45,240 --> 00:07:47,960 Speaker 2: There are I mean, I know you said friends and 155 00:07:48,000 --> 00:07:51,040 Speaker 2: family might sort of hit you up for recommendations as well. 156 00:07:51,320 --> 00:07:55,280 Speaker 2: There are other websites like advisor Ratings which provide some 157 00:07:55,320 --> 00:07:58,160 Speaker 2: sort of testimonies as well. If you're really stuck for 158 00:07:58,200 --> 00:08:01,080 Speaker 2: where to start. If you're in a particular industry, there 159 00:08:01,080 --> 00:08:05,440 Speaker 2: are certainly financial advisors that might specialize in your particular industry. 160 00:08:05,520 --> 00:08:08,200 Speaker 2: I know there's financial advisors that really specialize in working 161 00:08:08,240 --> 00:08:11,640 Speaker 2: with doctors and those in the medical professions. And you know, 162 00:08:11,680 --> 00:08:13,600 Speaker 2: at the end of the day, it's coming back to 163 00:08:13,640 --> 00:08:15,520 Speaker 2: that pt analogy. You've got to make sure that there 164 00:08:15,520 --> 00:08:19,160 Speaker 2: are a good fit with your goals and your I guess, 165 00:08:19,160 --> 00:08:21,640 Speaker 2: your approach to life as well. There are a number 166 00:08:21,640 --> 00:08:24,240 Speaker 2: of advisors out there who are really about, you know, 167 00:08:24,560 --> 00:08:27,680 Speaker 2: focusing on your life and your lifestyle first and foremost, 168 00:08:27,960 --> 00:08:31,000 Speaker 2: and less so about sort of plugging any particular product 169 00:08:31,160 --> 00:08:33,520 Speaker 2: or forcing you down a particular path. I think that's 170 00:08:34,000 --> 00:08:36,480 Speaker 2: more and more so, I think we're seeing there's many 171 00:08:36,520 --> 00:08:40,800 Speaker 2: more independent financial advisors around today with much fewer linkages 172 00:08:40,880 --> 00:08:44,000 Speaker 2: to sort of vertically integrated situations. 173 00:08:44,400 --> 00:08:48,000 Speaker 1: This has been a difficult area for regulation for about 174 00:08:48,040 --> 00:08:52,400 Speaker 1: a decade now, and we've had reform after reform. And 175 00:08:53,080 --> 00:08:55,520 Speaker 1: where are we up to now, because I know there 176 00:08:55,600 --> 00:08:58,679 Speaker 1: is some legislation that is scheduled to come in the 177 00:08:58,679 --> 00:09:01,240 Speaker 1: next year or so. But what I'm wondering is is 178 00:09:01,280 --> 00:09:04,040 Speaker 1: it going to be easier for people to get financial 179 00:09:04,040 --> 00:09:05,960 Speaker 1: advice in a year or two or three or four. 180 00:09:06,720 --> 00:09:09,720 Speaker 2: Yeah, Well, there was some announcement from a government last 181 00:09:09,760 --> 00:09:12,840 Speaker 2: week just I guess broadening out that avenue for advice 182 00:09:12,920 --> 00:09:16,600 Speaker 2: to allow for a different type of advisor that it's 183 00:09:16,640 --> 00:09:19,520 Speaker 2: able to give simplified advice. So I guess, you know, 184 00:09:19,679 --> 00:09:23,360 Speaker 2: at Vanguard really really all about making advice as accessible 185 00:09:23,400 --> 00:09:25,640 Speaker 2: as possible to as many people. I think that's in 186 00:09:25,679 --> 00:09:28,800 Speaker 2: line with our mission to take a stand for all 187 00:09:28,840 --> 00:09:31,600 Speaker 2: investors and give the best chance of investment success. So 188 00:09:31,600 --> 00:09:35,600 Speaker 2: we really would like to see anything that helps to 189 00:09:36,000 --> 00:09:39,959 Speaker 2: break down those barriers to people being able to access 190 00:09:39,960 --> 00:09:43,120 Speaker 2: financial advice, I think is a good thing. Obviously, you've 191 00:09:43,160 --> 00:09:45,000 Speaker 2: got to have some over over sight in terms of 192 00:09:45,000 --> 00:09:48,439 Speaker 2: managing those conflicts. I think with the pendula has swung 193 00:09:48,640 --> 00:09:51,560 Speaker 2: very far one way, and I think we're speaking back 194 00:09:51,600 --> 00:09:54,600 Speaker 2: in towards a more realistic realm where we're going to 195 00:09:54,679 --> 00:09:57,600 Speaker 2: be able to make advice accessible to a lot more people, 196 00:09:57,600 --> 00:09:58,679 Speaker 2: which I think is a great thing. 197 00:09:59,440 --> 00:10:01,640 Speaker 1: Absolutely, Libby, thank you for talking to Fear and Greed. 198 00:10:01,960 --> 00:10:02,280 Speaker 2: Thank you. 199 00:10:02,920 --> 00:10:06,800 Speaker 1: That was Libby Newman, Investment Specialist Strategy and Research with Vanguard, 200 00:10:06,840 --> 00:10:10,360 Speaker 1: Australian invest Strong and Steady with Vanguard. Visit Vanguard dot 201 00:10:10,360 --> 00:10:12,520 Speaker 1: com dot au for more information and to read the 202 00:10:12,840 --> 00:10:16,520 Speaker 1: relevant pds and TMD and consider if a product is 203 00:10:16,600 --> 00:10:18,960 Speaker 1: right for you before deciding. This is a Fear and 204 00:10:19,000 --> 00:10:21,200 Speaker 1: Greed business interview. Join us every morning for the fluri 205 00:10:21,360 --> 00:10:23,480 Speaker 1: sod of Fear and Greed, daily business news for people 206 00:10:23,480 --> 00:10:27,720 Speaker 1: who make their own decisions. I'm chanelma Enjoy your day.