CHOICE membership

Selecting investment platforms

finance

#1

We recently saw a financial advisor who after assessing our situation, came back with a plan that includes the recommendation to invest our available cash funds via an investment platform, to get a better return than our bank account.
Two questions:

  • pros and cons of an investment platform vs other options for investment?
  • how to choose an appropriate platform (the planner recommended Netwealth

EDITED TO ADD: the planner was from our industry super fund so no commissions from products. My question arises more from my own ignorance of whether an “investment platform” is the best way to go and how to assess different platforms
Thanks


#2

Were you told the returns for any investment are related to risk? No one investment is without risk, so you would have been told that diversity lowers risk. It will never remove it. Even banks can go bust!

And history is no assurance of the future!

Everyone’s personal financial position differs. For every investment I’ve made that went great there were two that barely made costs and another that cost me. That’s with the assistance of a qualified and properly accredited planner in a major accounting firm.

Perhaps the best advice here is for you to go to another planner. Request a separate assessment from the second planner and don’t mention you have seen the other one. Also go to a planner that is in no way connected to the original business. iE If planner one came through your bank don’t go to another bank for a planner.

The best advice I have received has come from the planners working without commission attached to my Industry Super. Look for some one who is not out to sell you any product. You will have to pay for advice. If they offer discount on the advice if you purchase product through them - go elsewhere.

Your question re pros and cons is impossible to respond to any other way.

If you perhaps had $1M you were didn’t need and another Billion in the bank then you could invest it all in Powerball or Super Lotto when there is a big jackpot. Brilliant return if you win! Unbeatable.


#3

As has become nauseatingly apparent from the Financial Services Royal Commission, it would seem that a great many Financial Advisors/Planners have a moral code which is amoral at best, if not totally absent.

Never trust a Financial Advisor/Planner who is not completely independent of all linkages to any other business. This includes receiving fees, commissions, benefits, rewards, support, etc etc.

Never trust a Financial Advisor/Planner who has any other business interest that they would be advantaged by if you bought/bought into.

Always ask what they will get out of it if you go down the path they suggest.

Once you have found someone who is completely independent, ask them for advise based on the specifics of your individual and unique situation. Then if possible, get a second opinion from another independent one. The cost of the appointments is far, far less than the money you could lose from bad advice.


#4

If you have lots of free cash and building more as well as a few assets the equation would be different than if you have a few hundred thousand in a super account and just more income than expenses. The recommendation you posted suggests you are in one of those situations, but not which.

Also, as the others posted above the higher the reward the higher the risk, and what is your risk tolerance. If you can stand to lose 10-20% in any one year to gain 50% over 5 years you fit a different profile to someone who mentally or financially needs stable capital.

Personal opinion, not advice. Netwealth appears to have a pretty good reputation, but the fact you asked the question suggests you may not be an experienced investor. As a general statement good ‘platforms’ work well for hands-on investors who understand investing and can take the time to educate themselves and make timely decisions, but for hands-off not so much as compared to other options such as a decent super fund, income focused fund, high interest online savings, and similar.