Two reports out last week show leaving your financial future in the hands of the so-called professionals leaves you at risk of having much less for your retirement than you probably realise.
The first report found that 37% of financial planners failed to prioritise clients' needs and give the correct life insurance advice, according to the corporate watchdog, the Australians Securities and Investments Commission (ASIC).
Peter Kell, ASIC deputy chairman, labelled the findings 'unacceptable'. And surprise, surprise, the report found planners who received expensive, upfront commissions where more likely to deviate from appropriate advice. 82% of financial planners net their remuneration from upfront commissions, with just 0.7% who received salaries.
The inherent conflict of interest in the vast majority of financial planners working for the Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank (ASX: NAB), Westpac Banking Corporation (ASX: WBC) and AMP Limited (ASX: AMP) means they are virtually salespeople in all but name.
Those same five companies also control a vast swathe of Australia's superannuation system. But most fund managers have failed to even match the benchmark S&P/ASX 200 Index's (Index: ^AXJO) (ASX: XJO) performance over the past five years. So what's the point of paying them high management fees, when a lower cost index fund would've done the job?
The good news for retail investors is that managing your own money is proven to generate better returns than the professional fund managers. The average self-managed super fund has beaten them in six of the past eight years, no wonder they are proving to be so popular. And if you think they are difficult or expensive to setup, or that you need a minimum of $200,000, that's the view the industry wants you to have.
If the average SMSF can beat the professionals, there's a clear signal that managing your own financial affairs will leave you with more money in your pocket when you retire. Your 65-year old self will thank you for it.
Do nothing and you may as well set fire to your retirement plans right now.
The choice is in your hands Foolish investors.
