These documents are the minimum legal requirements.
SOME THOUGHTS FROM BRENT ON THESE DOCUMENTS:
For what it is worth a good rule with disclosure statements is that the longer and more expensive they are the worse a deal you are likely to get from the advisor. The regulatory authorities think that by informing prospective clients about all the different ways in which advisors can get fees off them that this will protect clients. This is, in my view, ridiculous because in many cases people don’t read the disclosure statement and secondly many of the remuneration measures are not quantified. In our case our disclosure statement could be simplified to one line, at least as far as remuneration is concerned, and that is we are paid by you for a fee agreed at the time we do the plan for you and we charge you a quarterly monitoring fee which you are free to terminate any time you like. Contrast that with advisors who are paid by commission from fund managers, get free trips, get performance bonuses, get subsidised, portfolio tools etc etc to name just a few. While I am here I thought that I would mention how ridiculous this stupid financial dispute resolution arrangement we have is. The only time we hear from these vampires is when they send us a bill. We haven’t had a dispute with our clients that we couldn’t resolve ourselves within five minutes, never had a formal complaint made by a client and never ever had a court case. We have never sold finance company debentures and invest in everything that we recommend ourselves. All this silly financial dispute resolution law has meant for us is another overhead which we have had to pass on to clients. Nevertheless you will probably have noted that our annual monitoring fees are about 35% of that charged by our competitors. The significance of this is huge and goes well beyond the size of the fee – it means we can recommend genuinely low risk instruments like government bonds in the knowledge that the after fee return to clients will still be reasonable. Having said all that we think the FMA is doing a good job but it is just unfortunate its seems that many people in this industry need a very high level of regulation which means that people like us are burdened with the unnecessary compliance costs.