Feb 25, 2015
Feb 23, 2015
The financial advice industry is broken. Scandal after scandal has made this obvious. Where can you go for quality, impartial, appropriate advice? Not this venerable investment bank. Not this retail bank. Not this retail bank either. And likely not anywhere else, unless you accept what seems to be the 50/50 odds that you will get good advice anywhere.
Bad apple advisers, yes. But the problem for the industry as a whole?
Complexity, combined with a manual, subjective process.
The world of personal and wholesale financial investment has become too complex for individuals to manage alone, too complex for regulators to police it at the advice level, and too complex for financial advice firms to manage their advisers with the rigor and detail obviously required.
As someone who has worked in broking operations for many years, I can attest that there are, in fact, many good, skilled and decent advisers out there. They work hard for their clients and take pride in their work. But finding them is the problem. If you do not have high net worth, you are not likely to meet them.
I think the solution is to move the industry online, in the way insurance has. More recently, retail legal services have started to move online as well.
Broking already works reasonably well online. Yes, brokerage firms need to be very careful with their algorithms and constant monitoring and tinkering is required. But running a ComSec is a hell of a lot easier and ultimately more viable than running a JB Were.
I see a future - within a very short time, if a royal commission into financial advice goes ahead and accelerates things - where financial products are almost exclusively sold online, and "advice" is algorithm-based. Clients will enter their details and answer a questionnaire to set their profile and financial goals and determine their risk tolerance, and they will be guided towards simplified products that will serve them as well as anything on offer now. Every year, for their investments to continue, clients will be prompted to re-identify themselves and re-assess their investments. This whole vetting and profile setting process would work much better, and be less risky for firms as well. Compliance obligations around client assent to advice, client receipt of terms and conditions, and client identification are many times easier to manage online, as is record keeping and retention. Algorithms can monitor advisor-client activity and commissions. An iSelect-style model would encourage good competition and keep offerings simple and transparent.
Canny advisers should get in now, work with a web developer and a compliance expert to set up a website, then approach APRA and ASIC and suggest the mutual benefits of support for this product.
It's well beyond time. Retail customers cannot be any worse off than they are at present.
Feb 22, 2015
After a bit of a stand-off, Greece and the Eurozone and the IMF reached a compromise agreement on Friday which was less than the PM wanted but enough to (just) allow him to save face and present it as the first step in an ongoing campaign to end the austerity regime.
Austerity, in 2010, seemed the natural and only solution. Greece was, in the words of George Papandreou at the time, 'on the edge of the abyss'. Successive governments over the decades had run the economy on a toxic mixture of socialism, neglect and corruption, and the mess had been steadily exacerbated by its inclusion in the Eurozone. (Greece expected a free kick - instead it lost the little control it had over its crappy economy and got pummeled).
The first time I felt angry on behalf of Greece was when some Eurozone countries suggested kicking Greece out of the Eurozone in punishment for obviously cooking the books to get in in the first place. That made me angry because, HELLO, when Greece got into the Eurozone so early and so easily everyone KNEW they had obviously cooked the books, including EVERYONE IN THE EUROZONE. The fact was Europe wanted to get all the major countries in quickly and to build up its base and power and was quite prepared to overlook the fact Greece could not possibly, under any true test, have met the economic conditions required.
The second time was when the IMF advised the UK in 2013 to go easy on austerity measures because, hmm, as it turns out, austerity is damaging; the IMF then admitted to having underestimated the damage the Greek bailout conditions would wreak on the country.
I have also felt angry on behalf of the Greek people, most of whom, like any other people, are hard working and honest and have nothing to do with the crap their governments have created.
Of course, as a non-Greek who has learned Greek, married a Greek, lived in Greece and generally been steeped in Greek culture for many years, my feelings about Greece are complicated.
During the time I lived there, I liked and admired the Greek lifestyle, but find the spontaneity and constant socializing exhausting (what do introverts do in Greece?). I liked how hard working people are in small businesses and at home, but could not fail to notice the bloated incompetence rampant in the public service. (Go to a post office, or any government department, in 1996 and you will see what I saw. Ten people behind every counter smoking cigarettes and ignoring or yelling at the public).
When we visited in 2012, the country was visibly, badly struggling, Closed shop faces were everywhere, even down at prime real estate like on waterfront strips.
But, three anecdotes:
(1) When I broke my arm at Athens Airport I was treated initially at the airport's first aid clinic, a gleaming, impressive facility massively overstaffed and under-medecined. The people were all very nice but didn't seem to have a lot to do. While we waited outside for an ambulance to take us to hospital, two of the paramedics came outside and waited with us, smoking cigarettes and chatting to us the whole time, which was almost an hour.
(2) The ambulance workers and people at the hospital all did a great job. Even the scary bone-setter who I never want to see again. The hospital was terrifying, grimly under-resourced with the air of a third-world clinic. But even so, my treatment there was good - and completely free. Even though I am not a Greek citizen and I had full travel insurance, I wasn't charged anything for the clinic treatment, the ambulance ride or the hospital treatment, nor the follow-up hospital visit one week later.
(3) I still remember the wide-eyed horror on a friend's face when we told her that in offices in Australia we all work eight-hour days. "Like Germany," she said. "You must all fall into your beds exhausted each night!"
Of course, things are not so simple under the surface. Greek office workers might start work at 8 and finish at 2, but they come home and scrub their houses from top to bottom and cook two meals a day. Oh, I mean the women of course. But also, who knows what was going on behind the scenes of the things I could see? I can admit that one day's observation of the Athens Airport clinic is not a good enough basis from which to make any observations at all. And when a country is that far down the plug hole, who's to say that hanging onto too many staff isn't better than adding to the massive unemployment?
But even so, these three things all made me think, Holy shit, Greece, no wonder you're in trouble!
But, like France attempting the 36-hour work week, it is admirable at the same time, isn't it? I love the audacity of resisting the capitalist juggernaut, at least a little. God knows, we all do work too hard and too much, and some changes would be nice.
But the problem is, much as we lament the hamster wheel of working hard to pay for things we suspect we might not quite need, there doesn't seem to be an economically sustainable way to operate otherwise.
Or is there? In recent times, thanks to the longest, deepest global recession since the 1930s, and thanks in part to poor, poor Greece, the tide has appeared to turn against 'austerity politics'.
It will be very interesting to see what happens in four months time, in the next round of negotiations between Greece and the Eurozone. I am sure another compromise will be found, that will allow both sides to claim a win to their constituents. And if the compromises continue, as the tide continues to turn against the punishing austerity paradigm, then perhaps we'll start to see, some steady accumulation of relief for Greece as well.
As for the photo below, I don't know where it originally came from but I got it from @Circa on Twitter and it seems just perfect for meme treatment. Caption suggestions, anyone?
|'How long are we going to play chicken?'|
'I don't know, I wasn't thinking past the election.'
Feb 21, 2015
Feb 18, 2015
The 1970s and 80s I guess were the last gasp of the "driving as an end in itself" hobby. When you think about it, it makes sense. Cars took off as something that everyday people owned in the 1950s and 1960s, and at that time people did of course, go driving as a fun activity. The kids from that time were my dad and his generation, so they continued the practice, to a lesser degree, in their adulthood. Plus in my family's case, both my grandfather and my father worked in the auto parts industry, so they were into cars and driving anyway.
My dad like his dad was "a Ford man". In Australia in the 1970s you were either a Ford man or a Holden man. My dad like his dad drove a large Ford sedan, which he was entitled to lease or buy courtesy of his employer. These were nice cars, but being the 1970s they were not a patch on cars today. They didn't have retractable seat belts or air-conditioning. As kids we would get car sick in the back, and there was no DVD system to distract us, no sirree Bob! (Mine was a deprived childhood, obviously). But they were big, and on long trips up to New South Wales or Queensland there was enough room in the back for me and my sister to curl up and sleep, moderately comfortably, against the armrests or leaning on our pillows against the doors.
My dad always took care of his cars. I don't recall ever eating or drinking in one, though we must have been allowed to on occasion I suppose. He would get mad at us for wiping condensation off the windows, or for touching the window glass at all. Dad washed the car regularly, and did the weekly oil and water checks, and kept the tyres inflated. So the car was always ready for a drive.
The best car I remember was a blue Ford Fairlane with leather seats and a white roof. I think that one had air conditioning. Which you'd think was a huge improvement but in fact often meant me and my sister sweltering in the back and not allowed to wind down our windows because the air conditioning had just been turned on and would kick in "in a couple of minutes".
But even in a nice car, going for a drive is not something that kids usually choose to do with their weekends. When Dad would announce we were going for a drive, my sister and I would groan and moan but there was no getting out of it so we'd get in the car and off we'd go.
Strangely I don't remember a lot about these drives. I remember the experience of being in the back seat of the car: playing games (or fighting) with my sister, feeling car sick, the prickle of the seat fabric against my bare legs (or the stickiness of the seat leather in the later years), the seat belt strap chafing my neck, the burning hot metal belt buckle on a summer day. I remember tinder-dry farmland and winding roads, and feeling thirsty.
The only place I loved going for a drive was the Dandenongs. I loved the tall trees, the filtered light, the quiet, and the green ferns. I didn't even mind that we never actually stopped the car and got out and enjoyed the forest up close. I just loved driving through it.
I also loved driving on the freeway, driving at night and driving in the rain. I loved the feeling of snuggling against the car door, gazing out the window at the dusk, stars or streaming rain, and listening to my parents talking quietly in the front.
Last Friday after work I picked up my kids from Mum's house but we stayed there a bit later than usual because it was raining hard, and I prefer not to drive in pelting rain if I have a choice. When I told the kids we were waiting for the rain to ease off, M was disappointed. "But I love driving in the rain," she said. "It's so cosy!"
We don't "go for a drive" these days, but we do drive a fair bit, and I do love driving. I still like driving on freeways and driving at night. So my kids will have their own "driving memories" similar to mine, I guess. But without the car sickness, sweltering heat, or the elbow burn incurred from a hot metal belt buckle in summer.