Rotten - to the Core !

When the average person walks out the door for the last time with a superannuation check in his or her pocket that magic world of retirement depends on being able to wisely make the money last until life's end.  Most people seek the advice of a retirement planner because we are led to believe that this is a magic world where skilled people have the knowledge to place our money to gain the greatest advantage.  We trust that they will act in our best interest.

We have long been aware that all is not well in this financial world.  We hear lurid stories of funds invested in shonky investment companies that promise amazing returns, only for the capital to vanish into offshore tax havens from which all traces simply vanish.  We are advised to choose our advisor carefully and to that end the big four banks and a number of former insurance companies advertise their expertise and proudly nominate the huge sums of money under their management.

 This Royal Commission into banking practice has shone the light onto lies and misconduct at the highest level.  The very people who promise integrity have been robbing us by charging fees for services that are not provided and in many cases placing our money where it delivers a high commission to the counsellor's company, at the expense of the contributors return.

There has been a vast change in retirement schemes in the past half century.  Retirement used to involve a monthly pension cheque from the employers pension fund closely related to the salary level attained at retirement.   Today an employer and the employee jointly contribute to a retirement " pot " that the employee needs to manage once he or she leaves the firm.   How long the money lasts depends entirely on how well it is invested.

We have just been made aware that the AMP has also been involved in serious corporate dishonesty. The AMP used to be one of this countries foremost insurance companies and this Royal Commission has disclosed conduct similar to that of the banks.  The overwhelming impression gained is that size and advertised integrity of firms offering retirement investment advice bears no relation to the sagacity and honesty of the services they provide.

It is becoming evident that the various government supervisory boards put in place to supervise the banks and general investment industry have failed to detect and control corporate misfeasance that extends to the highest level.   There is an obvious need for heads to roll - in both the bodies that have been breaking laws and in the supervisors that have let this happen.   It should have been apparent at all levels that the billions the banks were reaping year after year was a certain indication that usurious practices were taking place somewhere in the system.

Unfortunately, there is no guarantee that what is needed will emerge from this banking fiasco.  The new regime that will supervise how the money market deals with investments will need to be crafted by the parliament and it is more likely that this will be beset by parliamentary infighting and political positioning than dealing with the needs of the general public.

There is a real danger that if the supervision becomes draconian, planners will be so adverse to risk that even adequate investment returns will become impossible.  Putting together investment practice and the supervisory level to keep it honest needs the cooperation of all sides of the parliamentary aisle.  The only way that will happen is if the general public apply enough pressure to bend the politicians to their will.

Having enough retirement money to live on is a matter of survival !