Is anyone else getting tired of hearing about the ‘new normal’ in the financial pages?
It’s like that time I got Meatloaf’s ‘Bat out of hell’ stuck in the tape player of my crappy old celica. Round and round it went, rolling out the same old lines.
In the end it got me into shape. I used to ride my bike just so I wouldn’t have to listen to it.
But you can’t get away from the ‘new normal’.
The new normal seems to be that that every week we’ve got to listen to some fund-manager, financial advisor or politician blame some colossal f@$# up on “the new normal”.
Give me a break.
Who came up with the term? Fund managers. It was reportedly coined by celebrity fund-manager Bill Gross from Pimco.
And what does it mean?
The gist of it is that over the past 20 years the investment community had a string of good factors at their back. This helped generate some tidy returns. But these factors have now all unwound. The future is going to be a lot less easy.
And this world of lower growth and lower returns is just the ‘new normal’ we have to get used to.
Winter is coming.
And where was ol Blinky Bill going with that one? Apparently he was trying to ‘manage expectations’. Trying to make sure his clients did place any unfair expectations on him. That they wouldn’t go and ask anything unreasonable – like asking their fund manager to actually make money for them.
“Managing expectations”. There’s a cute term. Like the way a mugger is helping you manage your liquidity.
I wonder how many people bought it.
“Why aren’t you making us any money? We’re paying you an arm and a leg in fees.”
“That’s the new normal. You can’t expect fund managers to make money for you. That’s unreasonable.”
“Oh, I see. Well, carry on them. Keep up the good work.”
“Thanks. That will be $200.”
Spare me.
Fund managers have got some cheek haven’t they? They take a bite out of your funds every chance they get. Management fees, withdrawal fees…
The one I really love is ‘out-performance fees’. That is, if they do better than the market, which is to say, better than a monkey with a mouse and access to index fund, then they charge you a fee for “performance”.
Of course, if they under-perform the market they give you your money back.
rotfl.
No, of course they don’t. If they get outgunned by a masturbating monkey, then you’ve just got to wear it.
Just like how they’re asking you to wear ‘the new normal’ now.
“It’s a tougher environment now. It’s not as easy to make money,” they whinge.
Well, exactly!
That’s why poor ol’ mums and dads are paying you the big bucks – the ‘management’ fees. So you can “manage” their money. Use your supposed knowledge and expertise to help them make money in difficult times. That’s the service you’re supposedly selling, remember?
And if it was easy before, why the f@%# were you charging us fees? You were happy to take our money then. I didn’t hear about any fund managers offering discounts because conditions were ‘easy’.
“I’m pleased to inform you that I’m sending you a refund this quarter because market conditions were so favourable, that mostly all I did was play golf, do lunches, and masturbate like a monkey.”
If there is any truth to this ‘new normal’ garbage is that the old ways of managing people’s money aren’t working. They haven’t been for years.
And this is a challenge to the fund management industry. They need to get creative. Do some research. Think outside their Porsche boxsters.
Just like you and I have to do, everyday.
And it can be done. I’ve done pretty well over the past 5 years. Very well in fact. And I had to work hard for it. But the one thing I didn’t do was throw up my hands and say, oh well, this is the new normal. There’s no money to be made.
Pull your heads out of your asset allocating software and do some work, you lot!
But what really bugs me is how many people are jumping on the ‘new normal’ excuse band wagon.
After the fund managers came financial planners. That useless mob of dils were more than too happy to have an excuse to not do any work.
So the next time some 19 year old kid with a Cert IV in Losing other people’s money from Toowoomba TAFE tells you that it’s a difficult time to get real returns, throw a bucket of water over him. Time to wake up champ. People are trusting you with their money. Rattle those lazy bones and do the work you’re supposed to.
Just because you’re not tripping over great returns, doesn’t mean they’re not out there.
(Maybe get him to sign up to this blog if he’s short of good ideas.)
And the thing to watch out for now I reckon is the politicians. Oh they love a good excuse. Especially if lazy fund managers and financial planners have gone and primed the public for them.
Growth is lower – that’s the new normal.
Unemployment’s rising – new normal again.
Inflation, budget deficits, worsening trade balance – yep, yep, yep. All the new normal I’m afraid. You can’t expect us to manage these things.
Actually we can. That’s what you’re supposed to do. Less lunches, more time trying to figure out some solutions.
Enough passing the buck.
And so with fund mangers, financial planners and politicians all ducking responsibility, who can you trust?
Yourself. You’ve got to trust yourself. Take responsibility.
And you might think you don’t have the skills, but I can tell you don’t have to try hard to outperform that lazy mob of bastards.
And I reckon I can come up with a few tricks and strategies for you. Just stay tuned.
Just don’t believe them when they tell you there’s no money to be made. There is.
Lots.
Jenny Kennedy says
Whew! They’ve certainly got up your goat! But good on you, this should be said in the main stream media. Maybe some of the nay-sayers need to educate themselves… Well done Jon!
len welsh says
g,day jon , like your news , sounds like you a man of your word like me ,no bullshit and speak your mind , would love to meet you in person some day over a beer /etc. keep up the great news . cheers ,welshy
Nick Shinner says
Yes, well said. Every time I have given my money for someone to manage they have given me back less than I started with, and they have happily charged for the price lodge. Every time I have bought property, I have made money!
SK says
Adding ‘Fund Manager + Financial Planners’ to my Bottom-of-the-ocean list!! Awesome, fully empathise with your frustrations.
Cheryl says
I LOVE this
Mickey says
true, you can manage your own stuff sufficiently enough to not rely on others until u have 50 properties…. you are all in one GO ON JUST DO IT! quit your lousy job and get your own properties and manage them 🙂
kuradji says
Hi Jon,
You must have been accessing my mind – I have been ranting like this for some years now too…. I was just over at a SMSF site where a poor long-suffering fund manager was chastising SMSF trustees – basically we’ve gone and moved our funds out of his clutches and we’re making money – and no fees for him. So bad, bad, bad SMSF people. I started a SMSF in 2010 and invested in residential real estate. And have already achieved capital growth and increase in rents. So I have done better by myself in 2-3 years than all those advisors who were helping themselves to my account. The final straw was when I discovered one of my super funds was helping itself to $30 a month to send me an electronic newsletter. Seriously!!!!!. Keep your recycled clap-trap and I’ll keep my $360 a year.
Kane Everett says
If the cheese moves move with it I say
gus says
spot on, love it.Keep it coming i really like your thoughts in this post.
Belinda Smith says
Yep, your right again. There’s still money to be made everywhere but more effort is required in finding out how. Effort is free.
Philip Ripper says
I agree Jon, love your passion and your humour especially the comparisons with monkeys, (no offence meant to the monkeys).
Paul Doody says
Yes got to agree, our latest property (off the plan) settled 3 months ago and we looked outside the square of negative gearing and went the short term rental (holiday rentals) path and have taken over $25k in bookings with over 50% of that paid up front we are already close to break even point and our only regret is that we didn’t buy two!!! There is money to be made and if I can do this, estimates are that we will make at least 20K in the first year, a return on our actual money of 20%, I would expect any financial “guru” to do same or better.
ilisoni halstead says
Wooot nice one
Josephine says
I completely agree with you Jon and with Kuradji – my hubby and I also started up our own SMSF after noticing that the only growth was the money that was coming from our paychecks – and this was long before the GFC when times were good. So in 2008 we began and so far have only purchased one property (which we managed to subdivide before the law was changed!) and have never looked back since. It was nearly positively geared from the outset and the value has doubled since we bought it – not bad for two people who didn’t have a clue what they were doing, except knew that the people we were paying to manage our money didn’t know what they were doing either
JJ says
Totally agree with you Jon, they are a bunch of wankers those financial advisors. I think people are finally waking up to them and are deciding to manage their own future!
Stockbroker with a focus in mining says
Funny the GFC started via the housing sector, everything has a cycle. Don’t forget the financial sector provides capital to discover , mine via risk vs reward and is more liquid. Is this not what drives your housing sector that you promote in regional areas ? I have noticed that capital for mining has been invested more overseas rather than Australia since the mining and carbon tax, Australian confidence is low. Maybe a new government can help here? Not saying you are wrong in what you invest , housing. Just pointing out confidence has been destroyed via his bad federal government, and if it continues all areas will suffer, including housing. A good adviser will not put all your eggs in one basket, and should also invest in property and other sectors….
Andy C says
As a financial advisor of 32 years, I agree with the comments (especially the issue of performance fees) to a point, but we are not all wankers! A large proportion of accountants and lawyers can also be included here. But, as in all circumstances there are exceptions to the Rule. Most people would not be aware that about 85% of the financial planning (I hate that term!) industry is controlled by the 4 major Australian banks and AMP. I have said for a long time that no-one needs a financial advisor IF they are prepared to spend the time in hours, days, weeks, months and years in gathering the knowledge, experience and technical expertise to take charge of their own financial situation and investments. In reality, most people are too busy living and running their life, family and possibly business and are just not inclined to spend the time required. If you do seek advice, the person should be able to demonstrate the value in what they are charging you for. Self-managed super is a case in point. The vast majority of people with SM Super Funds have absolutely no idea what their responsibilities as trustees are, or the documentation requirements – and neither do most accountants who advised them in the first place! I believe the SMSF strategy is easily the best long-term, tax-effective savings vehicle one can own but the advice on offer is generally pretty poor. There is no doubt that there is value in certain advice. I see it every day. So before you start making gross generalizations (as the Fund Managers continually do!), be sure that there are some good people out there who do deliver value for what they charge.
Mark says
Great stuff Jon and I agree with you wholeheartedly. There is plenty of money to be made if you’re prepared to start each day head down and arse up. Love reading and implementing your stuff where I can.
Cheers
Mark Burgess