Welcome to the Networth News update for Monday the 29th of August.
First tranche of FoFA unveiled
The Federal Government has released the first tranche of its Future of Financial Advice (FoFA) legislation. Assistant Treasurer Bill Shorten confirmed that under FoFA the 'opt-in' measure requires a financial adviser or planner to send a renewal notice every two years to new clients, as well as an annual fee disclosure statement to all clients. However, the government backed down on commissions on individually advised risk products with respect to self-managed superannuation funds. On releasing the draft legislation, Minister Shorten claimed that opt-in would cost only $11 per client, based on controversial modelling by Rice Warner.
DIY life insurance on the rise
Do-it-yourself life insurance is increasingly popular as people can buy 'off the shelf' products rather than going through a financial planner, according to Canstar Cannex. Money Management reports that insurers are looking to make insurance more accessible by introducing features including auto acceptance with pre-existing medical condition exclusions. While buying life insurance direct can be an alternative to going through a planner of adviser, Canstar Cannex head of wealth management Stephen Mitchell said people had to look very carefully at the exclusions before signing up.
Conservative funds deliver better returns
Defensive superannuation investment options have provided higher returns than balanced and growth funds over long time periods, according to Chant West research. Investor Daily reports that conservative funds had median annualised returns of 5 per cent in the 10 years to July, however, maximum growth funds returned 3.2 per cent yearly while growth funds returned 4.9 per cent yearly and balanced options returned 4.7 per cent yearly over the same time. The research found that conservative options also outperformed funds that were more aggressive over seven, five, three and one-year periods.
Dividend yields exceed forecasts
Investors are still cautious about moving into equities following recent market turmoil, however, some stocks are still paying high dividends, according to investment experts. The Financial Review reports that while underlying company earnings might have slightly failed to deliver on analysts' expectations, Russell Investments portfolio manager Scott Bennett said dividends have exceeded forecasts. The local share market is currently trading on a dividend yield of 5 per cent, and investment experts said these current levels of return are sustainable.
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