Future advice crucial

THE 1980s and 90s can best be characterised as the period in which the face of financial services changed completely.

Life was easy to that point with most of us looking to banks for the provision of simple banking products and some peripheral items that allowed us to do things a little differently.

But the 80s saw the creation of options and futures, warrants and endowment warrants, hedging funds and others that made the system more complex.

The complexity of superannuation legislation starting from the first change in 1983, to the myriad of other changes that followed, meant the average person found the whole panorama murky.

There was little they could do to change things and “anything they did now was going to be ineffective because the government would change the rules anyway”.

The late 90s and the current period is the information age. In the twinkling of an eye, information concerning the movement and valuation of hundreds of billions of dollars can be determined.

Decisions became instantaneous and mistakes extremely costly.

Further product development occurred to change the face of superannuation again. Governments changed the rules yet again. So the cycle continued.

Financial advisers became the norm rather than the exception. Few lay-people were confident enough to attempt to do their own financial planning.

Financial planning, as a profession, had arrived. The day of the bank providing the sole financial information was long gone. Insurance sales people had now reduced their mandate to a very narrow area.

Radio and TV programs relating to money became commonplace. Suddenly the thirst for information from the public had become almost voracious.

People not only wanted information but they wanted it now! With this, was and is, the development of the Internet. Suddenly it was possible to deliver the information rapidly.

So what are we likely to see in the near future?

The creation of even newer products seems to be the tone.

As the complexity of financial markets increases, people are developing even more innovative ways to cope with the changes. Complexity breeds complexity. As the markets become more difficult so will the products within that market.

The greying of the population will focus our minds on the question of whether we can afford to retire.

Much more will be done to encourage savings and investment as governments grapple with the subject of funding the aged.

One constant that we can count on is that once we become used to the rules, they will be changed.

The other is the continued need to seek advice.