Sexy Finance

One of the first rules of event management is to ensure that similar shows aren’t staged on the same day, much less at the same venue.

Yet this is what happened last week when the Financial Planning Association’s annual conference shared top billing with Sexpo at the Melbourne Exhibition Centre.

The link between the two may not be immediately apparent. Sure, most people dream about sex or money (sometimes both), but there are deeper connections, as I discovered last week. Let me explain.

At both conventions there were formal presentations from keynote speakers.

Unfortunately, despite the fact that I aim to make finance sexy, I didn’t score a spot at Sexpo, whose presenters tended to be famous porn stars who, by all accounts, have no trouble holding the attention of their audiences.

Demanding attention

I had been asked to do a presentation to the financial planners, and although I did it fully clothed, I still did a fair job of keeping everyone in the room from nodding off.

This had more to do with the fact that, by the time my presentation had finished, I’d managed to upset the entire audience of financial planners, bank executives and house and land package developers with some tough talk about the way they operate.

But these were the insiders. What about the mug punters – their clients?

Pay at the door

Entry to Sexpo cost $25, which I thought was a little steep. The entry fee charged by most planners to invest in a run-of-the-mill managed fund is about 4 per cent.

On a $10,000 investment, that’s $400. I know which I’d rather pay.

Both conventions had crowded marketplaces, staffed by sales people eager to sell their wares.

After spending a few minutes wandering around the stalls I started to see the similarities between both sets of products.

Despite there being an immense array of things to buy at each convention, they were all designed to achieve the same result – a happy ending, whether it be sexual pleasure or financial security.

The only difference was the packaging, pitch and price.

Whips and chains

When you think about it, most of these products are irrelevant to the main game.

People have been getting along fine for thousands of years without all the bells and whistles (okay, whips and chains). In much the same way, few people need part of their retirement savings invested in a highly leveraged hedge fund that charges 2 per cent and a 20 per cent out-performance fee.

The average punter perusing the stalls at Sexpo has a fairly good idea of the end goal for the products they were purchasing, but few realise the same can be said for choosing financial products to invest in.

It’s really quite simple. We forgo our money now so that we can have more later on. Where we choose to invest that money together with the fees that are charged will determine the end balance.

So why do people find themselves in managed funds that add little or no value, hugging the share market indices but getting charged outrageous fees for professional management? Well, mainly because many of these funds provide yearly kickbacks (known as trailing commissions) to motivate product-pushing financial planners.

Image is everything

It’s not surprising that the sex and money industries share something else in common – both have less than wholesome reputations.

The idea behind Sexpo, initially anyway, was to break the stigma of the seedy sex shop and open up the world of sex products to all of us.

The Financial Planning Association is also struggling with an image problem in the wider community.

People are slowly beginning to understand that little percentages add up to big numbers over a lifetime of investing.

The fact that the corporate cops have issued infringement notices to a number of planners for advising clients to transfer into funds which paid them higher commissions hasn’t helped matters either.

Out with the old

The financial service industry is constantly bringing out newer, sexier products and they have good reason to do so – if they can capture even a small part of the market they can make millions.

The only way these companies can get broad distribution is by paying planners big bucks to recommend them to their clients – a process financial dealer groups call “getting on the approved list”.

The typical financial planning client may never have heard of diversified share portfolios such as the Australian Foundation Investment Company and Argo Investments.

The reason for their relative obscurity is that they don’t pay commissions to sales people and have little to no marketing budget.

Because of this, their costs are a tenth of what you’d pay for a retail managed funds with glossy brochures and a smiling sales force.

And here’s the one great difference between the two conventions. Unlike the merchants at Sexpo, it’s often the unsexy financial products that will give the most pleasure in the long run.

Tread your own path!