On Saturday 14 November in the financial section of The Age, it was disturbing to read the following question from a distressed 88 year old man having to face self described ‘shattering’ financial problems due to an unsuitable Self Managed Investment Fund:
I am caught between a rock and a hard place and hope you can help me, as I feel completely distraught. I have had a Self-Managed Super Fund for years within the Dixon Advisory system. It includes a Term Allocated Pension (TAP) to complicate matters even more. Briefly, I have been with Daryl Dixon since he was a one-man operation. And, importantly, Daryl vetted every buy and sell throughout. My fear about the size and complexity of Dixon was allayed by this fact, as I trusted him. Daryl retired unexpectedly and it took me a while to discover that this was why I received no replies to my calls, about November last year. I have ended up with a portfolio that includes a proportion of the Masters property funds in trouble in the US; but also with two unlisted funds. I am 88 years old and have had my share of health difficulties and not observed the developments closely enough. I have no idea how long I will live and this loss feels shattering. Now I am looking for a way out. The industry funds do not accept TAPs and I have two assets – Fort Street Real Estate Capital Fund IV and Evolution Road Maintenance Group (ERMG) – that are unlisted and not saleable. It is a high-risk portfolio unsuitable for my means and age. So, there are two problems – 1. What to do with my very diminished funds, now $213,000 (a loss of about $200,000 in less than a year)? 2. How to go about seeking compensation from Dixons? A.S.
In responding to the question; What to do with my very diminished funds and How to go about seeking compensation? The financial editor, George Cochrane outlines a very lengthy process in which ASIC has begun launching civil proceedings. Further, a little depressingly he also states that “you are not Robinson Crusoe”, and there are many general themes highlighted in the above question that provide a cautionary tale for all of us:
• The failure of a clear succession plan to ensure that a client continues to receive the highest standard of advice and care that does not rely on anyone advisor, but a documented and cohesive investment structure and philosophy that can be managed by successive qualified advisers.
• The problems associated with Active Management over a passive Global Index Management. Active fund management and speculation has resulted in the purchase of Masters Property Trusts that are in trouble in the US and two unlisted funds.
• The stated fact that at 88 years of age and dealing with health issues you are not able to observe developments closely and poor advice that has resulted in a high risk portfolio that is totally unsuitable. This highlights the importance of meeting with your adviser at least one a year to review and adjust your investment portfolio to your changing needs together with a passive income stream that you can set and forget into the future.
• The financial editor detailing the conflict of interest involving the Financial planner Darryl Dixon, directly investing in Dixon owned and operated entities and products. Refer link to full article at the bottom of this page
While the situation highlighted is painful for the individual involved, it is reassuring both for Income Solutions and our clients that they are provided with the peace of mind that the financial structure and investment philosophy adopted at Income Solutions ensures that the above issues and conflict of interest could never occur, and the following table shows why:
We offer financial planning services that provide people with advice based on the best products and investments that are available. Income Solutions does not own or operate these entities but simply researches and recommends the best available options in the market place. The Contract Agreement for your investment is between yourself and the product providers with Income Solutions providing instructions and facilitation services to ensure everything is executed and managed to the highest of standards.
At Income Solutions we read the above question with regret that people have to deal with the financial scenario presented, however it reaffirms the processes, structures and investment philosophy in which we operate and we know with confidence that our clients will never be facing the issues presented in this article when they are 88 years of age (or ever). Click on the following link to access this full article: