Financial planner gets busted… is it really just a few bad eggs?
Just bizarre scenes at the Banking Royal Commission last week, as Terrence McMaster, head of financial planning outfit Dover Financial, passed-out while he was giving testimony.
Perhaps it was the stress. It certainly hadn’t been a flattering few days for him.
The day before his ‘best-performing’ planners had been pulled in for a roasting.
First up it was Adam Palmer. He had been fired from AMP (an outfit now famous for their ethical standards) for poor performance. He had actually received an ‘E’ rating – the lowest possible grade.
Why? Well, turns out he had gone out and set up his own property advisory service – a service that pretty much just flogged off houses on to unsuspecting customers under the cover of ‘investment advice’. As if that wasn’t bad enough, he was then recommending his service to his clients without telling them it was his company.
That’s right, his ‘financial advice’ – advice people had to pay for – was to actually give him more money for a product they probably didn’t need.
Next up, it was Andrew Smith. He was accused of pumping 20 customer sales of high-risk hybrid products through the system in a single day.
Then it was Chris Harris, who had also received the lowest possible rating while he was a planner at ANZ’s Millennium 3 planning arm. The royal commission heard one instance where Harris advised a widow with a $32,000 term deposit who wanted to invest to earn $2,000 a year was put into products that instead cost her $2,000 a year and made little returns.
Was Dover financial actively recruiting dodgy planners? Terrence McMaster said that wasn’t their policy when he took the stand, and said that in his industry, poor references were “actually quite normal.”
“Actually quite normal?” Seriously? This isn’t some Yelp review from a customer whose soup was a bit cold. This was an internal audit of compliance.
The only way that is ‘normal’ is if the whole damn industry is dodgy…
… and I’m starting to wonder.
The commission also heard that Dover had threatened a customer who had taken one of their dodgy planners to the Financial Ombudsman with defamation. They wrote them a letter saying that they would report them to Centrelink for fraud.
Finally, McMaster was being grilled over his “Client Protection Policy”. This document was designed to ensure that Dover wore no liability for the actions of its planners. It protected Dover and gave its clients no protection whatsoever.
“It’s a bit Orwellian to describe this as a client protection policy, isn’t it?” said QC Costello. “It’s entirely misleading, isn’t it?”
McMaster looked like he was about to agree and offer some lame defence, but Commissioner Hayne intervened to tell him that if he admits that it is misleading, then he has made a misleading and deceptive financial statement, and that’s against the law.
… And that’s when someone turned out the lights.
McMaster collapsed and had to be taken from the court on a hospital gurney.
I’d actually be laughing through my coffee if it wasn’t for the fact that ordinary people – widows and people on Centrelink – are being ripped off. The people who probably need financial help most are the ones being so shamelessly targeted.
It’s kind of clear to me that these guys aren’t the sharpest tools in the shed. Definitely tools, but not the sharp kind.
I googled their business to write this up. Look at how their result comes up on Google:
Seriously. “In everyone’s best interest except the…”
What? Customers? I’m guessing customers.
Oh no. The full quote when you click through says ‘institutions’, but it still should have raised some red flags.
I mean, why are we talking about ‘everyone’s interests’. Why should a customer care about that? It’s like a car dealership saying “You should buy this car from me because it will be great for both of us.”
I think it goes to show just how deeply entrenched the idea is that customers are there to serve financial planners. They didn’t even think they should try and hide the fact.
Then I love McMaster’s complaints about ASIC’s ability to ban dodgy financial planners and name and shame them.
This is what he actually said:
“For example, in my legal practice I have encountered doctors who cannot see children, and male doctors who cannot see female patients without a female nurse present. Obviously, serious misconduct had occurred, but still the right to earn a living is not taken away.
“ASIC, or anyone for that matter, can in effect rob a person of a right to earn a living, as a financial planner or otherwise, by simply posting on the internet.”
So your argument here is that dodgy financial planners should be treated the same way as rapists and paedophiles?
That’s powerfully persuasive, but probably not in the way you think it is.
And of course, the real tragedy is that the whole financial planning industry trades on the idea that finance is too hard – that you need to pay a professional to do it for you.
Yes, it’s work. Yes, you have to put some time into it and skill up. But do you really have a choice?
You need to be able to make sure you’re financial planner isn’t another Dover, but how do you know? The only way to tell is to do some research yourself.
But if you’re doing the research, why not just go that extra mile and manage the whole show yourself?
Seriously, it’s not that hard. I mean, these tools could do it.