ASIC recently banned a Victorian financial adviser, Christopher Armstrong, for eight years. His ‘crimes’ included: carrying out financial service business without having an Australian financial services license; providing inappropriate advice to clients regarding investing in Westpoint products; failing to accurately disclose commission and payments received from recommending Westpoint products; recommending or facilitating investments in Westpoint products after the products had been removed from the Approved Product List … the list goes on.
Reading about this latest entry in the Westpoint debacle elicited nothing more than a sigh as I scanned through the ASIC rulings. But a subsequent news item, which was reported in the Australian Financial Review, did cause me to pause. It seems that one of Armstrong’s victims, who, along with his brother suffered losses of around $150,000, felt that the eight year ban was excessive, saying that “he felt Mr Armstrong had not acted deviously but had believed too much of what he was told by Westpoint and its promoters”.
Which raises the issue of exactly what consumers and clients think is the proper role of a financial adviser – and just how low the Australian public has set the bar regarding expectations.
On the other hand, the case definitely highlights the clear impact of the adviser-client relationship: I have to think that Armstrong had developed such a strong bond with his client that the client was unable to imagine that his trusted adviser had done any wrong.
So it is unsurprising that an underlying tenet of ‘How to run a successful financial business’ revolves around the importance of building and retaining relationships with clients. Indeed our cover story, ‘The Plan of the Future,’ raises the topic on the first page. Later on, Greg Bright, the article’s author, includes some research which indicates a fairly wide gap between client and adviser viewpoints – which perhaps explains the finding that only 17 percent of clients are willing to turn all their assets over to their adviser.
Consumer advice groups may conclude that, under the current circumstances, this isn’t such a bad thing.
Sue Viskovic, a financial consultant, is in the process of looking into another hot topic in the advice industry: fees and fee structures. Her results to date, as discussed in Practice Profit, are certain to raise a few eyebrows. I must confess, I look forward to hearing the expected debate.