Financial adviser Siobhan Ashby realised there was something amiss with two new clients’ superannuation investments not long after they approached Northeast Wealth for help in mid-2022.

The clients had received advice from another firm in 2014 and, while carrying out a routine review of the couple’s super, Ashby, a senior financial adviser with Northeast, found that the male member of the couple had more than 60 per cent of his superannuation balance in cash, and the female member more than 80 per cent.

For a couple who were aged 24 and 25 when they received the initial advice, this asset allocation was clearly inappropriate. Ashby identified that a rollover into a new super fund, on the advice of their previous adviser, had resulted in the couple’s funds not being invested in the appropriate asset mix and that all of their contributions since that rollover had been held in cash.

Ashby first moved to ensure that the couple’s super was immediately invested appropriately, but also set in train a process to seek compensation for the opportunity cost of being out of the market for seven or eight years.

“Firstly, the objective was to fix it for them,” Ashby tells Professional Planner.

“They’d come to us because they want the right advice, and so first things first, we did an assessment of their super fund. We made investment recommendations that were [consistent] with their ages and their risk profiles and we made sure that their super became invested, just to stop it from sitting in cash.”

When Ashby inquired about how this could’ve happened the clients had no idea.

“They were both quite surprised to learn that it had happened and were under the impression that their super should have been invested,” Ashby says.

“I encouraged them to go back to the previous firm, and to raise their concerns with the with the firm and to try and figure out what had happened.”

Seven months of radio silence

The couple contacted their previous adviser’s licensee in November 2022. The licensee immediately acknowledged the contact and would conduct a full advice review but that it wouldn’t have an answer until mid-2023, a period of seven months.

“That suggests to me – I have no proof of this – that they had either very poor management, or they had a lot of these that they were reviewing at the same time,” Ashby says.

“I don’t see how it takes seven months to reach a conclusion.”

The clients followed up with the licensee twice more and received no response, but on a third attempt the licensee replied and revealed the adviser the couple previously dealt with had been terminated as an authorised representative. Even so, the licensee had continued to charge the couple advice fees – Ashby describes them as being “at irregular intervals, for irregular amounts” – even though it had provided them with no services since 2016.