Viridian Advisory, widely seen as one of the nation’s leading advice boutiques made famous for its mass onboarding of former Westpac advisers when the bank exited wealth management, has quietly undertaken a multi-year project to establish Chinese walls between its advice and asset management arms.
The structural separation project, uncovered by a Professional Planner investigation, was instigated despite the firm’s longstanding public and internal denial that its operation of both product and advice businesses presented a conflict of interest.
Viridian operates three business units: a financial advice licensee; a mortgage broking/finance lending business; and Infinity Capital Solutions, which includes separately managed account (SMA) service Infinity Asset Management. The project involved establishing stricter governance protocols separating the Viridian licensee from the Infinity SMA operations.
Viridian CEO Glenn Calder says this is evidence of the firm taking an industry leadership position as the advice industry has professionalised and the managed accounts market has matured.
“Viridian takes its position in our clients’ lives and its place in the industry seriously,” Calder tells Professional Planner.
“We champion integrity, transparency, and innovation, and have a commitment to improving the access and quality of financial advice and outcomes to more people.”
He says the firm “embarked on further capability” to separate all business units and embed real time compliance and auditing technology.
However, a number of former Viridian employees have alleged the separation project was sparked by potentially harmful conflicts of interest and related party activity between advice and Infinity Asset Management businesses.
‘It didn’t sit right’
More than half a dozen former Viridian advisers – all of whom have since left the business and spoke to Professional Planner on condition of anonymity – claimed Viridian operated a problematic vertical integration model. It is understood that at least some of these former advisers are at various stages of legal dispute with their former employer.
All of these sources were also Viridian shareholders, with equity secured as part of the high-profile transaction between Westpac and Viridian where advisers had the opportunity to switch to Viridian as part of the big four bank’s exit from wealth management after the Hayne royal commission.
The Australian Financial Review’s Chanticleer column at that time described Calder as the “new king of advice” due to the Westpac arrangement. The article described Calder – himself a former Westpac adviser with close ties to the bank – as being well known in the advice industry “because of his long-term commitment to ethical conduct and the unique business model” at Viridian.
But each of the former advisers said they felt subject to an incentive to promote Infinity SMAs to clients. While they conceded there was no explicit kickback or commission in place – or any suggestion of criminal wrongdoing – the sources claimed an incentive still existing by way of their equity holdings in the company and the possibility of dividends, which were supported by revenue from across the business including asset management.
Viridian had outlined to prospective equity holders a “10 and 10” target of 10 per cent annual capital growth and 10 per cent dividend returns. This profit and growth motivation, along with alleged restrictions on speaking to some sales representatives of external product providers, led some to believe they were being encouraged to provide inappropriate advice.
“It didn’t sit right,” one former Viridian adviser tells Professional Planner, adding that concerns over the model were raised with management.
“We were treated with disdain if we never invested into the inhouse Infinity SMA. On a scorecard, they couldn’t promote it, but it was definitely in the background if you’re ‘on the bus’ or not, so to speak.”
Others alleged the firm had a culture more broadly of product-pushing and insurance churning. “They used to have leaderboards in terms of how much money you could put in their inhouse products,” one former adviser says. “The concept was you put them in their products and then never leave.”
Viridian denies it ever operated so-called leaderboards with a product focus, let alone ones that encouraged in-house product recommendations.
Moves to be fully compliant
Calder says the firm’s systems were built in compliance with the Corporations Act, relevant ASIC guides, and affirmed by professional legal advice.
He says Viridian has annually audited capabilities such as internationally recognised cybersecurity designation ISO27001 and is a certified BCorp company, which is a certification for highly companies that meet high standards of social and environmental accountability. He claims Viridian is one of the few local financial services firms to hold both designations.
“Beyond system development, the model has been assessed by dedicated financial services legal firms and ultimately affirmed by a King’s Counsel,” Calder says.
“Viridian prides itself on the model that brings a multi-disciplinary approach to delivering client outcomes that considers at its heart aspects of conflict management, governance, oversight, specialist skills and a commitment to continuous improvement.”
