Troubled financial advice firm Venture Egg, which has been accused by ASIC of using lead generation service providers to gain new clients through high-pressure sales tactics, has been referring clients to Infocus after platforms switched off advice fees.
In a letter to clients, seen by Professional Planner, Venture Egg said some wealth platforms have “decided they will no longer pay adviser servicing fees” to Venture Egg Financial Services and have provided clients contact details to Infocus for those who want to continue to receive advice.
“Unfortunately, this has caused significant restructuring of our firm, and we are no longer able to service you as a client in the matter that we would like to,” the letter said, specifically referring to platforms ending advice fee payments.
“Since we are unable to service you in this manner, we want to ensure that you are referred to a firm who can.”
Venture Egg didn’t reply to requests for comments, but Professional Planner has confirmed the veracity of the letter and understands Infocus was chosen to get involved to help affected clients recoup assets. There is no suggestion of any wrongdoing by Infocus.
The letter, signed by founder and CEO Ferras Merhi, doesn’t specify which platforms have turned off fees or what the specific catalyst was.
The Federal Court froze the assets of Merhi, who controls Venture Egg and United Financial Advice (otherwise known as Financial Services Group Australia or FSGA), in February.
Venture Egg and Merhi are authorised representatives of Interprac Financial Planning, while FSGA also holds an AFSL.
Despite the action from the regulator, Merhi is still listed on the ASIC Financial Adviser Register.
In February last year, ASIC made interim stop orders on the Shield fund due to concerns there were misleading statements about Keystone Asset Management’s legal role in unregistered schemes the fund had invested in as well as not adequately disclosing the risks associated in those funds.
Over a two-year period, more than $480 million was invested into the Shield fund by thousands of clients.
Keystone is the responsible entity for Shield which is now in liquidation. ASIC has alleged a large proportion of the funds held had been directed to another fund connected to former Keystone director Paul Chiodo to fund property developments he was connected to.
The Federal Court froze assets of the fund in June, and ordered Chiodo surrender his passport and be restrained from leaving Australia.
ASIC also raised concerns the fund both failed to adequately disclose the performance fees that may apply and used inappropriate asset classifications to describe the investments in the underlying funds and the investments within those funds.
On March 18, ASIC announced another fund with ties to Venture Egg clients, First Guardian, would be wound up. First Guardian is accused by ASIC of investing in activities one of the trustee directors, David Anderson, had an “association or financial interest in” which the responsible equity failed to recognise and manage these conflicts of interest.
Falcon Capital Limited, which was the trustee of First Guardian, was also the trustee of the Chiodo Diversified Property Development Fund until June 2021, when Keystone took over as trustee.
The regulator had detailed how these funds had relied on an online super “health check” to grab customer details at the end of a short survey which circumvents anti-hawking laws, with this data then handed over to advisers who will offer a follow-up contact, eventually putting clients into the funds.
ASIC Commissioner Alan Kirkland had previously described how those advisers often pressure clients to move out a well-performing fund into a platform product or SMSF that is often higher risk and not in the client’s best interest.
