Anderson urges senate inquiry to hear from Dixon clients

The Financial Advice Association Australia’s (FAAA’s) Phil Anderson has taken to social media to urge the pending senate inquiry into the collapse and fallout of Dixon Advisory to hear from clients at the “centre of the story”.

The General Manager for Policy, Advocacy & Standards wrote on LinkedIn on Friday that he had recently spoken to a former Dixon Advisory client about their experiences with their adviser, and found they and many others may not be completely aware of all information related to the company’s collapse.

Anderson said the conversation highlighted the importance of involving former clients in the senate inquiry process and to hear their experiences to ensure all information is out in the open and the resulting Compensation Scheme of Last Resort (CSLR) can be operated effectively.

“We should never forget that it is these clients who are at the centre of this story and who we should feel for. What happened to them must not be repeated,” he wrote.

“We are looking forward to the Senate inquiry hearings commencing and listening to those who really know what happened and how things went so wrong. It is only with this knowledge that what needs to change can be identified and addressed.

“It is the CSLR that has helped to highlight what went wrong at Dixon Advisory. Understanding the Dixon Advisory story in detail will help to ensure that it does not happen again and that the serious problems with the CSLR can be fixed.”

In his post, Anderson said that the Dixon client, who was “educated” and had “experience running his own business”, was directed by his adviser to invest more than $100,000 in the US Masters Residential Property Fund (URF) but soon lost most of these funds. Despite going through the Australian Financial Complaints Authority’s (AFCA’s) complaints process, Anderson said the client is “sceptical about the effort involved”.

Anderson also discussed with the client the actions of Dixon Advisory’s Investment Committee members who decided how much money each client would invest in each product offering, masquerading it as the company’s business model. According to Anderson, the client said his adviser had given “no indication that he was acting upon directions from above”.

“Confronting what happened and reflecting on it is challenging. For those who suffered substantial losses, and put trust in people who failed them, it can be devastating. A lot of clients will have terrible stories about the impact of the Dixon Advisory and URF disaster on them and their families.

“This highlights the need to hear from these advisers. How did the business model work? Why did they follow these instructions?

“When I explained that the URF had not been subject to independent research and that the vast majority (85% to 95%) of the investors in the various URF products were Dixon Advisory clients, he was amazed and appalled. He assumed that financial advisers across the country had recommended the URF and related products.”

Anderson also said that if clients were able to contribute to discussions during the senate inquiry, more insights might be able to be gleaned, including:

• Why did 78% of Dixon Advisory clients stay with the group when they were transferred to Evans and Partners, even after having gone through this terrible experience?
• How did Evans and Partners explain to them what had happened and why they lost so much money?
• What remediation did Evans and Partners offer them, or how did they suggest the client losses could be addressed?