Senate Inquiry must hear real Dixon Advisory stories

From

Phil Anderson

This week I had the chance to talk to a former Dixon Advisory client, hearing his experiences but also his understanding and views on what happened.

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. This highlights the importance of hearing from Dixon Advisory clients at the Senate Committee inquiry hearings.

This client is an educated man who has experience running his own business. Through his Dixon Advisory adviser, he invested over $100k in the US Masters Residential Property Fund (URF), and lost most of it. He has gone through the AFCA complaint process, however is sceptical about the effort involved. He has read a lot about Dixon Advisory, however remains uncertain about some of what he has heard and unaware of some of what he probably needs to know.

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.

We discussed the Dixon Advisory business model, where an Investment Committee, comprised of very senior business people, decided how much each Dixon Advisory client would invest in each of the Dixon Advisory related product offerings. He could not accept that this was correct. His adviser gave no indication that he was acting upon directions from above.

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.

There is much more client insight that I would like to gain, 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?

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.

By Phil Anderson, GM Policy, Advocacy & Standards

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