Former Perth financial adviser Jason Sean Atkins will be banned from providing financial services for three years after he was found to have provided advice to clients to establish a self-managed superannuation fund (SMSF) and use limited recourse borrowing arrangements to fund the purchase of real property.
ASIC found that Mr Atkins had not acted in the best interest of his clients when giving this advice. ASIC was concerned that Mr Atkins did not investigate or consider whether the strategy of investing in property through an SMSF would outperform his clients’ existing superannuation fund and improve their retirement position.
“The detriment and potential loss caused to the clients is potentially very serious. The applicant facilitated a high-risk investment strategy for the clients whereby all of the clients were in a worse financial position than if they had done nothing and not followed his advice,” ATT senior member Dr Michelle Evans said.
“The clients were also left in the disadvantageous position of having a single property as the sole asset in their superannuation funds, leaving them in a precarious position, for instance: if the market were to drop; if the property were to be un-tenanted; or if the clients otherwise have cash flow problems, such as in the case of a redundancy.”
ASIC deputy chairman Peter Kell said advisers who provide poor advice on SMSFs are putting their clients’ financial futures at risk.
“Advisers who fail to give compliant advice will be removed from the industry,” he warned.
“This banning should serve to remind financial advisers that compliance with the best interest duty requires them to use their expertise to conduct a reasonable investigation into the financial products that may put the client in a better position, even where a client approaches an adviser indicating they are interested in a particular strategy or financial product.”
ASIC considered that Mr Atkins should have investigated and considered whether the preferred retirement savings strategy initially suggested by his clients (that is, to invest in property through a SMSF) would improve the clients’ ability to meet their retirement goals.
According to ASIC, this consideration by the adviser would allow the client to make an informed decision about whether they wanted to proceed with their preferred retirement savings strategy.
“The job of financial advisers is to help their clients by providing professional advice that leaves their clients in a better position, not to merely execute their clients’ wishes, especially when those wishes are going to leave their clients in a worse financial position,” Mr Kell said.
Mr Atkins was an authorised representative of Magnitude Group Pty Ltd, a subsidiary of Westpac Banking Corporation, from 11 May 2015 to 11 December 2015.
He was appointed by a corporate authorised representative of Magnitude called Wealth Plus Solutions Pty Ltd. Prior to this Mr Atkins was an authorised representative of Genesys Wealth Advisers Limited, a subsidiary of AMP Limited, from 14 June 2013 to 8 May 2015.
The banning of Mr Atkins is part of ASIC’s Wealth Management Project, which was established in October 2014 to lift the standards of major financial advice providers.
The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, Macquarie and AMP).
Why would anyone risk a career in this industry/profession (call it what you like) and spend 3-6 years studying and $$ when it can all be taken off you at the whim of a bureaucrat that has no clue about anything????
Has to be more to this than meets the eye otherwise every adviser and accountant in the country will be banned soon.
ATT senior member Dr Michelle Evans – Is this person an Academic? You know, someone who has never given advice to anyone…
I love this statement “The detriment and potential loss caused to the clients is potentially very serious” – Yes potential loss/ potentially serious, but what if we re-worded it to potential gains. What a terrible statement. What if the Adviser recommends a share portfolio – it has potential loss/ potential detriment and vice versa.
There has to be more to this story, otherwise ASIC has lost the plot totally. The clients goals have been satisfied, but the adviser gets banned on a very grey BID here. And, how in effect would the adviser at SOA stage, be able to forecast retail fund performance vs Direct property growth, when you are not supposed to be a property adviser. Shares also can lose money, if in a high growth portfolio, this can go backwards to. I am sure there is devil in the detail here, but this seems like lunacy.
I’d say Accountants need to take notice and make same considerations as to if SMSF is appropriate to clients needs.[/quote] Don’t be silly. Accountants will NEVER be under the same scrutiny on “selling “SMSFs as advisers are. Accountants are “old school professionals,” like old school bankers – all part of the same club in ASICs eyes. “One of us” as ASIC have said, and will continue to say, about the banks, while turning a blind eye for years !!
Agree Anon – his mistake was not just referring this to an Accountant to do it! No implications or banning risk there!! The part that concerns me is how many advisers despite warning or counselling their client of the impact moved their clients money to cash post or during the GFC…if a client says “move my money please” what is Kell saying here? “Nope sorry Mr Client – even though its your money I can’t do that because it breaches BID?” this industry has lost the plot seriously
I would like some more information on this one. Background info on the client to see the entire story
Let’s face it, most people set up SMSFs to buy a property. It’s a more costly asset to maintain in a number of ways. Here’s my SOA with calculations that suggest you don’t do it. Here’s my fee for service $2,000 pay in 7 days. Thank you. Next.
Mr Atkins…R U OK? Isn’t this what the media should be asking?
Lets be honest who can actually win against ASIC or the AAT? Aren’t they both run by the same governing body? Well, unless you are a billion dollar bank…. Make a “donation” and continue about your day you have no chance of winning! This is by far the biggest form of bullying I have ever seen or read! Today is RU OK day which raises awareness about mental health, yet posting about Mr Atkins banning order being upheld with a decision by another government department without stating factual evidence and re posting it Australia wide, what does that achieve? Absolutely nothing but heartache and depression, Where are the clients? Get them to speak? What are the actual truth and facts!
Let me get this straight…Who actually determines BID, ASIC, the licensee, the banks, the government or the actual client?!? Seems pretty clear that it should be the client? Have we have heard from the client/s shouldn’t the clients make that decision? Where are the clients? Where is there statement or facts to determine this kind of outcome? If ASIC are “all about the clients” get them on the stand, get them in front of ASIC/the AAT? Get their version of events. So our career and reputation is ruined in a moment, yet a bank can steal money, engage in fraudulent activity YET they get a slap on the wrist? Why is that! It is about time ASIC STOP bullying the little people and actually go after the real problems in our industry! All in all this whole story and the previous article seems to lack actual facts and some poor guy has been thrown under the bus and no accountability from the licensee or ASIC what so ever! Makes you wonder who actually watches the WATCHER! Are you safe? Who is next? Is it YOU? Time to make a change as this is NOT OK and mental health is increasing at a rapid rate and ruining someone’s reputation over BID determined by a reg guide #bullyingisnotok
Every Adviser should be topping up their IP cover. Mental Health claims among Advisers seem like they will be on the up, if this continues.
Doing whatever the client asks for, when they are paying for your ‘advice’ is not always in their best interests…
How do you not get this? You’re paid for your expert advice, not to follow orders. That what accountants are for…
That must set a precedent to go after all those dodgy real estate “financial advisers” who encouraged all those gullible people to set up SMSF’s to invest in residential property
Does anyone know what really happened here? The client clearly went to the adviser asking about property in a SMSF & now he’s been banned for recommending it. Did it go pear shaped & the client changed their tune & came after the adviser, or did the adviser actually do the wrong thing?
I wonder if it was a shadow shopper? Set them up to fall…
The client’s view of this isn’t actually relevant to ASICS case.
What the adviser was supposed to do, based on the case and findings, was to use his expertise to consider whether a complicated structure and a highly concentrated investment portfolio, was indeed an appropriate way for this client to fund this clients retirement.
So long as his advice reflected this, the client could have elected to implement whatever he wanted, but he would have done so having had the benefit of an experts opinion as to its efficacy.
See REPORT 575 – SMSFs: Improving the quality of advice and member experiences
ASIC went looking for bad advice and they found it. end of story.
I’d say Accountants need to take notice and make same considerations as to if SMSF is appropriate to clients needs.