Mr Henderson was called before the commission to answer questions about an SOA he gave to a client, Fair Work commissioner Donna McKenna.
The advice given to Ms McKenna recommended most of her capital shifted into Henderson Maxwell products and one of her superannuation accounts rolled into a Henderson Maxwell-run SMSF (at the loss of a $500,000 lump sum payment for accessing the funds early).
Counsel assisting Rowena Orr QC tendered as evidence a recording of a phone conversation between a Henderson Maxwell employee and the client’s superannuation fund.
The recording showed the employee impersonating Ms McKenna without permission in order to obtain information about the fund.
Mr Henderson told the commission he was unaware of the deceit at the time, and that the information obtained by the researcher (that Ms McKenna was in a deferred benefit scheme and would lose money starting an SMSF) was not then relayed to him anyway.
He said he did not terminate the staff member after learning of her actions, but denied this decision was made in a bid to hide the impersonation from public scrutiny.
“I would openly say that she impersonated the client,” he said. “It was most definitely the wrong thing to do. And I was bitterly disappointed that someone would do that under my responsibility.”
Ms Orr also questioned Mr Henderson over his emails to FPA chief executive Dante De Gori after Ms McKenna made a complaint to the association, asking if he was attempting to pressure or sway the outcome of the FPA’s review.
Mr Henderson denied this was his intention, but conceded that he did request on multiple occasions for the association to keep the complaint confidential due to the impact it would have on his media presence.
“I was reaching out in a state of desperation, because I felt I just wanted to be heard,” he said.
News Corp Australia publications have reported that Mr Henderson’s television show on Sky News Business has now been cancelled.
The royal commission financial advice hearings continue today. Follow live: https://www.ifa.com.au/strategy/25404-royal-commission-financial-advice-hearings-live-blog
Correction: A previous version of this story referred to Sam Henderson as ‘former AFA Adviser of the Year’ based of royal commission transcripts which identified him as “AFA Planner of the Year”. The article has been updated to reflect that this was not the case, rather that Henderson Maxwell was the AFA’s Practice of the Year.
[quote=Gerard Wilkes. FCA]Hundreds of times every day. Where does that figure come from[/quote]
ATO Statistics = 592,658 new SMSF’s in 2017.
I can assure you that under an AFSL or Limited License providing the research and SoA to support a recommendation that licensed Financial Advisers could not in a pink fit create over 11,397 new SMSF’s every week.
https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/Highlights–SMSF-statistical-report-September-2017/
There had been rumours from former staff about systematic……. I will be kind and say grey areas……. at this practice since the time of the GFC. Fell of my chair when I saw the ‘Practice of the Year’ award. Fantastic effort by the RC so far, they are casting an appropriately wide net.
The FPA are having rather a bad trot at the moment!
they are finished
I remember when the two FP advice rules you had to follow were 1) know your client and 2) know your product. Years and tons of regulation later and we still aren’t getting the basics right. Its not rocket science but taking short cuts, poor processes and not listening to the client will always end badly…
Reputation is built over a lifetime and lost in an instant.
Could someone please explain which DBF the commissioner was in , and how ,by rolling into an SMSF , her benefit would be reduced by 500,000 dollars . There is more to this than meets the eye and I would love to read the SOA which surely states the basis for the recommendation , and the impact of following the recommendation .
My understanding is this DBF was not a ‘defined’ benefit, rather a ‘Deferred benefit fund’, whereby the full potential is not realised until a retirement age, so withdrawing funds early greatly impacts what you actually get. And then to place the funds into his own Henderson funds and take another margin……
Adam is correct. She was in the SASS fund. NSW State Authorities Super Scheme is a hybrid fund between accumulation and defined benefit. As an example, If you work and you’re a member you get let’s say $2.5 million at age 58 but if you quit your job and/or exit you get $2million.In order to lose $500K she’d have to have had about $1.5 to $2million. In this case the advice was to exit SASS at age 56 and lose $500K and invest in a SMSF. People can leave prior to 58 and “park” there balance in SASS and it preserves the balance otherwise they lose a bucket load if exiting early. Really POOR advice and an adviser with 10years experience in NSW should have known better. SSS, SASS and some Commonwealth Schemes handcuff School teachers and public servants into their job until a defined age, 55, 58 60 etc.
Well, right there is most of the product research that needed to be done to avoid the bulk of the train wreck that happended.
now that wouldn’t create the headline they are after!
Chris it is a common situation that with Defined Benefit, that based either on age (ie being below preservation age), or accessing the fund before various retirement ages, that clients may suffer an economic loss as it were in the actuarial calculation by the Defined Benefit Provider. Any decent, intelligent, and ethical financial planner can assist you with that and would have found out the facts of the economic penalty.
Wow all this and he’s a non bank IFA did we miss this little fact IFA Magazine !!!!!! Silent on on this issue
He’s definitely not an Independent Financial Adviser, while he might be not be aligned with a bank, he receives commissions from the products he puts clients in, and owns a lot of the products he’s using for clients.
He certainly thinks, and infers he is independent. The following wording can be found on his website.
[i]We’re proud to be privately owned. Yep, we’re not aligned with fancy financial products and we don’t offer a set of steak knives with your SMSF advice. Neither are we in cahoots with the big banks and we pride ourselves on the very best in client service.[/i]
It’s ok for him to think that – but there’s a reason that he’s been careful not to use the word ‘independent’.
Well that’s just a lie isn’t it. They’ve got there own managed fund. I wouldn’t be comfortable with it.
Yeah exactly, makes everyone who is actually independent look bad. Throw the book at him. Talks a big game but cant do the basics right.
I think you will find that Sam will be made an example of now that this is all out in the public. ASIC, the FPA, and the AFA cannot afford to sit back now and not do anything about his unethical behaviour. If they allow him to walk away and continue to practice it will only be an indictment on those Associations and the regulatory bodies whose job it is to safe guard the public. If they don’t do something then it just sends a clear message that the financial planning profession has not improved since the FOFA reforms.
And they should do something about him. Very poor advice, driven by conflicted remuneration, should be weeded out of the industry.
Some will say this situation is quite different to AMP, CBA, NAB etc. But it appears to be exactly the same issue of vertical integration undermining professionalism.
Henderson Maxwell is a product provider whose employees seem to have been pressured to make professionally inappropriate recommendations of their own product. The same thing happens hundreds of times every day in accounting firms all over Australia, particularly in relation to SMSFs. The RC needs to recommend banning vertical integration of financial product and advice, regardless of the size or licensing regime of the company doing it.
Hundreds of times every day. Where does that figure come from
A ‘TV personality Adviser’ who has admitted to not knowing the safe harbour steps, has financial interests in the administration companies he uses for his clients, used only a ‘managed account’ created by his firm with his clients without comparison, allowed his staff to impersonate clients on numerous occasions fraudulently where recordings were heard and then did not terminate the staff member, did not meet best interests of the client, wrote a plan that would have a client lose $500,000 and was charging a client around $30,000 in fees for the advice.
They are looking at offering him ‘Summary Disposal’ of the complaint instead of a hearing that others have gone through where the FPA then sent members over to ASIC, but not TV boy.
He has advised he did all that he was accused of, one rule for TV Advisers and another for other members who the FPA do not give a hoot about.
You had better include Noel Whittaker in that group.From what I have read his adviser breached over 20 acts and committed no less than 6 acts of fraud.At no stage has this adviser ever been exposed and in fact the CBA removed parts of client files which showed evidence of unauthorized trading by this adviser,
I’ve made several complaints to the FPA about some of their members. Their conduct includes taking bribes, some have lied to ASIC and others have received millions from dead people taking revenue for no service. The FPA response is get stuffed. Oh wait those members are the banks. Therefore Sam Henderson also should receive no punishment from the FPA. You cannot punish one member because he is an individual and inflict no punishment on another member just because they are a corporation and pay you money.