# Dixon Advisory: Another Financial Planner Debacle



## Garpal Gumnut (19 January 2022)

The early morning drinkers at the hotel are agog at the advice this morning from John Wasiliev a usually wise correspondent for that Sydney rag, The Australian Financial Review, to victims of the latest shonky outfit to wind its way through ASIC and other regulators having ripped investors of millions. 

A penitent asking what he or she should do now having dropped between one large one and half a million dollars in their SMSF after advice from Dixon has been given the following advice,

Go see another Financial Adviser !

What a joke. Dixon a financial outfit out of Canberra has been on the nose amongst the drinkers here for some time. A straw pole indicated with some less than parliamentary language that Wasiliev's advice resembled a word denoting two hanging balls ending in X.

Unfortunate investors will travel a well worn path attempting to recover their money from this bankrupt outfit through the courts. 









						What do I do about my Dixon investments?
					

Making a complaint to ASIC or joining a class action are some options, writes John Wasiliev who answers your questions on super.




					www.afr.com
				




These stories of woe and the decidedly poor consequences of dodgy practice unpunished make me believe that the financial advice industry should be closed down as a danger to retirees future and finances. 

The Dixon honchos will have distributed mansions, boy and girlfriends, and vehicles, as some of the more colourful characters in other illicit enterprises do, to relatives and friends well before any class action winds its way through the courts. 

Laugh, I nearly died. 

gg


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## Dona Ferentes (19 January 2022)

I found a piece of paper in the bottom of a drawer the other day. A two line hand written "Statement of Advice" on some tax matter, from Daryl Dixon, dating from 1986. He was a one person shop run from a dank office situated on the Canberra CBD fringe. 

He'd gone out on his own from the public service sector, and had a column in the Sunday Canberra Times, all about this newfangled superannuation thing, especially retirement strategies for public servants (the only ones with any super in those days). Business rolled in and as the legislation became more complex, this niche grew. 

And here we are. It's all how growth is managed.


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## MovingAverage (19 January 2022)

What a complete and utter disgrace--bunch of shonks, shysters and spivs. No doubt there is a conga line of other "advisories" queuing up to follow in the footsteps of Dixon. Never understand how professional service firms are allowed to list--we all know their priority then becomes maximizing shareholder returns instead of the best interests of their client.


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## basilio (19 January 2022)

What a debacle. Found a number of very unhappy reviews from clients that all tell the same story. 
I think what is of real concern is the  stock market is generally going well. To lose so much money in a good market essentially by investing in "house" products  ...









						Dixon Advisory
					

Dixon Advisory (SMSF / Small Fund): 4.1 out of 5 stars from 174 genuine reviews on Australia's largest opinion site ProductReview.com.au.




					www.productreview.com.au


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## basilio (19 January 2022)

This review of Dixon is very telling.


verified
Devastated Clients​
published 1 year ago
_When ASIC completes its corporate action against Dixon Advisory (owned now by E&P Financial Group), we will see the confirmation of yet another bad actor in the investment sector. How bad is now revealed in the reviews on these pages, as well as numerous articles in the financial press. While we can measure our financial losses in the SMSFs set up by Dixons, what is harder to measure is the ongoing anxiety, worry, sleepless nights, guilt and sorrow that this company has brought upon us.

When I had an interview with the founder of Dixon’s over 15 years ago, I felt confident in placing my savings for retirement with them, and regular radio appearances and articles on superannuation by the founder strengthened my confidence.

However, my concerns were first raised in 2008 when high profile principals of the firm along with Dixon clients lost money in the Lift Capital collapse. It was at this point that I became aware that members of the firm were employing risky strategies for higher returns in their investment strategies.

As time went by, I received numerous emails from my Dixon advisor and their broker about “opportunities” that were available to me (but would close on that Friday!). I didn’t like the anxiety and tension this raised, and it made me question whether this was just a marketing ploy to generate more activities and fees in my account. I couldn’t understand why this super fund manager was taking a “boiler room” approach to selling products.

Later I was told I would need to transfer my Cash Management Accounts to bank accounts that were “approved” by Dixon - meaning for which they would receive fees. Soon this was followed by phone calls and advice to sell my blue chip Australian shares paying franked dividends to buy into the property market in the US. This made no sense to me. I was happy with my investments but still worried whether they knew better than me and was I missing out on a good investment.

However, by 2011 a highly respected property advisor was writing that the New Jersey properties were “speculative ...cheap and nasty”. I looked at the URF glossy brochure and didn’t like what I saw. On top of this no one else was recommending URF: it was only sold to Dixon clients - an easy and captive market. Later I we found out about the huge fees Dixons were raking in from this product.

All these were signs of greed that I found extremely hard to reconcile with my first impressions. Trust is number one but at each step along the way I felt my trust was abused.* The final straw was that I was asked to leave Dixons, and another Super Fund manager was suggested to me. I felt appalled and upset. I said to the managing director who called me that I wanted the simple service that I had signed up for with the trustworthy founder. He simply said, “Well things change". 

However, as the expensive, blanket advertising of Dixons continued I realised that they were replacing unwanted clients like me with new clients who were unaware of their tactics. This is a firm which exploited its clients to the max with conflicted advice while taking high management fees all the way.* 

The Dixon name may disappear, and the E&P Group may be taken over, but devastated clients and trashed portfolios are left behind forever._








						Dixon Advisory
					

Dixon Advisory (SMSF / Small Fund): 4.1 out of 5 stars from 174 genuine reviews on Australia's largest opinion site ProductReview.com.au.




					www.productreview.com.au


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## MovingAverage (19 January 2022)

Today's AFR


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## Belli (19 January 2022)

If you follow the trail, it wasn't Darryl Dixon himself.  I understand he had retired sometime before the events which followed and had stepped down from the firm.  Look up Alan Dixon.


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## Belli (19 January 2022)

I'll vent slightly while understanding those who lost their funds, including in SMSF's, are hurting badly.

One aspect which crosses my mind when these events occur and it involves a SMSF is this.




It's in every SMSF Trust Deed I gather or at least should be.  I'd love to see this in Court to ascertain if Trustees seek advice which they are *not bound to accept* to what extent are the Trustees also culpable?


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## Sean K (19 January 2022)

Alan Dixon leaving and selling out relatively quickly now looks a bit suss. AFR article:



> But Dixon Advisory has been plagued by conflict of interest issues, largely related to its in-house US Masters Residential Fund, which is listed on the ASX. The fund charged significant fees and at one stage accounted for an estimated two-thirds of Dixon Advisory’s revenue.
> 
> Clients were advised to invest significant allocations in the fund, which has performed poorly. That, in turn, has led to myriad claims alleging Dixon Advisory failed to act in the best interest of clients.
> 
> ...


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## MovingAverage (19 January 2022)

Belli said:


> I'll vent slightly while understanding those who lost their funds, including in SMSF's, are hurting badly.
> 
> One aspect which crosses my mind when these events occur and it involves a SMSF is this.
> 
> ...



Very complicated issue that. However if the trustee is acting (or not acting as the case may be) on professional advice, but that professional was negligent, not acting in the trustees' best interest and knowingly acting in a position of conflict of interest, I doubt very much the trustee could be held liable for the subsequent losses. Of course, if the trustee is shown to have also been acting negligently as well then that would be a different story.


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## Belli (19 January 2022)

MovingAverage said:


> Very complicated issue that. However if the trustee is acting (or not acting as the case may be) on professional advice, but that professional was negligent, not acting in the trustees' best interest and knowingly acting in a position of conflict of interest, I doubt very much the trustee could be held liable for the subsequent losses. Of course, if the trustee is shown to have also been acting negligently as well then that would be a different story.




But definitely a fascinating one.  Many time when things have gone down the toilet I have read (in mainstream media as a sob story article) Trustees saying "We followed his advice,etc, etc."  I then wonder what due diligence did you do or did you simply take the advice as a given which was required to be followed?

I've rejected FP advice on a couple of occasions not because it was wrong or not in the best interests of the member(s) but due to the product was not the best fit.  Never any pressure on me to accept the advice either just bounced the concepts back and forth for a bit - it was a geared product and so thanks but no thanks.


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## Belli (19 January 2022)

Just remembered.  Trio Capital.  Small regulated funds through APRA got some back when it went under but SMSFs didn't.  The reason given for that was SMSF's are Self-Managed, the Trustees are responsible for the fund and so fall outside of any Government insurance scheme.


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## Dona Ferentes (19 January 2022)

Belli said:


> Just remembered.  Trio Capital.  Small regulated funds through APRA got some back when it went under but SMSFs didn't.  The reason given for that was SMSF's are Self-Managed, the Trustees are responsible for the fund and so fall outside of any Government insurance scheme.



there's a bit on Trio in post #17  https://www.aussiestockforums.com/t...agement-lack-of-confidence.24697/#post-707998


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## Belli (19 January 2022)

Thanks for that @Dona Ferentes.  It's thread drift but it really does annoy me when SMSFs are treated as BBQ talk by a few I've encountered. 

I listen although I don't say much apart from nodding my head sagely going "Uh, ah. OK."  They show little understanding of the level of penalties under the Corporations Act (if Corporate Trustee) if they goof it - and the penalities can be cumulative if they keep on doing the same wrong thing - or those which can apply under the Income Tax Assessment Act.

Some do not seem to have an understanding of the roles and responsibilities of Trustees.  Could be it's confined to those SMSFs established before the ATO introduced the requirement Trustees sign and acknowledge they understand the requirements.


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## greggles (19 January 2022)

This is starting to smell like another Storm Financial, and there hasn't even been a GFC to act as a catalyst for the losses. Sure, there's been the COVID-19 pandemic, but aside from the short term market collapse in 2020 the market has been bullish ever since.

This is looking like a case of corporate greed and fee gouging run amok. I hope that ASIC are all over this and that there is some justice for all those who have lost money as a result of Dixon Advisory's greed and negligence. This sort of stuff is sickening to hear about.


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## Garpal Gumnut (19 January 2022)

greggles said:


> This is starting to smell like another Storm Financial, and there hasn't even been a GFC to act as a catalyst for the losses. Sure, there's been the COVID-19 pandemic, but aside from the short term market collapse in 2020 the market has been bullish ever since.
> 
> This is looking like a case of corporate greed and fee gouging run amok. I hope that ASIC are all over this and that there is some justice for all those who have lost money as a result of Dixon Advisory's greed and negligence. This sort of stuff is sickening to hear about.



One would hope so. 

However given the regulator's past history on similar fubars, the time elapsed for dispersal of assets through multiple accounts, and that one of the principals is missing, believed to be in Florida, I would not be holding my breath. 

gg


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## Dona Ferentes (19 January 2022)

to me it's just the inherent contradictions between clients wanting (and expecting) a long term relationship and expected growth trajectories, and the behaviours of the intermediaries, who see 'rivers of gold' and confuse their own skills with market randomness. Complacency on both sides. The URF story is appalling. As I say, frequently, _hubris._


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## greggles (19 January 2022)

Garpal Gumnut said:


> One would hope so.
> 
> However given the regulator's past history on similar fubars, the time elapsed for dispersal of assets through multiple accounts, and that one of the principals is missing, believed to be in Florida, I would not be holding my breath.
> 
> gg




There is a relatively simple answer to this in my opinion. All financial advisers should be obliged to have insurance that covers client losses in cases of adviser negligence and where it can be demonstrated that the adviser has not acted in the interests of the client.

If it was me, I would throw negligent financial advisers in jail, but I doubt the government will go that far. Financial services is such a grubby industry. It desperately needs legislative reform.


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## Dona Ferentes (19 January 2022)

_Dixon Advisory was founded in 1986 in Canberra by .. pensions expert, Daryl Dixon, and his wife Kate. In 2001, their son Alan Dixon assumed the managing director’s role.

Dixon Advisory grew into the fourth-largest superannuation advice firm in Australia and in late 2016 it merged with Evans & Partners, the brokerage firm founded in 2007 by David Evans.

The merger proceeded despite concerns raised in a report to directors of Evans & Partners by KPMG that highlighted the risks of Dixon Advisory’s vertically integrated model and its high reliance on fees generated by the URF.

In fact, Dixon Advisory’s foray into manufacturing its own investment products that charged high fees and performed poorly for investors proved its undoing.









						Dixon Advisory’s collapse delivers a painful lesson for investors
					

It has exposed the heavy cost of the firm’s highly conflicted business model that harmed the retirement savings of thousands of middle-class Australians.




					www.afr.com
				



_


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## Belli (20 January 2022)

Garpal Gumnut said:


> One would hope so.
> 
> However given the regulator's past history on similar fubars, the time elapsed for dispersal of assets through multiple accounts, and that one of the principals is missing, believed to be in Florida, I would not be holding my breath.
> 
> gg









__





						Searching ASIC
					






					sitesearch.asic.gov.au
				




and

"The heads of agreement follow Court-ordered mediation and propose that Dixon Advisory pay a $7.2 million penalty for breaches of the Corporations Act as well as $1 million to pay ASIC’s costs of its investigation and legal proceedings. The in-principle resolution between the two parties is subject to approval from the Court.

The hearing of 25 November 2021 has now been adjourned to 28 January 2022."

Note the penalities are in regard to breaches of the Corporations Act not flawed advice.





__





						21-167MR ASIC and Dixon Advisory enter conditional agreement to resolve ASIC civil penalty action  | ASIC
					






					asic.gov.au
				




I believe investors lodged a court case to redirect the $7.2m in funds to investors and not ASIC.  Doubt whether that particular matter has been resolved yet (hey, it's the Court, it's only six months and the investors aren't tennis players.)  The hearing above is about the Court approving  the in-principle resolution.


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## Belli (20 January 2022)

Mind you, dear old Darryl has problems of his own.









						Dixon: A Cautionary Case of U.S.-Australian Tax Issues - Rigby Cooke Lawyers
					

No other movie but Star Wars comes close to explaining the tragic duality and complexity of international tax. It demands more than just a pedantic




					www.rigbycooke.com.au
				




Interesting snippet though

"In 2019 an Australian citizen filed multimillion-dollar lawsuits against the IRS in the U.S. Federal Court of Claims and the Tax Court to dispute specific adjustments proposed by the IRS regarding dividends received from an Australian private company. The petitioner, Alan Dixon, a U.S. resident since 2014, was the managing director and Chief Executive Officer (*CEO*) of Dixon Advisory Group U.S. (*DAG-US*), an urban luxury home rental business based in New York City and New Jersey. He was also a shareholder, managing director, and CEO of DAG-US’s Australian parent company, Dixon Advisory Group Proprietary Ltd. (*DAG- Australia*)."

Completely irrelevant to the this thread but............


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## Belli (20 January 2022)

greggles said:


> There is a relatively simple answer to this in my opinion. All financial advisers should be obliged to have insurance that covers client losses in cases of adviser negligence and where it can be demonstrated that the adviser has not acted in the interests of the client.
> 
> If it was me, I would throw negligent financial advisers in jail, but I doubt the government will go that far. Financial services is such a grubby industry. It desperately needs legislative reform.




I like the concept.  However - and isn't there always an "however" - the main impediment is the insurance cost to do it.  Those costs will need to be passed on to *all *clients whether they are impacted by flawed advice or not. Insurance isn't about what will happen but what could happen.

FP firms are already shedding low-value clients, despite not wanting to, due to compliance costs.  FP may have helped lovely widow Mabel with Centerlink issues as she and her late husband had been with the firm for many years.  No charge to Mabel as the cost was able to be absorbed in the past.  Not now as all those actions and advice are required to be fully documented to comply with increased legislative requirements.

So lovely Mabel could be left swinging in the breeze with no one to help her with relatively simple issues from an FP who is switched on with Centerlink matters.


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## Belli (20 January 2022)

Belli said:


> I believe investors lodged a court case to redirect the $7.2m in funds to investors and not ASIC.




Found the reference

"The plaintiff in the class action claim filed against Dixon Advisory is seeking to ringfence the entire penalty levelled by the corporate regulator in its legal claim against the company to pay out former clients taking part in the class action."









						Dixon victims seek to ringfence ASIC penalty for payout
					

The Federal Court was due to approve a $7.2 million fine, but the matter has been adjourned to allow the corporate regulator to further consider its position.




					www.afr.com
				




Dixon Advisory has gone into administration this week by the way.

"Embattled wealth management firm Dixon Advisory has filed for voluntary administration after its directors determined that mounting liabilities from class actions, settlements and regulatory penalties would leave the entity insolvent."









						Dixon Advisory files for voluntary administration as claims mount
					

Liabilities from class actions, settlements and regulatory penalties will leave the embattled wealth management firm insolvent.




					www.afr.com


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## Sean K (22 January 2022)

So glad my old cheese aren't effected by this. What's the answer? Significantly diversify?


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## Junior (23 January 2022)

Belli said:


> I like the concept.  However - and isn't there always an "however" - the main impediment is the insurance cost to do it.  Those costs will need to be passed on to *all *clients whether they are impacted by flawed advice or not. Insurance isn't about what will happen but what could happen.
> 
> FP firms are already shedding low-value clients, despite not wanting to, due to compliance costs.  FP may have helped lovely widow Mabel with Centerlink issues as she and her late husband had been with the firm for many years.  No charge to Mabel as the cost was able to be absorbed in the past.  Not now as all those actions and advice are required to be fully documented to comply with increased legislative requirements.
> 
> So lovely Mabel could be left swinging in the breeze with no one to help her with relatively simple issues from an FP who is switched on with Centerlink matters.




Where there is poor advice, and unethical behaviour, it almost always comes back to how an advice firm is remunerated.  Running a financial advice firm, AND operating a financial product is fraught with danger.  The urge to push all clients into your own products (where you can charge product fees) seems irresistible.  Another red flag, are firms who are seemingly obssessed with SMSF.  It typically means they are making money outside of just advice fees, either via products, accounting charges, etc.

Product providers, and Financial Advisers should be separate.  And in fact, since the FASEA Code come in, it is arguably not legal to operate in this manner any more.

Advisers are paid by directly charging clients (commissions only on Life insurance).

No fancy or complex financial products are required, in the provision of quality advice.


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## dyna (23 January 2022)

You can't blame the couple in the above photo, for now calling the financial services game, a " parasitic industry".
Further to the same Weekend AFR article, Dixon Advisory's URF charged fees of 7% of its 2017 market cap. as well as losing 85% of its investors' capital. For comparison, a i Shares US Residential ETF  returned 85% in $A over 5 years for an annual fee of   0.5 %.

One  residential property in the fund cost its investors $1.3 Million to buy , then had a further $2.7 Million spent on renovations.

Alan Dixon ( the son of Darryl ) cashed out of his merged business in 2020 for $ 17.6 Million. Now lives in Florida, apparently .


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