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Dixon Advisory: Another Financial Planner Debacle

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

www.rigbycooke.com.au

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 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............
 
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.
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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.
 
Belli said:
I believe investors lodged a court case to redirect the $7.2m in funds to investors and not ASIC.
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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."

www.afr.com

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 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."

www.afr.com

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 www.afr.com
 
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.
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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.
 
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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