Outsider feels sure that financial advisers were delighted to read that Scott Pape, “Australia’s most trusted independent finance expert”, had produced an updated version of his book, The Barefoot Investor.
Just like Outsider, he believes advisers were rivetted by the news that the update covered off new topics such as the Royal Commission, Afterpay, changes to the Federal Budget, and the declining housing market and saving for a home.
After all, surely Pape, who is described by his publishers as “an investment adviser, author, radio host and television presenter”, is simply issuing general advice and nothing he says or does could possibly be misconstrued as personal advice, could it?
Still, Outsider is reminded of just how much an earlier edition of Pape’s book moved the inflows needle for a particular superannuation fund and he wonders whether Australian Securities and Investments Commission chair, James Shipton, might care to do a bit of bed-time reading.
Shipton might then care to pass the book along to his deputy chairs, Karen Chester and Daniel Crennan, to see whether it passes their “if not why not” scrutiny.
Barefoot? Perhaps. Penniless? Certainly not.
Comments
It's not hard to see the impact Pape has on the the people who hang on every word in the FaceBook group ofhttps://www.facebook.com/groups/BarefootB/. They seemingly follow like sheeples without any knowledge other than having read his book. When/if they fail, who is going to be held responsible? Another Royal Commission? Poor people getting poor advice! And they won't pay for proper advice because it is going to be too expensive. So if you want to give advice around investing without responsibility, just write a book.
There is no way Mr Pape can rest on General Advice warnings when he makes references to specific products. In doing so, his conduct would reasonably be expected to influence an individual's decision as to whether or not to use that product, which has clearly occurred. His philosophies around cashflow management are quite good, but when he starts to recommend High Growth super fund options for everyone and investments with exposure to a single asset class, which have failed to meet index benchmark returns he is stepping over his level of expertise.
Don't even get me started on his advice around appropriate levels of Life/TPD cover because the one size fits all is too simplistic and is unlikely to be in the client's best interests.
He will have trouble selling his book after the Code of Ethics comes into force in 2020. I have read his book and feel he has breached the following standards (as a starting point):
Standard 1 - by circumventing the intent of the code and applicable financial services laws such as the best interests duty under the Corporations Act
Standard 2 - by providing so called 'general advice' which is in some cases likely to breach best interest duty
Standard 5 - It is unlikely that many of his recommendations will be appropriate to the client's individual circumstances, nor does he clearly outline the benefits, costs and risks associated with the products recommended or the needs analysis employed when determining appropriate levels of personal insurance.
Standard 6 - He has not taken into account the broad effects arising from individuals acting on his advice
Standard 9 - The products have been recommended in a way which is deceptive and misleading. Clearly he lacks the competence to provide said advice also.
How Mr Pape's conduct has escaped the scrutiny of ASIC is beyond me.
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