Clients forgiving towards advisers over losses
Clients have been surprisingly forgiving towards their advisers on the recent non-performance of their investments, according to Townsends Business & Corporate Lawyers director Peter Townsend.
“It is, from my point of view as a lawyer, perhaps a tiny bit surprising that clients are quite forgiving towards their advisers on the performance of their investments.
“They are aware of what has occurred in the markets globally and do not generally target their advisers for blame as long as he or she continues to communicate with them and show an interest in their portfolios.”
Townsend had not “dealt with many people tied up in a Westpoint or a Storm Financial” but said this indulgence of advisers by clients did not apply in all circumstances.
“It obviously wouldn’t apply to advisers that have put their clients into investments that are clearly inappropriate, or where there is a perception of sharp practice.
“They’d also obviously be a lot more unhappy if they believed a planner received a commission that was excessive or outside the normal range.”
Townsend said his observations of clients’ behaviour over the period of the financial crisis suggested that this indulgence by clients towards advisers stretched across all investment categories, including SMSFs.
“We deal with a lot of SMSF trustees through our associated (SMSF trust deed) entity Super Central, for example, and in this sector in particular their advice flows on into investment advice.
“To the extent that the SMSF trustees have a greater level of control over their investments, they are much better prepared to accept the responsibility that comes with it.
“Again, however, they would obviously be very unhappy if they’d been advised to invest in a Storm Financial or a Westpoint purely and simply for the higher investment returns and big adviser commissions on offer,” he said.
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