Top 10 most influential, 2004: Dale Newman - a client wronged
As a client, 43-year-old Dale Newman’s financial profile was unremarkable.
His first big investment was in his career, when working as an air traffic controller he decided to take leave without pay to train as an airline pilot, financing his course from borrowed funds. He then saved for a deposit and purchased a house, and like most people, had to take out a mortgage.
But Newman didn’t foresee his decision to employ the services of planning group Financial Wisdom (now owned by the Commonwealth Bank) would catapult him into the role of lead plaintiff in a class action against the group when the advice he and more than 200 investors were given turned bad.
Newman & Ors vs. Financial Wisdom came to a dramatic climax in June this year, with the dealer group found liable by the Victorian Supreme Court for negligent investment advice resulting in losses of around $30 million.
Hugh McLernon, managing director of IMF, the company that bankrolled the class action, said “if financial institutions are aware that even the smallest investor can seek recompense in the court, they’ll be much more careful with the little men”.
In his witness statement, Newman said there were moments when he considered suicide.
“But my all consuming desire for fairness and justice has enabled me to continue on,” he said.
The court heard Financial Wisdom advisers had recommended a variety of investment schemes with the aim of offsetting these investments against tax.
However, the Australian Taxation Office rejected these deductions, costing the investors millions of dollars.
The Financial Wisdom case sent a clear message to the financial planning industry — that this will not be a stand-alone event.
The judgement is representative of a shift in ideology towards consumer-centric regulation, and the outcome of the Financial Wisdom case is one advisers ignore at their own peril.
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
