Wealth Within has sought to defend its reputation in the face of fines imposed by the corporate regulator for misleading advertising.
The company, which paid $20,400 in penalties issued by the Australian Securities and Investments Commission (ASIC), said that while it has complied with the action, it still objects to the rationale behind it.
In a statement, Wealth Within said its development of a benchmark for its individually managed account (IMA) service, in the interest of transparency, led it to “discontinue updating the returns on its website for a period of time, albeit at all times clients were fully aware of the disclosure in regards to performance and the methodology adopted”.
This was prior to hearing of the ASIC investigation, the company said.
“When Wealth Within launched the Direct Equity Managed Account Service there were no benchmarks, nor were there standards in reporting returns for individually managed accounts,” it said.
“This was primarily because the service was not well understood by the financial services industry.
“Consequently Wealth Within sought to develop a benchmark, as traditional benchmarks were not appropriate for this type of service, and we continually ran into issues as the product was misunderstood.”
However, the challenge of finding an appropriate benchmark caused the website updates to lapse, it said.
The statement follows two infringement notices, each for $10,200, which were related to Wealth Within’s IMA, known as its Direct Equity Managed Account Service.
ASIC said the first ad, which ran online between 30 June 2011 to 5 March 2013, overstated the true returns on the portfolio and did not take into account the cash holdings.
Regarding the second ad, which ran between 5 March 2013 and 17 October 2013, ASIC said it was similarly “highly likely” that actual returns would differ from those advertised due to the ability of the investor to nominate stocks.
The company said: “Whilst Wealth Within is disappointed with the outcome of ASIC’s investigation, it accepts the decision of the regulator”.
