Dover Identified as High-Risk Before Closure

Dover Financial Advice was identified as a high-risk licensee earlier this year due to the number of its advisers who had switched between licensees and their low education levels compared to new standards, according to industry research group, Adviser Ratings.

Adviser Ratings Chief Executive – Wealth, Mark Hoven

In a new report – Where will ASIC look next? – released following the announcement of the closure of Dover, Adviser Ratings Chief Executive – Wealth, Mark Hoven claimed the group “…identified Dover as having one of the highest assessed risks amongst the Top 100 Licensees”.

“This was not through inside knowledge of ASIC impending action, rather it was through an empirical assessment of correlating risk factors including movement of advisers between licensees, adviser education levels, and prior ASIC actions involving bannings / disqualifications, enforceable undertakings (EUs) and imposition of license conditions,” Hoven said in the report.

In a statement accompanying the report, Hoven added that Adviser Ratings had found the most persistent instances of poor advice came from licensees with advisers who had switched between multiple licensees and also had low educational levels relative to FASEA.

“These two measures can be helpful from an external view to monitor for potential future problem areas. They also identify those businesses needing some heavy lifting to raise education levels and reduce further licensee shopping by their advisers,” Hoven said in the statement.

“We identified Dover in advance of its shutdown as a Top 20 highest assessed risk licensee…”

“We identified Dover in advance of its shutdown as a Top 20 highest assessed risk licensee because it scored highly on these two measures, despite not attracting an EU or specific license conditions, at least publicly,” he added.

The Top 20 list referred to by Hoven, which is included in the report, also contains ClearView Financial Advice, Affinia Financial Advisers, Synchron, Elders Financial Planning, Aon Hewitt Financial Advice and Bombora Advice.

In the report, Hoven said Adviser Ratings did not expect the shutdown of Dover given that other groups identified as high risk by ASIC had usually been given a ‘second chance’, and the closure “…without any formal warnings in terms of an EU or specific license conditions was possibly the most surprising part”.

The report also provided some information on where Dover advisers had moved from when joining the group and where they were likely to go upon its closure with Hoven writing that of the 264 advisers that had joined Dover in the past four years, 43 per cent came from licensees owned by AMP, IOOF, ANZ, CBA, NAB/MLC and Westpac/BT.

“At a time when the industry is wondering where the 400 displaced Dover advisers will end up, there is a track record of licensees re-settling Dover advisers,” Hoven said.

“Over 100 advisers have exited Dover in the past few years and found new homes,” he noted, adding that less than 10 per cent of advisers were hired by an institutionally owned licensee and that while 12 per cent were employed by new licensees the large majority of advisers moved other privately-owned licensees.

  • Jake

    Poor advice and poor compliance are completely different. Licenses encourage poor advice as long as it is compliant and all the boxes are ticked. They don’t care about the outcome for the client.

    ASIC are in the same boat. They certainly dont care about the outcomes for the client. Thats why they have let the banks get away with everything and the direct insurers to exist.

    Why dont ASIC focus on poor outcomes instead of poor advice, such as when a client is charged $2k pa advice fees to change to a retail fund when their super balance is only $20k. I dont care how good your paper work is here, you cannot justify 10% of the balance being taken out in fees unless you can guarantee 25% asset growth (which you cant).

    • GregF

      The irony there is that they might not have to charge $2k if there wasn’t such over the top compliance involving changing or, worst still, establishing a new super fund for a young person with a small balance. $2k now for a properly advised future is probably worth it if its good ethical advice. But, my point is that I would happily set someone like that up for a few hundred dollars if common sense prevailed in the compliance world and I wasn’t faced with the time consuming BS required to be produced. They set the amount of work required – they can’t then criticise someone for charging for adhering to it!

  • Face the Facts

    I’ve been with Synchron since the FSRA 2001 Act came into force in March 2004. If anything their auditing processes are overly stringent and they have picked up the most minor breaches [if only to mirror what an ASIC audit would find]. On occasions when questioning their auditor – I am told they are following to the letter what ASIC is expecting to be found & then rectified. Their management has been at pains to point out they are extremely selective with whom they finally allow to join them. I believe their vetting process is extensive and as bullet-proof as humanly possible. And yes, I concede in a by-gone era they were too focussed on ‘growth for growth’s sake’ – but that is now NOT the case. One part of me says – ‘ask Synchron NOT to put any displaced ex-Dover adviser on’ – My empathic side says there must be many very good, ethical and diligent Dover advisers now caught between a rock and a hard place. This whole industry is being decimated by bureaucratic overkill and ‘selective’ approaches depending upon who the License holder is [or who they might be owned by]. Worst of all, new business in both lump sum & IP is rapidly declining [see report today in RiskInfo]. This is NOT good news for the consumer or the Government [of the future]. It has NOTHING to do with the over-stated and reported ‘churning’ activities of the past. It’s about having to spend countless hours on a given client’s individual insurance needs. Meaning it is not financially possible to deliver professional and totally compliant advice to anyone who cannot afford to pay a minimum $5,000 annualised premium. For the first time ever, I now see why so many of us need to use ‘anonymous’!!!

  • Old Risky


    What are the motives here of Adviser Ratings. They have been “surveying” advisers on whether or not they were looking to shift licensees for at least a couple of years. Why do they do that – are they promoting another AFSL for which they have a connection, or are they conducting a business broking enterprise – I’d like to see Adviser Ratings be upfront about exactly what they’re doing. So come on Risk Info – ‘s ask the questions and report back on the answers

    I also question the tecniques used to form their opinion.. There are perfectly innocent reasons why advisers change licensees and in most cases it’s not to do with either poor advice or poor compliance. I had my own AFSL,sold the business, wound up my license but as I continued to advise, I had to change to the licensee of the purchaser. When that arrangement ended, I joined an institutional licensee, and the experience as a risk only adviser with them was frankly horrible.

    In frustration I joined a largish midrange private AFSL, after a lot of research, but then after five years, and in the shadow of the changes of LIF, that licensee decided that, on their charging model , I wasn’t making enough money for them. My move had nothing to do with the quality of my advice or compliance issues.

    I was then forced to search out another AFSL, preferably a smaller one, and yes for about a month I looked at Dover, but something told me it wasn’t what I wanted or needed, and I didn’t proceed. I am now with a very small licensee who is most interested in my advice and my compliance.

    For Adviser Ratings to use a recent record of changing AFSLs as an indication of poor advice or poor compliance is crap. There are perfectly legitimate reasons why many advisers are move AFSLs. Some of it is to do with the scope of APLs

    We still don’t have the reasons why ASIC attacked Dover. Remember Dover complained to the RC that the big insurers and fund managers and the banks delayed giving Dover references for advisers who sought to join Dover. It was commented that the delay was generally from institutionally owned AFSLs and seemed to relate to the level of FUM that would disappear out the door if the adviser joined Dover.

    ASIC have a poor record for not disclosing full information on their actions to the industry it is regulating, preferring a splashy headline of another head on a pole to the general media. Advisers and other AFSLs should be fully informed on the REAL reasons why ASIC sought to wind down Dover. This is not secret lawyers business.

    For example, I am aware that over the last decade many advisers were approached by one or two large institutional owned AFSLs seeking to have them join that licensee and offering large amounts of cash to “cover expenses” . It was very obvious when I received a number of those offers, that it was expected that a large proportion of my risk business( that was still insurable) should be of the “moved” to the parent insurer of the AFSL. That practice has probably ceased but the fact is that it occurred on a number of occasions to advisers of my acquaintance, yet ASIC apparently failed to detect the resultant “churn”, until Report 413 came along. That issue should bother everyone in this industry, because LIF was a direct result of Report 413..

  • Megs

    Ridiculous ! So advisers move from an Institution with appalling lack of supervision and real quality advice, and takes the clients , the FUM and the wish to do it better to a Licensee that actually does dot every i and cross every T and in every word and deed guides better advice and better compliance. Then because they used to work under the slack useless other mob , the new firm is branded risky ?? Whaaaat. DO these people actually get paid for such nonsense.

    • Dave

      when you look at the report its full of inaccuracies and potentially liable
      they mention ASIC notices and compliance enforcements for the top 20 yet a number have impeccable records
      They also talk about education standards and FASEA excuse me this has not been finalised yet!
      So they have branded these 20 companies as high risk on two sets of figures with no evidence to support this
      OMG I hope you have good litigation lawyers