June 26, 2018
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.
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.