Kim’s Story
*Details have been altered for legal and privacy reasons
Kim was provided inappropriate financial advice for her situation, and almost lost her life savings
Kim was compensated for the financial losses she incurred from bad financial advice.
If your experience sounds like what Kim went through, get in touch with our team for an obligation free discussion.
A few years ago, Kim was referred to a Financial Advisor by one of her work colleagues. Kim hadn’t been actively looking for financial advice, but her colleague seemed to be doing well financially, so she figured she had nothing to lose.
Kim attended her free initial consultation, where she had a general conversation with the Financial Advisor about her financial situation and goals. At the conclusion of the meeting, the Financial Adviser offered Kim help with potential investments and with managing her superannuation to maximise her returns.
During the presentation of her Statement of Advice, Kim was presented with information about the benefits of establishing a self-managed-super-fund (SMSF), and positively gearing an investment property. They then recommended an affiliate property developer “they worked with all the time”, to facilitate the purchase.
Kim considered the advice for a number of days, and eventually decided to go ahead with the advice. Within a month, Kim had rolled her superannuation into an SMSF, and engaged with the property developer to purchase the investment property, as well as obtained a loan to further fund the purchase of the property, beyond the capacity of her SMSF.
However Kim felt uneasy about a number of things and had questions. The presentation was focused around the SMSF property aspect of the advice, however when she read more into the advice, she had questions about the ‘do nothing scenario’.
Kim sent a number of emails over the next few months asking questions about her plan, but the planner wasn’t giving her answers. She then called her Financial Advisor to follow up, and he accused her of not trusting his advice, and told her that her question was frustrating. The call ended with still no explanation as to why the financial projections in the statement of advice highlighted that the ‘do nothing scenario’ was the better option to follow rather than initiate the advice provided by the Financial Advisor.
Frustrated with the lack of explanation, Kim lodged a formal complaint with the financial advice firm. The Head of Advice reassured Kim that the SMSF was a long term prospect which was set up for the purpose of having total control over her superannuation and the management of its funds. She shouldn't stress about the 5 and 10 year projections, and she would be better off in the long term if she followed their advice.
Over time, Kim continued to check the balance of her investment, and realised that all of her employer's contributions were going straight into paying fees on the investment, and instead of being positively geared, she was losing money.
Kim found Financial Rescue online, after trying to lodge a complaint with the Australian Financial Complaints Authority (AFCA) herself, and getting overwhelmed by the somewhat technical process.
Financial Rescue were able to assist her with her dispute, as the Financial Advisors failed in their duty to provide advice in Kim’s best interest. There was no basis behind their recommendations, and as a result, Kim incurred financial losses.
The Financial Advisor was ordered to compensate Kim, and restore her superannuation to a position she would have been in, had she not received the inappropriate advice.
