Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Dixon Advisory files for voluntary administration
On Wednesday, Dixon Advisory & Superannuation Services, the division of ASX-listed E&P Financial Group (ASX:EP1) that was focused on delivering financial advice to high-net-worth clients for several decades, filed for voluntary administration.
This marks the beginning of the end for what initially appeared to be an Australian success story. According to the ASX announcement, administrators were appointed because management “determined that mounting actual and potential liabilities mean it is likely to be insolvent at some future time.”
The “mounting and potential liabilities” refers to a growing list of complaints to the Australian Financial Complaints Authority (AFCA) and now two class actions, one from Shine Lawyers and the other from Piper Alderman.
The majority of the complaints and legal action relates to the advice provided by the group’s team of financial advisers throughout the 2010s, but particularly, the recommendation of in-house products and perceived conflicts of interest, following their eventual demise.
Dixon Advisory had an ambitious marketing campaign, attracting self-directed investors seeking support through a strong brand name, and grew to the point where it merged with stockbroking firm Evans & Partners before listing on the ASX. One of the key marketing points was a focus on delivering low-cost SMSF service and supporting this through investment and strategic advice.
As is too often the case in financial markets, when the product cost is low, you may well be the product. The willingness to source cheap services and advice was ultimately countered by the significant fees generated by their suite of in-house products.
With complaints mounting, management is concerned about the inequity that may result due to the payment and resolution of individual complaints and cases and prefers this to be managed independently, via an administrator. The company was, however, quick to confirm that this has no impact on the other operations of E&P Financial Group, nor on the assets of its remaining clients.
Ultimately, the fall of what was seen as a very strong brand is another disappointing result for an industry that is already under significant regulatory pressure. All one can hope for is that investors who have been financially hurt are “made good.”
