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A Client or Sales Target?

24 Jun 2013 10:07 AM -

When all sides of politics agree on something (other than a pay rise for themselves) it’s worth paying attention.

Last week Liberal, Labor and the Greens all supported a Senate inquiry in to the Australian Securities and Investment Commission (ASIC).

This came after Fairfax reporters, Adele Fergusson and Chris Vedelago, revealed ASIC took 16 months to investigate allegations of serious misconduct and forgery within the Commonwealth Bank’s financial planning arm.

After dithering, ASIC admitted that “unacceptable and unlawful conduct” had occurred within Commonwealth Financial Planning.  

A rogue planner within Commonwealth Financial Planning had placed low risk investors – many elderly and disabled – into high risk investments without their knowledge or authorisation.  

Don Nguyen, the planner in question, was one of the Commonwealth Bank’s top financial planners.

It appears Nguyen was telling clients one thing to secure their business and doing the exact opposite with their money.

And if you’re wondering, Nguyen’s high status wasn’t based on the quality and appropriateness of his advice; it was based on his ability to bring in new business and sell investment products.

It’s something that had Nguyen promoted, despite a previous suspension and allegations of excessive fees and kickbacks paid to bank staff for referrals.

There’s two issues of concern here; firstly, ASIC’s slowness to react which has prompted the support for the Senate inquiry.

As I’ve said numerous times previously, ASIC generally arrives at the scene of the crime after you’ve done your dough.

Secondly, the culture that ranks financial planners on a ladder based on business they bring in.

It doesn’t inspire confidence that the client’s wellbeing is the primary objective when their money is tallied up on a ladder each month as a way of measuring success.

So it’s probably no surprise that when misconduct occurs within the financial world, it’s happening where there’s a sales based culture that can prompt this behaviour.

Success should be about clients reaching their financial objectives, not internal business sales targets.

It’s never too early to invest in your future