Chapter 8 – ASIC’s review of Terry McMaster’s advice. A Study in incompetence

This where ASIC really get nasty.

A reminder: this is what the ASIC experts wrote about Terry’s advice to Dr Amit:


Sounds bad, doesn’t it

In Chapter 5 we saw the ASIC officers make Terry look like the worst adviser ever. A rogue adviser whose sole purpose was to corruptly mislead and exploit vulnerable and gullible clients.

Reading “Example 3-Advice of Terry McMaster” one understands why: it sounds terrible.

The ASIC experts are being misleading and deceptive

Every ASIC sentence is false and pejorative. The others are just pejorative. Mere incompetence cannot explain their words. They are breathtakingly inadequate, always assuming the worst and ignoring the facts in front of them. Remember, Dover constantly requested meetings[1]. ASIC refused each request. Dover volunteered legal privileged reports confirming Dover’s compliance was in order (including detailed discussions of the CPP). ASIC dismissed these reports as incompetent[2].

Dover says the ASIC officers created misleading and deceptive evidence about Terry’s advice to Dr Amit. This this was done for the specific purpose of enhancing ASIC’s required narrative on Dover: ie Terry’s advice was bad, and Dover had to close.

A sentence by sentence break down of Terry’s advice

1          ASIC is concerned Dr Amit is a vulnerable client, and is being preyed on by Terry

This is not specifically stated but it is strongly implied throughout the ASIC report. It is a false implication. Dr Amit is not a vulnerable client. Dr Amit is an ex-RAN officer, was the CEO of Australia’s largest medical personnel association and holds an MBA and a PhD in science.

The officers ignored the facts to create a pejorative impression Dr Amit was a vulnerable client.

This was intended to, and did, prejudice subsequent ASIC decision makers.

2          ASIC is concerned Terry is benefiting from the advice in an undisclosed way

This is also not specifically stated but it is strongly implied. It permeates the ASIC report. It is another offensively false implication: Terry did not charge for the advice. Terry rebated all commissions and only charged the agreed time-based fee of $1,800 for setting up the SMSF and installing the insurances. There was no other benefit to Dover or Terry.

3          ASIC states Terry is forcing Amit to set up a SMSF and buy a property

 “The Advice is to set up a SMSF. The Adviser states that the client wants to do this but it is clearly his advice (ie Terry’s advice) as he makes statements such as “SMSFs generally earn better investment returns than managed investment funds.’”

The officers get it wrong again. They then use this false statement to color all their subsequent findings and conclusions.

First, Dr Amit decided to set up a SMSF and borrow to buy a property. Terry did not initiate the idea and did not encourage it.

Second, Terry discouraged Dr Amit setting up a SMSF to borrow to buy a property.

Third, Dr Amit engaged Terry because Terry did not accept commissions and employed a team of highly qualified experts[3] who specialized in their fields, such as SMSFs or risk insurances.

Dr Amit asked Terry for help with a strategy to set up a SMSF to buy a property in the western suburbs of Melbourne. This was near where his family was living at the time. Terry disagreed. Terry suggested the SMSF invest in Vanguard (commission free) Australian index funds instead. Dr Amit insisted he wanted to set up a SMSF to invest in residential property[4].

The officers are wrong. Their base premise is 100% incorrect. What more can one say: the officers call Terry a liar and thereafter assume everything Terry writes is a lie. A simple phone call to Dr Amit or Terry would have disabused them of these false thoughts. But why do that? Why spoil ASIC’s false narrative before it even starts.

4          ASIC is concerned Terry falsely stated that SMSFs get better results

 “SMSFs generally earn better investment returns than managed investment funds”

The context of this sentence suggests the officers believe Terry claimed a false advantage for SMSFs. At the time the statement “SMSFs get better results” was true:  AFR Article saying SMSFs perform better[5].

ASIC must have known this. It was public knowledge at that time. There are exceptions: some large funds do outperform some SMSFs. Dr Amit knew this. He is not dumb. But as a general proposition the costs advantage connected to a SMSF compared to managed super meant the SMSF would perform well.

5          ASIC is concerned Terry says there are limited risks with SMSFs

“He states that there are limited risks with SMSFs.”

Terry did not say “there are only limited risks with SMSFs”. Further, this statement falsely implies Terry did not explain the risks connected to Dr Amit’s strategy. Terry actually wrote:

“There are limited risks associated with managing your own SMSF such as poor investment decisions by yourself and the potential costs of rollover. You can read our guide to self-managed funds, which is also a product disclosure statement, Doctors’ Guide to SMSFs (which also worked as a product disclosure statement[6] for a SMSF, which is good practice but is not required by ASIC.)

“You mentioned that the main purpose to set up the SMSF is to enable you to buy real estate. Given that this is the case we recommend you familiarize yourself with borrowing in a SMSF by reading link to chapter 5.2 of the Doctors’ Guide to SMSFs.”

Terry then provided numerous other warnings about the risk connected to SMSFs, gearing and property investment. These were in the SOA and the hyper-texted linked manuals, ie Financial Planning for DoctorsDoctors’ Guide to SMSFs and Financial Planning for Registrars deemed to be part of the SOA by ASIC in ASIC’s RG 175-180.

It’s hard to see how one could be more expansive on risk than Terry. Bear in mind Dr Amit is and MBA and a PhD and a CEO. He can make up his one mind on matters like this.

6          ASIC is concerned Terry did not create a fact finder


 “The Adviser fails to complete a fact find.”

What did ASIC think the bit in the appendix headed “Information upon which this SOA is based” was? You can see part of it here:

It is obviously what ASIC calls a fact finder, except Terry used a more accurate non-jargon description.

The Corporations Act does not refer to a “fact finder” and doesn’t require a fact finder to be on the file[7]. However, it is an industry convention, one way of proving compliance with the “know your client” rule.

For advisers who are accountants, such as Terry, the “know your client” rule is easily met. The huge amount of data on the  accountant’s file easily satisfies the “know your client” rule. 

7          ASIC is concerned Terry did not ascertain Dr Amit’s super balances

 “He fails to, among other things, ascertain the client’s current super balance that will be rolled into the fund but says it is ‘about $200,000”.

Terry obviously did ascertain Dr Amit’s current super balance. What can one say? It is pictured here:

ASIC got it wrong again. The balances were ascertained and confirmed in writing with HESTA. They are on Terry’s file. Amit’s super was $157,436 and his wife’s super was $39,349. A total of $196,785, ie about $200,000. They rose to more than $200,000 by the time the rollovers to the new SMSF were completed. The balances change as the HESTA pricing model reacted to the market. Hence the phrase “about $200,000” rather than an incorrect precise figure.

By the way, what grounds did ASIC have for saying Terry failed to ascertain Dr Amit’s current Hesta balance? There is no evidence for this assertion.

It seems they just made it up.

8          ASIC is concerned Terry failed to ascertain “other things…”

Further, why did the officers write “He fails to, among other things, …”.  What other things did Terry fail to do?

This is a maliciously deceptive and mislead suggestion. It implies Terry omitted other unnamed critical tasks and the the omission was deliberate and for nefarious reasons.

There were no “other things…” omitted.

9          ASIC is concerned Terry recommended a property around the $450,000 mark

“He says this will allow the client to purchase a property for around $650,000 but recommends a property with (sic) no more than $450,000.”

This is correct. One struggles to see how the officers could have a problem with it.

Terry counselled Dr Amit against borrowing to buy a property in the SMSF. Terry preferred Australian shares index funds. Consistent with this, Terry suggested a property value below the maximum limit based on lending percentages. Terry was being conservative: the idea was to not take on too much debt and risk. To ensure the SMSF was not stressed and was liquid.

This meant the SMSF was protected against the loss of a tenant, an unexpected repair bill or an unexpected fall in the market.

10        ASIC is concerned Terry consider Dr Amit’s existing HESTA insurances

 “The Adviser makes recommendations for insurance without consideration of the existing HESTA policies and whether some superannuation should be retained in that fund to continue the policies.”

The officers gets it wrong again. Terry’s advice did consider the insurances in the old fund. Could it be more obvious? It was in the SOA under the heading “Part B Insurances”. Dr Amit was not happy with the insurances in his old fund. This was a fair call. For example, the income protection insurance is limited a low sum insured, and cannot be changed[8]. This was explained in McMasters’ manuals Terry gave Dr Amit.

Dr Amit was right: when Terry asked Sarah Gao[9], a chartered accountant employed by McMasters’ who helped Terry with para-planning work to get quotes from other reputable life offices[10] Sarah sourced a better deal for from AIA, a reputable insurer.

For the same cost, ie premiums of $2,335, Dr Amit got $10,000 pcm income protection insurance to age 65 (cf $10,000pm with Hesta for two years), $1,500,000 life insurance (cf $850,000 with Hesta) and $1,500,000 of TPD[11] insurance (cf $765,000 with Hesta).

In other words, Dr Amit got more cover for the same premium. It was a great piece of work by Sarah. Of course, Dr Amit and his wife were delighted. Dr Amit’s before and after position is summarized in the following two tables, both lifted directly from Terry’s advice to Dr Amit[12]:

On the life insurance and TPD insurance side of things, with HESTA Dr Amit got $850,000 of life cover and $765,000 of TPD cover. With AIA Dr Amit got $1,500,000 of life cover and $1,500,000 of TPD cover. Once again, an extraordinarily better deal, but not to the same extent as the much better income protection deal.

If this does not satisfy the best interests duty, what does?

It gets better: commissions rebated in full

Of course, as was obvious from Terry’s SOA, it gets better than this once the McMasters’ Commission Rebate Scheme is considered.

The position over 3 years is shown here:

As you can see, over the three years Dr Amit’s SMSF received $3,268 in commission refunds. This made Dr Amit’s insurances even cheaper than before, and an even better deal.

To be frank, it is impossible to understand how the officers did not know this. It was blatantly obvious. Anyone with the slightest knowledge of financial planning would see how much better the AIA deal was for Dr Amit. Terry’s advice to Dr Amit to switch insurers and pay the new insurer’s premiums out of his new SMSF, with a full commission rebate, was manifestly in Dr Amit’s best interests[13]. Dr Amit got much more cover for a much lower net after-tax cost.

We stress this: the above data was in the SOA. Form your own view on why ASIC left it out.

11        ASIC says Amit did not leave money in HESTA to benefit from its insurances

 “The Adviser makes recommendations for insurance without consideration of the existing HESTA policies and whether some superannuation should be retained in that fund to continue the policies.”

For the reasons set out above Dr Amit would have been pretty dumb to leave any super benefits in the HESTA fund, as appears to be suggested here by ASIC.

This was obviously not in Dr Amits’ best interests. As explained above, Dr Amit’s HESTA fund insurances were inadequate compared to his new AIA insurances.  If Terry recommended “some superannuation should be retained in that fund to continue the policies” he may have breached section 961B(1) of the Corporations Act. He may have been exposed to a complaint from Dr Amit that he had not acted in Dr Amit’s best interests. He may have been negligent, in not procuring the better income protection and life insurance and TPD insurance for Dr Amit.

Doubling up on income protection insurance is also problematic: the indemnity principle means Dr Amit cannot over-insure and if the insured event occurs each insurer will pro-rata reduce the benefit to avoid a total benefit greater than 75% of Amit’s total income.

We confess to being at a complete loss as to how ASIC could think otherwise.

12        ASIC is concerned Terry recommended arbitrary sums insured

The Adviser makes recommendations for arbitrary amounts of insurance (fails to identify relevant personal circumstances of the client including number of dependents) which the client later revises.”

The sums insured were discussed. Dr Amit chose the sum insured/premium combination. Dr Amit holds an MBA degree. He can think for himself.

Dr Amit was fully apprised of the risks of being uninsured, as Terry wrote in his SOA:

13        ASIC is concerned Terry failed to identify the personal circumstances of the client including the number of dependents

The Adviser makes recommendations for arbitrary amounts of insurance (fails to identify relevant personal circumstances of the client including number of dependents) which the client later revises.”

This is wrong too. The number of dependents was “1 Child”.

How could the officers miss it?

14        ASIC is concerned the AIA product was selected by someone other than the adviser and that persons other than Terry were involved in the advice process

 “The AIA product was selected for the purposes of the quote, by someone other than the adviser, who tells another person to quote and t “AIA is fine”.

This is best dealt with together with the next sentence:

 “Terry McMaster provided the SOA but does not appear to have developed the advice document or present the advice document or discuss the advice with the client. This was done by name deleted (Lydon) who is not authorized to provide financial services.”

Terry did not work on his own. Terry owned a multi-disciplinary professional firm turning over about $50,000,000 a year. Terry had more than 50 staff on his team at McMasters’ and another 50 on his team at Dover. Terry was accompanied by a junior staff member at meetings. This employee was entrusted with creating the advice for Terry’s review and implementing the advice for the client. Sometimes this person was a solicitor, sometimes an accountant and sometimes a financial planner (or a combination thereof).

Terry introduced three of the McMasters’ team[14] to Dr Amit. They were:

  1. Lydon, a university educated chartered accountant with experience in setting up and accounting for SMSFs (obviously Dr Amit would need a SMSF experienced accountant on an on-going basis. It made sense to introduce Lydon[15] in the early days to enhance client continuity. Lydon did the SMSF work
  2. Sarah holds a Master of Commerce degree from Melbourne university and is chartered accountant with extensive experience in risk insurances. Sarah enjoyed para-planning work and eventually crossed over to become a fulltime financial planner. Sarah was brought in to help Dr Amit with the selection and implementation of the risk insurances and
  3. Berivan, a director of McMasters’ Accountants, with a master’s degree in accounting. Bez is also qualified both a financial planner[16] and a licensed real estate agent with more than ten-years full time experience helping clients buy houses in bayside Melbourne while she studied accounting part time. Berivan was available to help Dr Amit with the property side of things.

This depth of skill was one reason why clients engaged Terry and his multi-disciplinary firm, McMasters’ Solicitors, Accountants and Financial McMaster.

A team usually beats an individual, and a team will have a greater range of skills. This is shown by the great results achieved by Sarah Goa for Dr Amit on the risk insurances side of things. Terry expected Dr Amit would get a better deal from someone other than HESTA. He left it to Sarah to do the leg work, and to approach the question with an open mind, a higher skill level and a lower hourly charge out rate. Sarah did a great job. To be frank she did a better job than Terry would have. This is because she worked full time in this area and Terry did not. She was a risk specialist. Terry was a generalist.

If the officers had rung Dover this could have been explained to them.

15        ASIC is concerned McMaster did not recommend trauma insurance to Dr Amit

 “The advice fails to consider trauma insurance.”

This is not correct[17]. Trauma insurance was effectively discussed in detail. It was not recommended. It never was.

ASIC criticizes Terry’s for not recommending trauma insurance. Terry’s views on trauma insurance were well known and were set out at page 165 of the Financial Planning for Doctors[18]. Dr Amit had a copy of this manual. It formed part of Terry’s advice. Terry thought trauma insurance was unnecessary if the client had adequate income protection and life insurance. As detailed above, once Dr Amit switched to the AIA income protection policy and its life insurance and TPD policy this box was ticked: Dr Amit was adequately insured.

You can read an extract from the Doctors’ Guide to Financial Planning detailing Terry’s thoughts on trauma insurance here:

Plus, it is common knowledge there are huge issues with definitions, such that nearly half of all trauma insurance claims are rejected by the insurers.

The omission of trauma insurance shows the advice is in Amit’s best interests. Most AFSLs require advisers recommend trauma insurance knowing it is not in the client’s best interests. They recommend it just to get a commission.

Terry would not dream of doing this.

Terry did not accept commissions.

16        ASIC is concerned the strategy depends on Dr Amit paying $50,000 a year


“The Adviser states that the client will be able to contribute $50,000 a year to superannuation without any basis. The viability of the strategy is predicated on this, but there is no evidence that the client can afford this or that this is a better strategy for the client than reduction of their non-deductible debt.

No such statement was made. Terry did not state “that the client will be able to contribute $50,000 a year to superannuation”. The viability of the strategy is not predicated on contributions of $50,000 a year by Dr Amit. This is a blatant lie. (emphasis intended)

The ASIC proposition defies common sense: how could borrowing $250,000 to buy a $450,000 property require $50,000 a year in contributions (after rent) to be viable? It is an absurd proposition. The only reference to $50,000 was in the context of the maximum that can be contributed as a deductible employer contribution each year. The SOA read:

“The contributions each year can be as much as $50,000 depending on how much you and Surbhi are able to salary sacrifice.”

Further, the concept of a contribution, what it is, who can pay it and how much can be paid is detailed in each of the Doctors’ Guide to SMSFs and Financial Planning for Doctors. Both manuals formed part of Terry’s advice.

17        ASIC is concerned McMaster encouraged property

 “The adviser recommends a buyer’s agent stating that among other things this should yield a better outcome. Specifically the adviser recommends the clients use “Buying Bayside” which the SOA notes is an associated business of McMasters (the adviser’s firm).

However, a company search conducted showed that the adviser is a former director and shareholder of Buying Bayside and was a director and shareholder at the time the SOA was produced. It is also noted that a potential family member of the adviser (name deleted) is the current major shareholder and director of Buying Bayside.”

ASIC says Terry recommended property and implies this is a bad thing. It would be negligent to not recommend residential property. Direct property was the best investment available at the time, as this ASX sourced graph shows:

Bayside Melbourne did even better.

Most AFSLs did not allow advisers to recommend the best performing asset. Why? There is nothing in it for the AFSL. No commissions, no Funds Under Management and no Premiums Under advice.

Terry was not influenced by commissions, Funds Under Management and Premiums Under advice. Terry was only influenced by the best interests of the client. This is manifest in the advice to Dr Amit.

Dover encouraged property[19]. This was provided the only person who paid the adviser was the client. No apartments, off the plan deals or commissions. Dover was unique in attaching conditions to ensure advice was in the client’s best interest[20].

Must it be said again: Dr Amit wanted to use a SMSF to invest in property. Terry said the SMSF should invest in Vanguard Australian shares funds instead. Dr Amit insisted on property.

18        ASIC is concerned Terry recommended Dr Amit use a buyer’s advocate

ASIC is concerned Terry suggested Dr Amit use a buyer’s advocate to assist in the search, and that he said this will yield a better outcome. ASIC implies using a buyer’s advocate is a bad thing and was not in Dr Amit’s interests.

Terry’s advice on a buyer’s advocate is reproduced here:.

As you can read, Terry did not say what the ASIC experts said he said.

Full disclosure of the relationship between commission free Buying Bayside and commission free McMaster’ Accountants, Solicitors and Financial Planners.

19        ASIC is concerned Terry said the client knows where the SMSF assets are

ASIC is concerned Terry told Dr Amit an advantage of an SMSFs is the client knows where the assets are. ASIC implies this is wrong. Terry is not wrong. Terry is correct. All one can do is shake one’s head in astonishment at the ignorance of such a sentence: how it could fall from the pen of an ASIC SMSF expert?

This is a real head scratcher? How could the ASIC experts say something so wrong?

The most powerful advantage of a SMSF is control. Graeme Colley is an SMSF expert and you can read his thoughts on the advantages of SMSFs here: 6 Top Advantages if an SMSF. How can one read something like this and then imply it’s wrong to say an advantage of an SMSF is the client knows where the SMSF assets are? If the ASIC experts are to opine SMSFs they should at least demonstrate an awareness of the basic concepts.

They did not do this. They instead demonstrated their ignorance of SMSFs.

SMSFs are literally “self-managed” by the client/trustee/member. The client is the trustee, ie the legal owner of the asset. This means Dr Amit will know where the asset is at all the time[21]. This particularly with real estate. Dr Amit’s name would on the title (the state revenue offices use the legal owner’s name, ie the trustee’s name, not the beneficial owner’s name). The various bills (eg water) and notices (eg council rates) would be sent to Dr Amit’s address.

It’s the same with share investments. The share trading account is in the trustee’s name and can be accessed it will. The trustees obviously always know where the SMSF assets are.

Whatever investments he chose, Dr Amit would always know how the SMSF’s investments were performing and where they were. That’s just how SMSFs work.

20        ASIC is concerned the best interest duty is breached: s 961B(1)[22]

Terry’s advice was manifestly in the best interests of Dr Amit under section 961B(1) and there is no need to rely on the “safe harbor” rules set out in section 961B(2). See the attached document:  ASIC and its non-best interests duty for an explanation of these rules. However, it appears ASIC incorrectly applied the section 961B(2) so called “safe harbor rule” to incorrectly conclude Terry’s advice is not Dr Amit’s best interests.

This is wrong and breaches the NSG case[23] findings on the best interest duty: in the NSG case ASIC acknowledged the correct test was section 961B(1) and the safe harbor rules in section 961B(2) are only considered if the advice fails section 961B(1).


[1] These are detailed in chapter 13: “ASIC’s in-house lawyers set Dover and Terry up for the Royal Commission”.

[2] The 2016 Holley Nethercote report is reproduced and discussed in full in chapter 4. In summary, it analyses Dover’s SOA procedures and Client Protection Policy, and concludes all is in order. This report was voluntarily provided to ASIC despite being a legally privileged document. Dover did this in good faith. The ASIC officers dismissed the 2016 Holley Nethercote report (and a similar Sophie Grace Report) as incompetent. But worse, they did not tell Dover they had done this.

[3] Most of the staff were solicitors or accountants or financial planners. Many were dual or even triple qualified.

[4] See the e-mail from Dr Amit Vohra to Terry McMaster of Dover dated 19 February 2019.

[5] The general point that SMSFs perform better was recognized by most authorities. Time has shown Amit’s preferred strategy of investing in the western suburbs of Melbourne, near his home, was a superior strategy.

[6] Refer to paragraph RG 168.50 to 52, which can be read here: RG 1868 Product Disclosure Statements

[7] You can read a helpful fact finder Q&A on this topic here: Helpful Financial Planning Association Q&A on fact finders

[8] This is common knowledge in the financial planning industry. The ASIC experts must have known this.

[9] The ASIC experts did not bother to learn about Sarah Gao. They assumed she was an uneducated shyster.

[10] Does this help explain why Terry employed people who were more skilled in certain tasks than he was? It’s a great effort by Sarah. Who would have thought it would lead to ASIC shutting Dover down due to Terry’s poor advice?

[11] Total and Permanent Disability insurance

[12] The data was in the SOA. The ASIC experts seem ignorant of basic financial planning concepts. They just did not understand Terry’ advice

[13] The cheapest way to obtain insurance cover is through a full commission product with a full commission rebate. This is cheaper that “dialling the commission down” ie asking the life office to reduce the premium and not pay commissions used by some independent advisers. This is because in dial down the decrease in the premium is less than the decrease in the commission.

[14] McMasters’ employed more than fifty professionals.  Different staff were used for different client assignments depending on client needs, staff skills and work preferences and staff availability and other work commitments

[15] Coincidentally, Lydon is married to an ASIC solicitor

[16] Bez was once an owner and director of Dover. She is now authorised by Independent Financial Advisers Australia, and is a member of the Independent Financial Advisers Association of Australia

[17] There are actually an almost infinite number of things Terry did not recommend. For example, he did not recommend insurance on the life of Dr Amit’s child. Some advisers and AFSLs would have. These policies pay commissions too.

[18] This document formed part of the statement of advice: ASIC’s RG 175-180

[19] You can read a manual on advising on property called “The Financial Planner as a Property Adviser h

[20] You can read an interesting article by Halseys Financial Services Lawyers of how ASIC obtained section 1324 and 1101B injunctions to prevent Park Trent Properties Group and its CEO Mr Ron Cross (who Peter Kell describes as a property spruiker: ASIC media release 28 July 2016) here: ASIC successful in … restraining sales group who encouraged investors to invest through SMSFs. It appears ASIC incorrectly believed Dover and Terry McMaster were involved in similar nefarious and egregious schemes. If ASIC had accepted any one of Dover’s many invitations to meet and discuss Dover’s business model this misunderstanding on the part of ASIC could have been avoided.

[21] Unless the trustees forget the property’s street address, which I have seen happen before. But we expect it is rare.

[22] You can read about the best interests duty here:  ASIC and its non-best interests duty


The Dover Group