The financial planning industry owes its origins to the old life insurance salesman days. The salesman, sitting down with his customers (not his clients) would pull out a prospectus and do his best to sign ‘em up for high cost and high commission managed funds and managed super, as well as his traditional forte of high commission risk insurance.

As the financial planning industry slowly sheds its origins and painfully transforms to a profession, free of commissions and paid only by clients, we will see the old life insurance salesmen fall away, for a fairer and more informed approach focussing on the clients, and what is best for the clients.

Dover’s on-boarding and off-boarding processes

Dover’s on boarding process was based on the Australian Bankers’ Association protocols, and ASIC’s public statements, but went a lot further. When advisers left Dover we always did the right thing and gave genuine and complete answers to the ex-adviser’s new AFSL.

We did our best to make sure the bad apples stayed out of the industry.

Dover had its on-boarding processes reviewed by external consultants at least once a year.

The most recent review was in February 2018, when Integrity Compliance Advisers reported all was in order. They confirmed “Dover has demonstrated the recommendations for the background checking of advisers as set out in ASIC’s report 515: Financial Advice: Review of how large institutions oversee their advisers…”.

This was not a surprise. Every year for the previous four years Dover engaged a different compliance consultant, and asked it to check, amongst other things, our on-boarding and off-boarding processes. Most years the consultant said “All good here. But have you thought of…” and rattled off a few suggestions for improvement.

We carefully considered their suggestions and, if they made sense, took them on board as improvements. It was part of our commitment to continual improvement.

(The annual consultants’ reports went a lot further than Dover’s on-boarding and off-boarding processes. The reports concentrated on Dover’s SOA review processes including the content of each SOA. Every year was a big tick. But that’s another story.)

Introducing Synchron’s Don Trapnell

I have not had the pleasure of meeting Synchron’s affable Don Trapnell, although I have often seen him in his sales booth at industry functions, handing out trinkets and showbags full of goodies.

Don seems a natural showman, and knows how to woo a crowd.

I doubt it will be an interesting experience if I ever do meet him. Don is proudly an old style risky; Don is the author of thought leading hard hitting opinion pieces, such as “Thank Goodness for Life Insurance Advisers”; Don is a man who cannot understand why commissions are unprofessional. Don and I do not have much in common.

Don has been a Dover critic for many years. Quite amazing when you consider Synchon’s poor compliance track record, actively participating in various ASIC compliance case studies, as well as the well-known professional negligence insurance switching case, Swansson v Harrison.

We heard bad reports from ex-Synchron advisers who joined Dover. Virtually no compliance, and a big emphasis on moving insurance products as fast as possible to maximise Synchron’s volume-based revenue streams. CPD days focus on (sponsored) insurance products. There was no technical support.

It’s was a lonely life at Synchron, they said, with virtually no adviser supervision or contact. As long as you are writing new business they leave you alone.

 

I was never surprised to see a Dover adviser terminated for poor compliance and weak technical skills turn up a week later at Synchron, without the faintest suggestion of a reference check, or the shortest call to check our ex-adviser out.

For example, the ex-Dover adviser who features in Practice Note 9: Why vulnerable clients need extra TLC joined Don’s team over at Synchron without a question or reference, despite being a disgracefully unethical adviser.

Read practice note 9 to see why. You can do this here: Practice Note 9: Why vulnerable clients need extra TLC

So you could understand why I was surprised to read Don’s comments on Dover, as reported by Linda Santacruz and Killian Plastow in the September 2018 edition of Independent Financial Planner (IFA).

Boy, did Don go to town. Don absolutely gave it to Dover. No punch was pulled. No quarter was given. Don went in for a kill.

Don hit out with the gleeful venom of a man who thought his victim could not hit back.

The simplest way for me to explain what Don said is to let you read every word for yourself:

Nasty stuff. I confess I had to read Don’s words twice. Was this guy fair dinkum? If he was, what a bull shit artist.

I copied it over to our CEO Florence Tee, and Tee too was shocked.

Unbelievable hypocrisy. No, worse, a blatant lie. Don wrote crap. Pure hypocritical crap. Nothing could be further from the truth.

What are Synchron’s on-boarding processes really like? Another three bad apples in the barrel

Let’s look at a recent real-life example to see what Synchron’s on-boarding processes are really like.

In early March 2018 I terminated three Dover advisers, let’s call them Adviser 1, Adviser 2 and Adviser 3.

I terminated them because they tried to recommend a parcel of risk insurances costing $5,000 a year to a 21 year old female pre-school worker earning about $20,000 a year, and a transfer of her $2,000 of super from CARE to a retail fund that just happened to allow advisers to take their fees out of the member’s account. Horrible advice that would really damage the poor woman if she acted on it.

Obviously Dover’s SOA review processes caught the SOA before it was sent to their unwitting client. No damage done. But what a disgraceful and nasty breach of the best interest duty and the appropriateness of advice rule it would have been.

Dover did not want them as advisers, and I let each of them know this in no uncertain terms. In fact my terms were probably a bit too not uncertain. (I tend to be like that when faced with dangerous incompetence.)

Soon after, on 15 March 2018, Dover received a reference check e-mail from Ms Simone Ciancio, Synchron’s On-Boarding and Kaplan Training Officer, asking after Adviser 1, 2 and 3. Simone asked six specific questions, being:

  1. What was your experience with Adviser 1 as an authorised representative?
  2. Is there any compliance issues? (sic)
  3. Is there any on-going training issues? (sic)
  4. Does he owe any money?
  5. Did he resign or was he terminated?
  6. Are there any other matters that we should be aware of?

Dover responded immediately, telling Synchron the truth: the three ex-Dover advisers were technically weak, had a poor compliance attitude, virtually every client received the same (poor) advice, and they almost always breached the best interest duty and the appropriateness of advice rule. They just wanted to over-sell unnecessary and unaffordable insurances, in a gross betrayal of trust.

In summary, the three advisers were dangerously and hopelessly incompetent. Dover could not have made itself more clear. There is no way Synchron can claim it did not get the message.

You can read what Simone Ciancio from Synchron asked, and how Dover responded (the bits in red text) here:

Yes. You guessed it. Virtually the next day the three ex-Dover advisers, terminated by Dover for very poor compliance, popped up  as advisers at Synchron. There they remain to this very day. No doubt doing damage daily.

Do I need to say anymore?

Be careful what Synchron says about it’s compliance processes and in particular it’s on-boarding processes.

Things are not what they say they are.

Postscripts

Was this unusual for Synchron?

No. It was usual. What was unusual was the reference check. Usually there was no reference check.

Should Synchron now lodge a breach report in respect of these three advisers’ appointment?

Yes. ASIC would be of the view that a breach report is required. Within ten days. But I doubt Synchron will do this

Is Synchron being investigated by ASIC for appointing these three advisers?

Yes. Synchron knows ASIC is investigating it for appointing these three advisers.