An update on the Dixon Advisory disaster

Over a year ago I made some comment on breaking news that the wealth arm, Dixon Advisory within listed wealth giant Evans Dixon had been publicly called to task on recommendations for clients to invest in several of their in-house investment products that had performed poorly. One particularly egregious performer was their heavily recommended US property fund, URF, and other related products. (Hot tip, hang on for something similar soon with another from the stable, NEW Energy Solar….)

In news today it appears that these complaints did not fall on deaf ears, with Federal Court proceedings now being launched by the Australian Securities and Investments Commission (ASIC) over alleged failure of Dixon Avisory to act in their clients’ best interests:

The regulator announced the proceedings today saying it was alleging Dixon Advisory representatives failed to act in their clients’ best interests and to provide advice that was appropriate to the clients’ circumstances.

ASIC said it was also alleging that, in giving the relevant advice, Dixon Advisory representatives knew or ought to have known that there was a conflict between their clients’ interests and the interests of entities associated with Dixon Advisory within the Evans Dixon group, and failed to give priority to the clients’ interests.

The regulator said the court action related to financial advice given to eight sample clients, who were advised to invest in the US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019.

It said it would be further alleging that a total of 51 separate instances of financial advice were provided to the eight sample clients in the relevant period, each of which resulted in two or more contraventions of ‘best interests duties’ under the Corporations Act.

I will suspend comment on the above matter until resolved. But it is timely to repeat some of my previous guidelines that should be considered when seeking advice. Particularly when a recommendation involves some form of in-house product.

Aligned advice

It seems to an outsider (glaringly so after the Royal Commission), that an adviser recommending you invest 50% or more in house-branded products should warrant some sort of third party review.

Unfortunately for most, the time and cost incurred in seeking the initial advice generally mean that seeking alternative points of view can be beyond what is left in the schedule after family and work commitments.

The sad part of this scenario is that these clients have suffered the common triple ignominy of disappointing returns from investments recommended in the advice they have paid for, from the product supplier!

Moral: Be wary when you are being charged an advice fee to go into an investment product from the same company that is advising you. Don’t be afraid to ask what other external investments have been considered for a comparison.

High Fees

The URF in the spotlight at the moment was a cash cow, no question. The obscurity of the type of the investments in the fund makes the fee structure hard to mark to market, and the fees charged are hard to quantify. For mine, fees are a headwind to performance, so it always pays to ensure that you are paying a market rate for the exposure. If stated fees start in the 100’s of basis points, you have to wonder if there is going to be much left over for the investor!

Does this mean that it is a bad investment opportunity? Probably not, but like all things, the less you know, the less you should have invested as a proportion of your net worth.

Moral: unless you are investing in moon rocks, there is a high probability that similar investments exist and don’t be afraid to ask for comparable options, reasons why they were not selected and fee comparisons.

Poor Liquidity

The ability to sell an asset at a time that suits yourself is a critical component of investment. The more obscure the investment the harder this is to ascertain at the time of purchase, especially amongst the promise and emotion of an advice presentation that is centred on your retirement.

Investments in vehicles like Listed Investment Companies ensure longevity of funds for the investment manager. Capital is effectively locked up and means that as an investor, the onus is now on you to either (a) find a higher bidder in order to get your money back or (b) accept whatever opaque mechanism exists for getting your money out.

Demand for the Listed Investment Company can wane meaning significant discounts in unit price when compared to the actual amount invested in the fund. As the seller, you have to absorb the difference.

Moral: Again, the less you know, the less you should have exposed to the investment. Making sure at least some, if not most of your investment should be placed in areas known for high liquidity, such as large capitalisation public companies and federally sourced bonds.

Selling stock in your own company

Undoubtedly, the girth of the Dixon Advisory and Evans & Partners brand was built on strong client relationships. Why wouldn’t clients want to share in the potential prosperity of an upcoming float?

The advisory model of building a network of advisers and clients before essentially becoming a product provider is a well-trodden (and lucrative path) which appears to still be socially permissible until the carousel stops.

The obvious red flag here is not the promise but the reality that the combination of (a) house advice, (b) big positions in in-house products and (c) equity in the firm, means that most of your eggs are in one basket. If the in-house products have problems, you will quickly learn that you are not as diversified as you thought.

Moral: Diversify. But more importantly take a big picture look at your diversification to make sure that there is not a common thread running through what might at first glance seem unrelated.

Wrap up

Any investment can go wrong, I am not indicting the URF for making mistakes.

What I am saying though is that mixing aligned advice, high fees, illiquid assets, and related party transactions will quite likely create an incentive structure for financial advisors and wealth practices that don’t match the needs of the average investor.

When assets are going up it doesn’t matter, but when things go wrong the negative effects can multiply and when it comes to securing your retirement, it pays to keep it simple.


Tim Fuller is Head of Advice at the MacroBusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Tim Fuller is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

Tim Fuller


  1. DA has always been a shady as f boiler room shilling manipulated small caps to grannies.

    The Canberra office had a strong coke culture back in the late 00’s early 10’s. Would not be surprised if the rest of the group was similar.

  2. TailorTrashMEMBER

    Nice succinct article with good timely reminders
    ….a few more of these on MB would be good

    and …..used to see those ads for Dickson advisory with the two old guys in ill fitting suits ….though they looked like the dodgy brothers ….

    • Yes measured professional response. Gives a flavour but leaves the determination of who did what where to the authorities which is where it belongs.

  3. The Fund Management business is the lowest of the low. If you’re so good at investing why do you need to charge other people advice – surely you should be able to live off your own investments and if you can’t then don’t charge other people advice. Furthermore anyone who charges for advice should underwrite the capital to guarantee their work, if you took your car to the mechanic and it was returned with 3 wheels instead of 4 would you accept the quality of service.

    • While there are many ills associated with the asset management industry your approach is simplistic to the point of ignorance. The investment industry operates within a world of inherent uncertainty, completely different the vocations you compare it too.
      It would be lovely if investment was like civil engineering, but it aint. The main problem is that those within the industry frequently fail to recognise that and it’s not just hubris, it’s because of exactly what you have proposed above, that is, customers generally don’t want to know about it, uncertainty of outcomes is a difficult thing for the average joe to grasp, most people crave certainty, they feel that ‘getting investment advice’ simply means walking into an office an having some random tell you how to make money. They see investment (whether its an off the plan unit or parcel of equities) as like buying a fridge or taking a car to the mechanic, heres my money and I’m now entitled to the return I want or that you stupidly/deceptively promised and if I don’t get it I want a refund. Hence the reason, the higher returns you offer and the more certainty you falsely claim there is attached to it, then the more punters line up for it.

      Greed pays for a reason. Almost every punter sucked into an investment scam was offered a lower return and some point, but wasn’t interested, they wanted more! I suspect many of Dixon’s clients don’t fall into this category, they sought professional advice on managing risk and investing in sensible portfolios, instead, they ended up with a classic case of scum bags talking their own book for profit (big profits) but at the end of the day, the same thing is happening with car dealers, real-estate agents, builders, mechanics, tradies, hell even doctors! every day of every week.

      It’s worth remembering that contrary to your claims, the logic you outline doesn’t apply to other vocations or businesses anyway? If you’re such a good builder, why build buildings for other people? If you’re such a good mechanic why does your car have mechanical issues? If you’re such a good doctor, why are you unhealty? Those other businesses also seldom ‘guarantee’ their work and for any profession that deals with uncertainty it’s basically impossible, what are the guaranteeing, that you will make money? that your surgery will be a success? No, they can guarantee that the follow an established process but the can’t guarantee outcomes, anyone expecting that is frankly part of the problem.

      Bottom line, you go searching for simplicity in a world of complexity, there is always the danger you come off second best. Luckily for the Dixon clients, if that occurs because of professional incompetence or deception, they stand to receive compensation. Those that went their own way and decided something like Mayfair Platinum is where they should be, well they have lost everything and there will be zero compensation for them.

  4. “I am not indicting the URF for making mistakes.” Thats fine, you can’t because you risk a defamation lawsuit.

    However, insiders and observers know that while the investment premise of URF may have had merit, the vehicle was raped and pillaged by insiders who levied huge, hidden fees, funding the lifestyles of the overseas executives operating it. The net result being that almost all the profit generated from the property investments went to management, with investors left with illiquid holdings, debt and ongoing management costs.

    Dixon (like Macquarie) didn’t come under the same scrutiny as other financial advice players during the royal commission (despite running identical business models). Why? because they advise a wealthy client cohort and that doesn’t induce the same public reaction as ripping off ‘mums and dads’.

    The banks are out now, and all these cowboys are now ‘independent’ or ‘non aligned’ advisers (yep, thats what Dixon marketed itself as too!). That sales pitch will hang proudly next to everyone’s shingle, but don’t be fooled into thinking it offers you any additional security or increase the probably of you receiving quality financial advice.