The Association of Independently Owned Financial Planners is a rival to Financial Planning Australia as an umbrella group for financial planners in Australia. Financial planning in Australia is a big business because Australia – unlike America – has a privatized social security system called “superannuation” and financial planners are the front-end for the sale of many superannuation products.
The industry has had its share of scandals (see Storm Financial and Westpoint) but there are many fine operators in the industry and I am unashamedly admit that some of my best friends are financial planners.
That said – the AIOFP was closely associated with Astarra – a fund of funds and distributor of funds which was closed recently by the Australian securities regulator after a whistle-blowing letter from your blogger. [I wrote about Astarra and my role in precipitating the investigation here though I can’t claim too much credit – a reader of my blog suggested that I look at it.]
Anyway – back to the AIOFP. According to this article four financial planning groups – all members of the AIOFP – represent about 90 percent of the funds in the “Astarra Strategic Fund” (now known just as the ASF). The strategic fund is the main black hole in Astarra – and the administrator has said that they cannot prove the existence or value of the foreign assets of the ASF. They said this possibly to quiet media claims by the AIOFP that the assets have been found. The AIOFP just wants the strategic fund taken out of liquidation – and presumably valued on the the basis of assets that they claim they can find.
Now my guess is the administrator – who intends to liquidate the ASF – is accurate. The assets of the ASF are pieces of paper which state that there are assets there but real proof of the existence of the assets cannot be found and liquidation is the only way to determine what is recoverable. But as said – the AIOFP has a different opinion and wants to sack the administrator.
Peter Johnston of the AIOFP suggested that I wrote my letter to regulators motivated by “professional jealousy”.
This is of course defamatory.
I am a hedge fund manager: I am motivated by money.
Professional jealousy is a counter-productive (and defamatory) motive because – frankly – it just stands in the way of what I should be doing.
And so – being motivated by money - when Peter Johnston offered me a bet on whether the money would turn up I leapt on the chance. I offered $100 thousand to be escrowed either by Morningstar or the Sydney Morning Herald. [I have since offered Peter three for two odds.] And he backed out. (The Sydney Morning Herald CBD gossip column reported the story this morning.)
Peter is of course a coward – he backed out of the bet – but that has not stopped him from boasting to the press about how his organization has found the ASF money and that all is well. Worse – his members have been telling their clients that their money will turn up and their superannuation (meaning their entire retirement savings) will be unimpaired.
Now this article names the financial planning companies that have – as Peter Johnston notes – about ninety percent of the claims against the ASF. I know many victims do not know they are victims because their financial planners say that they are going to be alright. And maybe they will. Maybe the money will turn up as Peter Johnston says it will.
But Peter Johnston is a coward and will not carry through with his bet. That however does not stop at least one financial planning group (or at least some financial planners) telling their clients that their money is safe. If they believe that maybe they could take the bet Peter Johnston backed out of. If they are certain enough to tell their clients that their money is safe then they should be certain enough to take that bet.
The Sydney Morning Herald has said they are willing to be the escrow service.
And I look forward to spending the winnings.