I responded to a Facebook ad by “Super Smart”. The video invited me to “review your super performance in just 60 seconds …. just click the link below it’s free.” Other ads by Super Smart promoted property investing through superannuation. These ads suggested there was some urgency because the law that allows this could change soon.
The ad identifies that it is paid for by NZ company Easy Capital Investments. It appears that the director of Easy Capital Investments is also a director of Velocity Leads.
Within minutes I received a text referring to my enquiry, saying to expect contact from Advisor Link.
I received a phone call 5 minutes later from Advisor Link (I think all communication was with Travis Seckold) asking for some information so my free report could be prepared.
In response to his questions I told him I was 65, earned $80,000 a year, and had $500,000 in HESTA superannuation and my funds were in the default investment option. (This information, and the name I provided, are fictitious). I received an email 5 minutes later saying that my report was being prepared. This email said “On average we see a projected increase of $300,000+”. Two hours later I received a text saying that my “Free Superannuation Health Report” was completed, but they will call me because “There are a few concerns that we would like to make you aware of”.
I suspect it is always the intention to make this second phone call before providing the report – there was not much information in this call apart from an attempt to sell – including to refer me to a financial advisor. “I’ll book you in with Stefano now”. Travis used this call to point out that being 65 it was important I was in a top performing fund – that they have to put me in a better fund compared to my current fund. He said “it has to put you in a better fund compared with 6.99%”. He said he could show me if I was near my computer – I think he wanted to do a video call but I declined this.
He said with my current fund I could take $54,000 per annum income once retired in two years (at 67), which would run out at 79. He told me the comparison would give me an extra benefit of $199,000. He said this is “not financial advice. It’s like going to a doctor before you have surgery”. “The Government says any advice relating to superannuation, is paid from your super. All our advisors are checked and licensed”.
He said “To be referred to an advisor, the benefit must be at least 100K or it’s illegal”. “You’ll only be shown personal advice if it’s in your best interest.” He mentioned something about not putting me into any of “those high risk products”.
Hs said he can refer me to Stefano Duro. “He’s one of the best in Australia. He’s a judge at the national financial awards. Do some research on him.” I did. Despite a very sleek website, the fact that Duro mentions Grant Cardone and Gary Vaynerchuck in his profile would be enough to put me off!!
The process was slick – I assume the intention is to move the customer quickly, and seamlessly, from ad, to phone call, to email to financial advisor.
There may be no relationship at all between Advisor Link and some of the businesses or individuals involved in the Shield Master Fund and First Guardian collapse. However, Advisor Link is at the same address that used to house Next Generation Advice, one of its representatives and a lead generation firm. A name listed as a past shareholder of Advisor Link appears to be the same as an authorised representative of Next Generation Advice who was banned by ASIC.
So what was in the Superannuation Health Report? It started with a screen shot of the ASIC registration of the Advisor Link company. Its “selected, vetted referral partners” are listed – Inheritance Financial Advice, My Advice Hub and Pure.
The report outlined the personal information I’d provided, and assumed I will retire in 2 years time.
The new super fund’s 5 year return after fees was 11.79% (compared to 6.99%). The report explained that with the new product my super balance in 3 years would be about $44,000 more, and the retirement income would be about $156,000 more. These are added together to give a “total projected extra benefit” of almost $200,000. This results from some double counting because the retirement income includes using up the super balance.
A table correctly noted that my current investment option was “balanced growth”, and categorised the “investment risk strategy” as “growth”.
The comparison fund isn’t named. While the report says the “investment risk strategy” of the comparison fund “would be matched with existing super fund”, the category assigned by Advisor Link – “growth” – could cover a wide range of investment options, with different risk profiles. An 11.79% return with a similar risk profile to my current fund doesn’t seem realistic.
There are a number of problems with lead generation in the financial sector, including the ability of unlicensed companies and individuals to influence someone’s investment decisions before they receive licensed financial advice. Even if the licensed advisor acts ethically, a report that shows such a large financial return could lead someone to expect the projected return in the report. Even if the advisor explains that there is increased risk, would a person be conditioned to expect that return more readily and accept an increased risk that they might not have otherwise?
The risk for the consumer is that they don’t simply obtain a comparison between super funds from the lead generator (which is, of course, publicly available anyway). They receive a report that projects their financial future based on a particular (but unnamed) superannuation fund and investment strategy. By the time they see the advisor, they may feel they have already received some advice, and may feel they know their best superannuation option. Can you imagine the advisor saying “Now, please forget what these marketing people told you, the investment they proposed is likely to be inappropriate”.
Licensed advisors who pay for these referrals are compromised. The conflict is a real one – do you place the client in the fund that’s proposed by the lead generator even if it’s inappropriate, or do you lower the client’s expectations? How do you act ethically and keep the referrals rolling in?
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The Naysayer 