Wealth management firm Dixon Advisory has been forced into voluntary administration due to mounting liabilities arising from potential damages from class actions, consumer claims and penalties owing to the corporate watchdog.
Dixon Advisory and Superannuation Services Pty Limited (DASS), a wholly-owned subsidiary of E&P Financial Group Limited, told the Australian Stock Exchange that it had appointed PwC Partners, Stephen Longley and Craig Crosbie, as voluntary administrators.
DASS directors have determined that mounting actual and potential liabilities mean it is likely to become insolvent.
The company, founded in Canberra by Daryl Dixon and his wife Kate Dixon in 1986, is facing a big damages bill from multiple class actions led by Piper Alderman and Shine Lawyers, claiming DASS provided conflicted and misleading advice by directing clients into its US residential property fund.
Many clients suffered considerable losses, devastating life savings.
The Australian Financial Complaints Authority is also pursuing the company. Last July, DASS agreed to pay the Australian Securities & Investments Commission $7.2 million in penalties and $1 million in costs as part of a settlement for failing to act in clients’ best interests.
E&P told the ASX it would aim for minimal disruption for clients and settle all claims. It would transfer DASS clients to another service provider of their choice and propose a deed of company arrangement which provides for the comprehensive settlement of all DASS and related claims.
It said that the voluntary administration relates to DASS only and there was no recourse for DASS liabilities to other entities within E&P.
No client assets were at risk because they were either held in clients’ own names or in trust by independent third parties, no jobs would be lost, and DASS clients would still have access to their current adviser.
The group acknowledged the heads of agreement entered into between DASS and ASIC relating to alleged breaches of the Corporations Act, including the agreed penalty and contribution to ASIC’s costs. It agreed to contribute an equivalent sum for the benefit of creditors as part of a comprehensive settlement of all DASS and related claims.
Group managing director & CEO Peter Anderson said the appointment of voluntary administrators to DASS had become necessary in light of the increasing number of claims against DASS and the potential associated financial liabilities.
“It has also become apparent that settling individual claims as they arise will likely lead to inequities between client creditors. Voluntary administration provides an appropriate framework to ensure all client creditors are treated equitably,” he said.
Dixon Advisory is the fourth largest self-managed superannuation fund provider in Australia.
In 2001, Daryl and Kate’s son Alan Dixon assumed the managing director role and formed the SMSF and investment advice unit.
By 2015 the company had 4500 SMSFs under management, worth about $5 billion, and had around 8000 SMSF members.
Dixon Advisory was a trusted adviser for more than 5000 clients by the time it agreed to merge with brokerage firm Evans & Partners in September 2016. The merged group, then called Evans Dixon, was a combined $18 billion wealth advisory firm and listed on the ASX in 2018.
It shed the Dixon name in 2020 as the reputation of the once-lauded financial adviser became tarnished.
Daryl Dixon is also a regular media commentator, columnist and author on financial affairs, and there were few more trusted experts in Canberra than him.
According to Canberra public policy academic Dr Jenny Stewart, writing in 2007, only three people understood the entire superannuation system: “One went mad, the other died and the third was Daryl Dixon.”
Both Daryl and son Alan left the business in 2019.