13 Key Areas That Demonstrate A Bad Advisor
In the complex world of advising clients it is important to identify the 13 key areas that demonstrate a bad advisor. It is in these areas that accountants, lawyers and financial planners leave themselves open to litigation from clients and possible denial of a claim from their professional indemnity insurer.
The 13 identifiers are:
- Providing clients with SMSF Deeds with automatic forfeiture clauses,
- Not advising clients to use a unit trust for property acquisitions,
- Having a clients Death Benefit Nomination as a lump sum,
- Not having a characterisation clause in a clients discretionary trust,
- Having loans to a discretionary trust due to lack of understanding of s.99B(2) of ITAA36,
- Poorly drafted and sometimes fraudulent minutes and resolutions,
- Lack of written advice and instructions with clients,
- Never updating clients deeds, wills, fund rules or documents,
- Not securing a clients credit balance loan to their entity,
- Not recommending life insurance after rollover to an SMSF,
- Establishing unit trusts where merger occurs,
- Having an SMSF as unitholder in a unit trust without absolute right to redeem,
- Not advising a client to convert their unit trust to a Land Tax Unit Trust (NSW only).
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