David Nelson lost half of his $300,000 investment through Vestar. Photo / Paul Estcourt
When David Nelson sought advice from a financial planner in 2005 to help manage his sick father's estate, he was told not to worry about paying for it - it would all be covered by a commission from the investment company.
"He told us: 'There are no fees associated with
this - there are commissions that are paid from the companies we invest with. So that's good news for you."'
But since losing half of his $300,000 investment in the now collapsed Vestar group, he has become convinced commissions are not such good news.
"At the time I didn't believe the commissions influenced where the money was going. But subsequently I would have to say absolutely. They were very unsound investments that the money was put into."
The money was split between six property finance companies - Bridgecorp, Capital & Merchant, OPI Pacific Finance, Boston Finance, St Lawrence and Property Finance Securities.
Two of the companies, OPI and Boston, were owned by the same company as Vestar.
"I believe the others were chosen because of the level of commission."
All of the companies are now either in receivership or frozen in moratorium repayment schemes.
Mr Nelson, a 42-year-old who works for the Waitakere City Council, says he went looking for "sound professional advice" but ended up with a salesman who just carried a "mailbox message" from the company.
The loss of income from the investment had left his family stressed and left him with a deep distrust of the financial advice industry. "We were still able to manage (financially) but it was hard." His father passed away this year.
"It has caused an enormous amount of stress. It affected my health. It really did take it out of me."
He believes the Government should consider a ban on commissions for financial advisers but says there still needs to be action taken against those who acted inappropriately and illegally in the finance company collapses.
"There needs to be some sort of recognition and punishment for that sort of behaviour."
