[UPDATED] Moyle: Steer clear of messy family situations
NZ Financial Planning founder and director Greg Moyle has been criticised by a High Court judge, and says he’s learnt one thing recently: Don’t be a trustee or the executor of an estate where there’s a second marriage involved.
Friday, April 11th 2014, 6:00AM 
22 Comments
by Susan Edmunds
He been criticised in court over his handling of a $1.4 million estate.
Moyle was the executor of a will left by farmer Murray Dean, who wanted to provide an income for his widow, and for the money to be distributed among his sons, from his first marriage, upon her death.
A High Court judgment said the value of the estate had dropped by $230,000 over 10 years after Dean’s death - and New Zealand Financial Planning was charging more than $1000 a month as a portfolio monitoring fee. It also showed an unauthorised payment of $52,000 out of the capital of the fund to Dean's wife, also an executor of the will.
Moyle said the overpayment was a mistake, was small and was recovered so there was no depletion of the capital that was to pass to her stepsons when she died.
Justice Murray Gilbert found Moyle had "persistently failed over many years" to provide information to Dean's sons even though they were entitled to it and it was available.
But Moyle says he became the victim of a family dispute. He said he heard from the brothers in 2006 and answered their inquiry. “They wanted information and I said I was happy to [provide it] as long as the life tenant, their stepmother, was happy. My recollection is that she wasn’t. The next correspondence was six years later.”
In 2011, he was contacted by lawyers and Moyle sent information requested. “They wanted more information that I didn’t have… they wrote to me on December 20 and said they wanted the information by January 14 or they were going to court. I couldn’t get the information from the accountant until the end of January.”
Moyle said the case had left him with a lot of concerned clients. “The consequences for me are far in excess of the issue. I tried to act in the interests of my client, who wanted to look after his wife.”
He said it was detrimental to other financial advisers to have the case played out in court. “It paints the industry as self-serving, managing money until it’s all gone. What I’ve done wrong is accept the appointment in the first place.”
The investment had been for income rather than growth because his client wanted his widow to be in a sound financial position, he said.
Moyle was ordered to pay $1300 in court costs.
He has now moved his clients from NZ Financial Planning to a new company, Financial Planning NZ.
Moyle said he had no knowledge of a complaint reportedly made to the FMA about him in 2011.
Wendy Russell, Dean's widow, responds: What family dispute? There has been no dispute to my knowledge. It seems also that [Moyle's] recollection about information being sent to the Deans has failed him. At no time did I suggest they they not receive reports. In fact, I was aghast to find this has not been done on a regular basis.
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Now that Moyle is firmly within AMP's mandate, it will be interesting to observe their repercussions of this.
Having read the 7 page judgment in detail,I would suggest that all advisers read the judgment themselves. The link is below.
My understanding is that there are clear precedents that an Executor and Trustee have a fiduciary duty to all beneficiaries, which include income and capital beneficiaries.
All AFA's should understand this well.
Here is the link to the judgment for those of you who want more information
http://goo.gl/VcQl7X
& manage the clients money
& be a trustee in their trust too !!!
conflict of interest ?
rather unwise ?
no brainer ?
Also helps provide clarity around portfolio reporting legalities to the trusts ultimate beneficiaries which is not often discussed.
Ps. I would believe any fee over 1% is too expensive for a $1.4m income portfolio:)
The Trustees have an obligation to look after both classes of beneficiary (those who receive the income and those who eventually receive the capital).
Therefore the portfolio should be more of a "balanced" portfolio rather than bond portfolio. (There have been several high profile court cases about this, eg Mulligane). Also the fees charged to run an estate are usually charged to capital, not income, so the widow won't bear the cost of portfolio management or estate managment.
Also Brent, the yield on a bond portfolio is locked in at the time the bonds are purchased so the bond portion of this portfolio could well be returning in excess of the 5% that you would yield today if you were to purchase an entire bond portfolio from scratch.
- his duties as trustee
- some of his office costs - rent & phone & power & rates & insurance
- some of his PI cover
- some of the cost of external research
- some of his time, getting CPD credits
- a whole lot of extra costs due to FMA & AFA requirements
- a whole lot of time and cost absorbed on AML & CFT & FATCA
- wages
- portfolio design and monitoring
- tax
After all that I am guessing Mr Moyle took home maybe $1,000 pa. for himself
David Greenslade once told us: "guys, this business is not without risk (e.g. being sued or FMA'd), and if you are not going to make a fair profit, then go and do something a whole lot less risky"
I don't always agree with DG, but in this case he was 100% right
Mr Moyle was made a common but unwise decision to be both an adviser and trustee, and he is now paying a very heavy price.
As DG said, this job is not without risk - lots of risks.
The after fee performance of the portfolio leaves a lot to be desired. Perhaps someone from his former group should run a performance report for a balanced risk profile investor for the period (1/4/07 to 30/9/12)and report it in the comments for the article.
Yes that is what I thought at first too and I am aware of Mulligan and the need to account for both income and residual capital beneficiaries but … if you look at the performance of the portfolio … I think it fell in value by $230,000 over 10 years … this suggests it had a high bond weighting or was very badly invested in shares?
On your last point the yield on the bond portfolio would have been locked in but only for 2-3 years as this is the time it would take for the short dated bonds to mature so I’m guessing that the yield to maturity on the bond portfolio would be close to 5%. And even if it was 6% taking 1% in fees doesn’t look “fair” or “putting your client’s interest first”. Does it? Obviously I don’t know the details of this portfolio just making a general comment.
I don’t mean to be pedantic – but the Code Committee has deliberately created this state of confusion and I (occasionally) feel duty bound to point it out.
e.g. if the lady was drawing down say $60,000 pa through 2008 and 2009 then this would have been consumption of capital, since the return would have been a minus
What else would anybody do ? Not use capital during the GFC and starve ?
And there was inflation over the past 10 years. No doubt the house needed painting or a new roof, the car needed repairs, perhaps she needed a new hip, and so on
Sounds like a lack of realism here from the judge all the way down to the complaining sons
e.g starting at $1.4 million, and she wanted say $50,000
The $230,00 fall does not eman it wa sa bad porfoiloDos not mean
Bill, there is nothing in the judgement that indicates she was entitled to a fixed sum. She was only entitled to the net annual income, whatever that might be. She had no right to "dip" into capital.
That's 5 1/2 years by my maths and covers most of the period when markets were badly affected by the GFC. So to fall in value by 17% and if you add back the fees and the incorrect capital payment then only by 8.4% (both simple rates not compound) may suggest it wasn't as badly invested in shares as you thought.
I agree your numbers using the judgement don't look too bad...but I would have to compare it with the benchmarks and know more details to comment further.
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A caution for Advisers in the comment thee only wrong was accepting the appointment in the first place.”