How can we be protected from this sort of behaviour?

Sam Henderson, the celebrity financial adviser, has been exposed as the most dangerous type of adviser.

Sam Henderson, the celebrity financial adviser, has been exposed as the most dangerous type of adviser — the one who actually does know what they are talking about, but wants your money so much they break the rules.

There are two stunning ­breaches of faith in Henderson’s dealing with Fair Work Commissioner Donna McKenna. These were laid out as evidence in the financial services royal commission yesterday.

First, in trying to persuade a senior public servant to cash out their public sector super arrangements and start a self-managed fund, Henderson was being ambitious. In pushing for McKenna to then borrow in her super fund and invest in funds that Henderson provided, the exercise becomes ­rapacious.

McKenna was a high net worth client — if she stood to lose $500,000 in quitting her super scheme to cross over to Henderson, she has clearly been a successful investor before meeting him.

Remarkably, even when a clearly astute McKenna dismissed Henderson’s proposals as deeply flawed he kept trying to win her over. If he had done so, his company Henderson Maxwell would have made thousands in fees.

Henderson also had undisclosed interests in client funds and said he had a “masters degree in commerce” though he does not. In short he must have lost touch with reality. The question is, how long ago did that happen?

Second, the inquiry heard that Henderson staff impersonated McKenna in calls to her super fund. This is spectacular and unforgivable. Again, it makes you wonder how often it happens.

Perhaps the most troublesome issue of this case is not that Henderson is a so-called celebrity planner. There are no lack of slick, tailored and articulate professionals on television who have the sort of talent to have an answer for any question, any time.

Rather it is his stature as a boutique operator, a prize-winning professional. In choosing a planner, this is the type of character that is most often recommended.

Moreover, the fee structure at Henderson Maxwell where Henderson is CEO is the most reliable — that is, it is a fee-for-service group rather than an operation that charges a percentage of funds under management. Crucially, as the privately owned company said in its own promotional material, “We’re not in cahoots with the big banks.”

No, it seems like Henderson did not need the pernicious influence of the big banks to behave in a way that was demonstrably against the best interests of his client.

How can we be protected from this sort of behaviour? It turns out the Financial Planning Association had reprimanded Henderson for his action in this case as he had breached FPA standards. He was sanctioned but the FPA agreed not to publish his name or the outcome of the findings.

We would never have known about this story without a royal commission — in yet another example of how ineffective self-regulation can be in financial services.

Just now the FPA is embroiled in a row over the education standards of financial advisers. As investors we need to be able to trust FPA members — they are put forward as the elite of the profession with higher education standards and better qualifications.

But knowing this sort of suppression of information goes on behind the scenes alarms both investors and no doubt also infuriates the decent planners among more than 20,000 advisers registered in Australia.

Hopefully, the commission in its final report will recommend a way forward on education and policing in the financial advice arena so this type of case study in bad advice is never repeated.