A woman who retired and sold her home on the strength of a financial adviser’s projections has won a $320,000 settlement after losing close to $400,000. It would be easy to file this under one bad adviser. That would be a mistake. The failures here, ignoring a client’s stated short-term needs, keeping poor records and making an irreversible call in a panic, keep showing up in dispute files. For advice firms and their insurers, they are now expensive.
From retirement seminar to fire sale
The sequence is brutal. At a 2020 retirement seminar, the adviser assessed her as a ‘growth’ investor with net wealth of about $2.5 million. She retired and sold her house, planning to buy something smaller and invest $1 million. Instead, $2.3 million went into the sharemarket. By 2022 she judged his projections too rosy and went back to work. When she withdrew $1.1 million to buy a house, the market had already fallen.
Then came April 2025. After Donald Trump announced his tariffs, the adviser rang and told her to sell everything. The downturn lasted about a week. Her total loss came to $396,267.81, including $101,937.60 in fees. The adviser’s offers climbed from $221,000 to $247,000 and finally $320,000 once Financial Services Complaints Ltd (FSCL) investigated, all according to RNZ.
The regulator’s verdict is blunt
FSCL found that “the advice to sell was not that of a prudent financial adviser”, and that poor record-keeping made it hard to establish what had actually been discussed. The fees were disclosed upfront and sat within industry norms, albeit at the high end, but some were charged for poor advice, and part of the settlement recognised she should never have paid them. Massey University financial services expert Claire Matthews called the case unusual and said she would expect the Financial Markets Authority to take a closer look at the adviser.
The settlement climbing 45% from the first offer is the number compliance teams should sit with. FSCL will not rubber-stamp a lowball figure.
The same mistake, three times running
This is the third case in as many years with an almost identical shape. In 2024, a woman with $900,000 lost $200,000 after her adviser put everything into growth funds despite her wanting $400,000 held back for a house. FSCL again struggled with inadequate records, and she received $80,000.
In 2023, a first-home buyer with $500,000 from her mother was handed between advisers, her house-purchase plan got lost in the handover, and she ended up in a growth fund through the 2022 slump. Her statement of advice was a pro forma computer-generated document. The firm was held 80% responsible and paid $133,000 after she lost $160,000 and had to borrow the shortfall.
None of this is exotic. A client says she needs cash for a house. The adviser doesn’t write it down, or doesn’t act on it. Money meant for a near-term purchase sits in assets that need five to seven years to ride out a bad patch.
Retirement is where the stakes compound
The newest case involves a retiree drawing down savings, precisely the area the FMA says is underserved. In a July speech, FMA chief executive Samantha Barrass flagged a “significant gap” in decumulation advice, noting it “requires in-depth knowledge, competence and skill so peoples’ retirement savings are safeguarded”. Back in April 2026, Chapman Tripp likewise noted an advice gap developing around retirement drawdown.
The pool is getting bigger. KiwiSaver funds reached $138.8 billion at 31 March 2026, and members aged 65-plus withdrew $3.3 billion. More retirees with bigger balances means bad drawdown calls get costlier.
The sector itself is expanding. In 2025, the FMA reported 1,553 licensed advice providers, half of them one-adviser shops. Licensing has not eliminated basic discipline failures, and commentator Simon Papa argues the regulator has not examined the pricing, business models and remuneration structures that shape what advice actually gets delivered. He has a point. More rules haven’t fixed bad habits; better incentives and sharper accountability might.
What advice firms should do before the next shock
The lesson is not complicated, which is what makes it damning. Record the client’s goals and timeframes in writing. Ring-fence money earmarked for a purchase. Document the rationale for any material trade, especially one made in the middle of a headline-driven selloff. Make sure handovers between advisers carry the full picture.
Markets will lurch again, whether it is tariffs, geopolitics or something nobody has priced. The firms that come through FSCL complaints intact will be the ones whose files show calm reasoning. The ones relying on memory and pro forma paperwork are carrying an uninsured risk, and this case just put a $320,000 price on it.
Sources
- RNZ: Woman who lost $400,000 to ‘poor advice’ wins $320,000 settlement (2026-10-09)
- RNZ: Investor given $80,000 compensation for $200,000 investment loss (2024-09-16)
- Good Returns: Adviser firm pays $133,000 for part of house deposit lost in growth fund (2023-10-03)
- TMM Online: Adviser firm pays $133,000 for part of house deposit lost in growth fund (2023-10-03)
- FMA: Samantha Barrass keynote speech to Financial Advice NZ Policy Summit (2026-07-28)
- Chapman Tripp: FMA’s financial advice review findings (2026-04-02)
- FMA: KiwiSaver Annual Report 2026 (2026)
- FMA: Regulatory returns show growing advice market, rapid rise in digital advice (2025)
- Good Returns: Simon Papa – Access to advice, is adviser conservatism the issue? (2026-06-27)
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