A Canberra couple reckon they've lost about $300,000 of their life savings by accepting the advice of one of the country's most prestigious financial advisers.
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The nurse and her husband who used to be employed by the federal government decided their super wasn't offering enough return.
They pulled the $1.1 million out and turned to Dixon Advisory which describes itself as one of Australia's "premier" financial firms, with offices in Canberra, Sydney, Melbourne, Brisbane, Adelaide and New York.
After discussion with Dixon Advisory, the couple's savings were put into a series of funds, many of which were developed by Dixon Advisory itself.
In other words, the advisers and the funds they were advising about were part of the same company. The couple say they paid a fee for the advice and another fee for investing in the adviser's products.
One of the funds, in particular, performed disastrously, halving in value from the beginning of 2016 to the beginning of this month - the same period as prices in shares have risen steeply.
Dixon Advisory had invested in homes in what it called "select neighbourhoods" in the New York area.
The idea was that the investment would make money by "restoring and renovating properties, where required, to the highest standard, adding value through in-house construction management capability".
And the company would provide tenants with "quality property management services".
But it never worked out the way it was meant to.
The financial advisers told The Canberra Times that the houses needed more maintenance than the company's managers had anticipated, and the unexpected movement of the exchange rate between the US and Australian dollar had bumped up costs.
The couple say that if they had just kept their money where it was or invested in a simple index fund, their savings would have risen in value instead of crashing by hundreds of thousands of dollars.
They reckon the cost to them is $300,000 ($120,000 in the cut in the value of their current investment plus $180,000 in what the money would have done if they had kept it in their previous super).
It is legal in Australia for financial advisers to develop funds for people to invest in and for the advisers to sell those funds to the clients they're advising.
Dixon Advisory denies that there was any conflict of interest between its role as both a financial adviser and as a developer of products.
It issued a statement saying that it acted properly - the investors were kept informed and everything relevant was disclosed.
But a group of investors, including the Canberra couple who do not want to be identified, are now getting together.
The legal firm Shine Lawyers is considering a joint action on behalf of all of them - known as a class action. It said about a hundred investors were in touch, adding up to investments of more than $100 million.
The lawyer leading the case, Vicky Antzoulatos, said that financial advisers were meant to act in the best interests of the client but they put these people's money into "highly risky, illiquid products".
The Canberra couple (she's a nurse and he is a former government public servant) accept that they were given information about risk and that they were told that the funds they were investing in were part of the advisers' company.
They said jointly, "We were made aware that these products were associated with Dixon Advisory and that we would be paying fees applicable to the products, in addition to the annual advice and administration fee of $5999."
But they still feel that there was a conflict of interest.
"We now both strongly believe that our financial interests would have been better served if our investments were restricted to only independent products in which Dixon Advisory had no financial interest."
The husband in his late 60s has retired but the wife is still working and now feels that her planned retirement will have to be put off.
Dixon Advisory says that it has acted properly.
And it feels that each client was given tailored, relevant advice so no class action would succeed. Its argument is that even if it's found to have acted improperly in one case that wouldn't apply to the others.
Its statement says, "We believe there is no basis for a class action. Dixon Advisory is in the business of providing personal advice - it considers the risk tolerance, relevant personal circumstances, objectives and needs particular to each client when providing a recommendation. This is what the best interest obligation requires and we do it well."
Even though being both an adviser and a developer of products is legal in Australia, the regulator has raised concerns about the general question of financial firms which are "vertically integrated" - in other words, ones which offer advice and have products to sell.
The Australian Securities and Investments Commission told the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry: "a vertically integrated business model gives rise to an inherent conflict of interest".
Dixon Advisory has since moved to try to recover some of the losses made by the poorly performing investment. It's been selling off its US property and reorganised management.
The couple now regret taking their money out of their original super, Australian Super, and putting it into a self managed superannuation fund.
They reckoned their previous fund was only earning 5 per cent a year. They felt they could do better.
Steve Evans
Steve Evans is a reporter on The Canberra Times. He's been a BBC correspondent in New York, London, Berlin and Seoul and the sole reporter/photographer/paper deliverer on The Glen Innes Examiner in country New South Wales. "All the jobs have been fascinating - and so it continues."
Steve Evans is a reporter on The Canberra Times. He's been a BBC correspondent in New York, London, Berlin and Seoul and the sole reporter/photographer/paper deliverer on The Glen Innes Examiner in country New South Wales. "All the jobs have been fascinating - and so it continues."
