KEY POINTS:
A group of about 700 former Vestar clients have been left without financial advice on their failed investments because the new owner, Gould Wealth Management, can't afford to take them on.
The investors were members of Vestar's Star Invest product where their money was placed into fixed income finance company debentures which have since gone into moratorium or receivership.
In June Gould Holdings, the investment company of Christchurch businessman George Gould, bought the assets of Vestar through an offer to Vestar's 3000 clients.
Gould took over the management of the portfolios Vestar ran on behalf of clients and continues to charge a management fee which is a proportion of the money invested. But it did not take on clients in the Star Invest portfolio.
In a letter to investors on the St Laurence recapitalisation plan, Gould Wealth told Star Invest investors it could not make any recommendation on whether to take up the offer as it did not have a formal contract to provide advice.
The move has angered some investors.
A source, who did not wish to be named, wrote to the Herald on behalf of an 85-year-old investor, saying they were disgusted by the situation.
"Vestar received brokerage for the companies it channelled these poor investors into and now all of them are in either receivership or moratorium.
"I find it disgusting that the Star Invest clients have been 'cast adrift' because they are not paying adviser fees."
The source said Gould refused to offer advice and clients were effectively being left to their own devices. "How could they do this to these poor people, Vestar/Gould Wealth accepted the brokerage, surely they should accept the responsibility that goes with it?"
But Gould Wealth Management chief executive Jeff Staniland said those in Star Invest had a different service offering to those in the managed portfolios which it had taken on. "Vestar used to earn commission on placing the money with finance companies but we don't do that."
Gould's fee-only model means any commissions on investments are rebated to the investor.
"We are trying to help where we can. But people feel a bit let down and lost."
Staniland said Gould continued to send the investors updates on the finance companies and was considering putting together some sort of service offering for those investors. But most were in failed finance companies where there was little choice but to wait for the outcome of either the moratorium or the receivership, he said.
Staniland estimated there were between 600 and 700 investors in the Star Invest situation.
