Going for broke: The advisers stealing to feed gambling addictions

With three separate financial advisers facing criminal proceedings this year having struggled with gambling problems, access to client money combined with a stressful job can be a “perfect storm”.

In April, Gavin Fineff was sentenced in Sydney to an aggregate term of imprisonment consisting of nine years and a non-parole period of five years and four months after he gambled away $3.4 million in client cash over three and a half years.

In Perth back in June, Mark Sebo was found guilty of 36 counts after being accused of duping eight clients into transferring some $1 million from their superannuation into personal online gambling accounts between July and August 2019.

Finally, ASIC froze the assets of David Valvo amid an investigation after he allegedly faked client signatures to obtain $750,000 from his financial planning clients. It is understood he has a “long history of substantial gambling” and has gambled more than $400,000 at Sportsbet since February 2021.

But does the trifecta of having access to client funds combined with an advanced education in financial markets and a stressful job make advisers more likely to gamble? 

VIEW ALL

View all

Stress of working as an adviser

It is no secret that advisers’ mental health has come under pressure in recent years as recommendations from the Hayne royal commission have been implemented. The number of advisers has fallen from 21,000 in 2019 to around 15,000 in 2023, concurrently with more people seeking advice.

Many of them have left the industry for mental health reasons as the educational and compliance requirements ramp up, and some advisers have spoken openly about feeling suicidal.

A study by Forte Asset Solutions and Philippa Hunt in May 2022 of almost 700 advisers found 95 per cent said their stress levels had slightly or significantly increased, and 87 per cent said their mental health had significantly or slightly declined.

Some 18 per cent said they were on medication compared to 7 per cent prior to the royal commission, and more than 20 per cent said they had entertained thoughts of self-harm.

An earlier paper from e-lab’s Dr Adam Fraser and Deakin University’s Dr John Molineux in June 2021 found over 40 per cent were considering leaving the profession due to stress, and advisers reported poorer mental health and wellbeing, higher stress levels and higher feelings of overload than other professions.

Max von Sabler, psychologist at MVS Group Psychology, who has treated gambling patients, told Money Management: “We know that depression and anxiety can contribute to gambling disorders, as can substance use. These are often methods to avoid emotional suffering, and are particularly common in men who can seek to manage their emotions through these kinds of external ‘numbing’ mechanisms. 

“To this end, we know that financial services have seen some enormous changes – increased regulation, banks occupying the space of financial advice over small firms and individuals, public demonisation of advisers by the federal government, have all meant that the emotional cost of doing the job is much higher.”

Gambling in Australia

For individuals living in Australia, it can be hard to avoid gambling with the country holding more than 200,000 pokie machines (almost half of which are in NSW), according to research house IBISWorld, and casinos from Crown Resorts and Star Entertainment Group popping up in major cities. 

Shares in Crown Resorts are up by 113 per cent over the last five years, undeterred by a $450 million regulatory fine for breaches of anti-money laundering rules. 

Gambling is so prevalent that the Melbourne Cup, the ‘race that stops a nation’ every November, saw an estimated $223 million in gambling in 2021, and warrants a public holiday in its home state of Victoria.

But all this spending comes with costs. The Australian Institute of Health and Welfare said Australians lose an estimated $25 billion on legal gambling every year, representing the largest per capita losses in the world. 

A study by the Australian Gambling Research Centre (AGRC) in March 2023 of over 1,000 Australians found 73 per cent of Australian adults gambled at least once in the past 12 months and 38 per cent gambled at least weekly, with 46 per cent classified as being at risk of gambling harm. 

The average amount spent in a typical day was $83 on sports betting and $93 on race betting, although the median for both types was $20. 

Men gambled more frequently on every product than women, spent more and were more likely to be at risk of harm from gambling, it said. 

Gambling has gotten even easier and accessible in recent years with the advent of betting via smartphones, online advertising and ‘bets with mates’ promotions, which portray gambling as a fun, social activity. 

Illegal activity 

With a stressful job and easy access to gambling nationwide, it is therefore no surprise people are trying to resolve their problems with gambling. However, more than likely, it can often lead to other problems rather than solving them.

The 2019 NSW Gambling survey by the NSW Responsible Gambling Fund of 10,000 respondents found 0.31 per cent of gamblers engaged in illegal activity to fund gambling debts and 0.41 per cent had lost their job. 

Some 1.3 per cent said they used work or study resources to gamble, and 11 per cent had gambled at work. 

A spokesperson for the Office of Responsible Gambling said: “Illegal activities, although serious when they occur, are rare. Most people experiencing gambling harm do not engage in illegal activities as a result of their gambling.”

However, for those with access to client money, it can be easier for them to embark on illegal activity which is often used in an effort to recoup their losses. 

Dr Charles Livingstone, associate professor at Monash University, said financial advisers and money managers may be easily tempted to use client funds to cover their debts. 

Famously, a UBS trader in the City of London, Kweku Adoboli, was jailed for fraud in 2012 after racking up losses of £1.5 billion ($2.9 billion) during three years of off-the-books trades. At one point, his potential liabilities totalled £7 billion, which prosecutors said would have been large enough to bring down the Swiss bank. He had also lost £123,000 of his personal money in spread betting trades. 

Dr Livingstone, who leads a Gambling and Social Determinants Unit within Monash’s School of Public Health and Preventative Medicine, said: “Anyone who is responsible for other people’s money can get into strife. People who have access to their boss’ account, people who work in a bank … [stealing] is a form of white-collar crime and is not uncommon.

“If you are used to buying shares, then you often have hedges in places, but being able to beat the market is very different to gambling. The bookie always wins and it is incredibly rare for people to beat the bookie, the idea of doing so is pretty dumb.”

He said even if people may have investment expertise, they tend to “overestimate their ability to calculate the odds and their ability to read the results”, which can mistakenly convince them they know what they are doing. 

Problems particularly occur when people try to chase their losses but then end up gambling away their winnings and losing more, Dr Livingstone said, creating a vicious circle and extra stress which can then only be relieved by more gambling.

“People who manage money for clients are likely to be under pressure to perform well [at work] and if they are under gambling pressure as well, then it can be an easy temptation to dip into client funds. They keep chasing their losses and can’t get out of it,” he said.

“If people overestimate their ability to read the market and then have access to other people’s money, then that’s a perfect storm.”

Stigmas around gambling problems

Dr Livingstone said one reason individuals find their gambling spiral out of control is the stigma attached to it and reluctance to get help. 

It is widely reported that men, who are the gender most likely to have a gambling problem and also most likely to be a financial adviser, are often reluctant to seek help for any type of mental health problem, especially if it is associated with gambling or financial problems.

The AGRC research said just 0.9 per cent of people in NSW, for example, sought help for gambling problems. 

For this reason, Dr Livingstone noted it was “hard to tell” how many people turned to illegal activity to cope as most did not disclose their gambling problems as being the reason for the crime. 

“Gambling problems are very shameful, there is a stigma around it. It is often the case that problem gambling is fuelled by other problems going on in their life. You will find people who are model citizens, who have held down good jobs can suddenly end up with gambling problems.”

Von Sabler added: “Biological factors combined with stress, and poor mental health combined with stress, are a perfect environment in a male-dominated profession for a variety of mental health outcomes, including substance and gambling use. 

“However, the shame associated with these issues does reduce the likelihood that people will self-disclose.”

He suggested an increase in access to mental health services through Medicare, greater support for advisers and a better link between the industry and government could help the situation, as well as reform financial advice.

If you are affected by problems mentioned in this article, please contact Gambling Help on 1800 858 858 or Lifeline on 13 11 14.