Storm Financial Group

[Harleyquin]

Did anybody read the rest of the thirteen pages?

QUOTE Margin loans are not regulated under the Corporations Act. ASIC's ability to deal with mortgage and loan issues is limited, because these matters are ordinarily determined by the general law of property and contracts UNQUOTE

Quite!

It then considers if it should have taken steps to stop Storm's aggressive gearing model but concluded:

QUOTE Consider the difficulty of ASIC trying to close down an advisory model during 2006 or 2007 which was producing high returns for its investors. UNQUOTE

Exactly! The same people who now bemoan their losses would have strongly objected to being shut out from such an obvious money-making scheme.

Not all of us were with storm in 2006 or 2007 many joined after that time and timing shouldn't be an issue. If there's a problem it should be sorted. Had it been sorted then none of us would now be in this position.

 

[Julia]

As I said 'Aren't you lucky you knew that.' It appears that's all you know.

Storm's investment strategy has been a standard but risky form of investment for as long as people have been investing in the stock market. It may not have been real wonderful, but it wasn't crap. What is crap is the blinkers that you have on regarding the whole issue here.

I would disagree that the Storm model was a 'standard (but risky) form of investment.
Most financial planners would not recommend that people engage in levels of debt they could never attempt to service.

The banks don't need to be involved at all. Their involvement was pure greed.

Really? From whom would you have borrowed then?

Garpal Gumnut,

No matter how hard you try, you will never get through that, putting any CBA involvement aside, it was not margin loans (darn safe if managed properly, ie dont get the LVR above 20% if you wish to sleep soundly at night unless you are really hairy chested) and/or borrowing against the house which was the problem per se. It was the sheer amount of debt incurred which remained constant while the market went south.

Debt carries risk at some level. People with storm were seemingly fed a line of bull that any level of debt was safe. I don't know why they believed such rubbish but they did.

Why they did not add up their monthly statement of position and ponder how is this debt to be paid off can only be answered by the individuals concerned.

This is the bit that we keep coming back to, isn't it. How could even the most uneducated investor imagine they were going to service a $600,000 loan on an age pension income?
Why didn't they ask the adviser how this could be done?
There would simply be no plausible answer to such a question.

I am not really 100% with you there, i don't think it is the banks responsibility to make sure and certain that you are able to service the loan , thats why the bank takes security, if you can't repay the loan they get their money back.

It's the banks job to lend you the money, hell, thats what they do, thats how they make their money. I don't think they should be giving too much financial advice, thats what the FPs are for and to a lesser extent do some research.

Correct. Except for the financial planners actually employed by the banks, it's not the bank's business to offer financial advice.
If Storm investors had taken their whole situation, including Storm's advice, to a bank FP, I'd be very surprised indeed if such advice would have been endorsed.

Darkside

Whilst I agree it is the borrower's responsibility to ensure they know what they are getting themselves into and that they can afford it, from a legal point of view, there have been some cases where borrowers have won their case due to predatory lending, where the bank would know the borrowers could not pay.

Not a legal case, but I recall one of the majors, CBA I think, waived car loans that had been made to NT aborigines who were on welfare. No way they could pay.

I think there needs to be some responsibility on banks to lend responsibly. Not everyone is as financially savvy as you and me

That's true, and the banks seem to be admitting they were less than assiduous in the checking of application details.
That does not, however, remove responsibility of undertaking any given level of debt from the investor.

I disagree that the investor should take some blame. I am not an astute investor that's why I went to a financial planner. That's why I needed to take the advice from an expert in the financial field. If I was able to educate myself I wouldn't need to go to a financial planner. There does need to be some legislation in place to protect those seeking financial advice because they don't know how to do it themselves. If I was as clever with finances as many of you profess to be I wouldn't bother going to a financial planner either and I would also have known better than to do what Storm suggested. Unfortunately I didn't know.

Harleyquin, I quite see the point you're making, but surely if someone tells you you can borrow twice the value of your house, wouldn't you ask
"really"? "How does that work?"
It simply doesn't make sense to even the most financially uneducated.
It's like going into the supermarket and buying a trolleyfull of goods, value $100 when you only have $50 to spend.

Are financial planners professionals who can be trusted or not? Make up your minds. If they can be trusted then none of us made a mistake in going to Storm. If they can't be trusted then we made a huge mistake in going to Storm. In which case why were they licensed to give financial advice. Why were they members of the Financial Planning Association.

It's unreasonable and unfair to generalise against all financial planners on the basis of Storm's completely unprofessional behaviour.

Why didn't Storm Financial explain to their clients what a margin loan was. Why didn't many of us find out until it was too late. I admit I'm a first time investor and I had no idea that I had to educate myself before taking financial advice from an expert.

Gee whiz, why didn't you ask?????

If you didn't know how a margin loan worked why in the name of heaven would you engage in it?

Does that mean that if I am advised to have brain surgery from a brain surgeon that I'll have to educate myself about brain surgery first before I have the operation or do I trust him because he's a professional.

That's not a realistic analogy.
If you were advised by a brain surgeon to have surgery, you wouldn't need to know the first thing about how such a procedure would be carried out to ask to see the X-ray and have it explained to you, ask what the operation would accomplish, what the expected outcome would be, and what the long term prognosis would be.
And if you didn't completely understand the response, you would hopefully persist with your questions until you did, or ask for a referral for a second opinion.

We need genuine professional financial planners who can be trusted and it looks like the only way we are going to achieve that is to legislate.

Nonsense. There is way too much legislating for the tiny percentage of crooked so called professionals.

This does not mean for one moment that if you want to borrow against your home to take out a personal loan to buy a car or similar that the legislation needs to cover those types of personal loans, it simply means that FP's/Banks cannot advise/lend huge margin loans for financial planners to play the stock market on their clients behalf.

Re this last suggestion, they could only do that, i.e. 'play the stock market', as you put it, if the client gave them permission to do so.

Some of you are just going to accept that we all have to start somewhere with this understanding of how the financial world operates. Give yourselves a pat on the back if you've made it. I'm still in financial preschool and it's been a painful journey so far. I've been to hell and looking for that arrow that says 'this way back.'

And it's been a very hard lesson. I'm really sorry that you are in this situation which must be unbelievably stressful.

But placing total blame on every aspect other than investors will only mean that something similar could easily occur again.

Good luck.

 

[Harleyquin]

"FPA membership can't be bought: chief"

"Process requires due diligence and audit
Claims that FPA membership carries no obligation and is simply bought are untrue, the association's chief said."

More by Kate Kachor from Investor Daily here;

http://www.investordaily.com.au/7246.htm

What does the FPA do to ensure that their members are genuine professional planners. Do their members have to keep the FPA up to date with their standard of advice. I don't understand how storm 'got away' with the standard of advice they were giving for so long without something being done by the FPA. Does the FPA have something in place to study their member's methodology annually to make sure everything is as it should be or do they simply depend on an investor or two making a complaint. Surely they should have something in place themselves to ensure that their members are not putting their clients finances in jeopardy.

If what I'm reading on this forum is any indication, I see no reason why anyone should ever bother going to a financial planner.

If you know what you are doing - you don't need a financial planner.

If you don't know what you are doing - then you have to learn what you should and shouldn't be doing before you go to a financial planner. By this time you are educated enough to do it all of your own investing and - you don't need a financial planner either.

The FP's are effectively out of a job if this is the case.

Let's just get rid of the FP's and the FPA they have just made themselves all redundant!!!

 

[Harleyquin]

I would disagree that the Storm model was a 'standard (but risky) form of investment.
Most financial planners would not recommend that people engage in levels of debt they could never attempt to service.




Really? From whom would you have borrowed then?


This is the bit that we keep coming back to, isn't it. How could even the most uneducated investor imagine they were going to service a $600,000 loan on an age pension income?
Why didn't they ask the adviser how this could be done?
There would simply be no plausible answer to such a question.



Correct. Except for the financial planners actually employed by the banks, it's not the bank's business to offer financial advice.
If Storm investors had taken their whole situation, including Storm's advice, to a bank FP, I'd be very surprised indeed if such advice would have been endorsed.






That's true, and the banks seem to be admitting they were less than assiduous in the checking of application details.
That does not, however, remove responsibility of undertaking any given level of debt from the investor.



Harleyquin, I quite see the point you're making, but surely if someone tells you you can borrow twice the value of your house, wouldn't you ask
"really"? "How does that work?"
It simply doesn't make sense to even the most financially uneducated.
It's like going into the supermarket and buying a trolleyfull of goods, value $100 when you only have $50 to spend.




It's unreasonable and unfair to generalise against all financial planners on the basis of Storm's completely unprofessional behaviour.




Gee whiz, why didn't you ask?????

If you didn't know how a margin loan worked why in the name of heaven would you engage in it?




That's not a realistic analogy.
If you were advised by a brain surgeon to have surgery, you wouldn't need to know the first thing about how such a procedure would be carried out to ask to see the X-ray and have it explained to you, ask what the operation would accomplish, what the expected outcome would be, and what the long term prognosis would be.
And if you didn't completely understand the response, you would hopefully persist with your questions until you did, or ask for a referral for a second opinion.



Nonsense. There is way too much legislating for the tiny percentage of crooked so called professionals.


Re this last suggestion, they could only do that, i.e. 'play the stock market', as you put it, if the client gave them permission to do so.




And it's been a very hard lesson. I'm really sorry that you are in this situation which must be unbelievably stressful.

But placing total blame on every aspect other than investors will only mean that something similar could easily occur again.

Good luck.

You obviously have no idea what storm investors were told. We were told that we could borrow up to 60% of our valuation and anything over that was unsafe. We were never told that they would be borrowing twice as much as our home was worth. We were never told that we would have a second loan, called a margin loan, so how were we to question something that we were not told about.

When we went into storm we were well aware that we had to ask lots of questions but being a first time client we were taking in a lot of information that was completely new to us, we asked as many questions as we could, we even asked 'are there any other questions we should be asking'. I don't know how we could have asked anything more.

Your comment ''Really? From whom would you have borrowed then?'' - why should we be expected to borrow at all, we never asked to borrow anything and we did question the safety aspect of borrowing so much. We were assured that the money borrowed would be well looked after by experts and we had nothing to worry about. Before investing we talked to others who were with storm and they assured us that their investment strategy was sound and it was the best thing they had ever done. I'd be interested to hear what they have to say now. I was taking in so much information that we completely forgot about the interest we would be paying, we only thought about that aspect of the investment at a later stage. Call it information overload if you will.

I do agree with all of you that we should have done more research before handing our money over or before borrowing. I do also agree with you that we should have sought the advice of an accountant or someone else. However hindsight is a truly wonderful thing we now realise the many things that we should have done and we certainly won't be making the same mistake again. We'll never have enough assets or money to make the same mistake again. We all make mistakes and we have made unknowingly the biggest mistake of our lives in going to storm, but we had no idea that this could possibly happen and our planner assured us that we had chosen a very safe level of investment. We trusted that he knew what he was talking about and he was right.

We are well aware that we have made many mistakes. The biggest mistake we made was trusting a financial planner. I apologise if I've generalised against all financial planners I'm sure there are some genuine financial advisors out there but we didn't find one and now it's too late for us, they have destroyed us enough financially to the point where we may still have our own home but will only have the old age pension to live on.

I'm taking on board all that you are telling me on this forum and it's helping. The storm planners were very good salesmen and we knew we needed help with our finances as we did not understand how to help ourselves financially. There will never be a next time for us as we will never give another financial planner our trust I'd rather die broke than trust another one.

 

[Monario]

So what you are saying is that it was not Storm's fault.!!!!!!!!!!!!!!!!!!!!

Are you a moneyspider from SICAG ?

I will not say anything more except.

In eight years tme you will be on here complaining about the next FP who takes your dough.

Folk here post to advise each other and to learn.

And you are not victims. You are investors in a dodgy product that failed to live up to your expectations.


gg

Well GG I have learnt my lessons, I hope!! and feel I wont be here 8 years from now....


Yes we are investors in a dodgy product, but were are also victims.....

Victims of systems that failed, and should not have!!!!

Victims of the poor performing FPA and ASIC...

Vistims of banks who did not have their customers best interes at heart, which if you look at there profiles all proudly claim to have!!


If these governing bodies, and the government allow these sort of activities to continue without legislative changes to protect against these dodgy companies and investments been setup, they are no better than the conmen and criminals that run them, therefore I say why waste my tax dollar financing such useless bodies as these...

Sure, we made a mistake falling into these investment traps... But they should never have been allowed to get off the ground, and if they did, how the hell did one of these bodies not pick something up in their 15+ years of operation!!!!

 

[Ironhalo]

http://www.youtube.com/watch?v=WINDtlPXmmE&feature=related

SICAG's inspiration according to the website. I quite like it, but only because I have a general hatred of humanity...

 

[Anastasia]

There have been comments made off and on now over the many months of how could people/ pensioners on low/ no incomes expect to pay off such massive loans....didn't they question it?

Well, we did several times and this was the answer, more or less, that we received each time; "You wont. You will die owing a big debt, and your kids/ estate will inherit that big debt, but they will also inherit an even bigger income. That is how the big boys play the game. Do you think Kerri Packer is going to die with no debt? Hell no... he will have massive debts and be smiling because he will have left an even bigger income. This is how you get ahead with investments and making money...and this is how you get ahead of the tax man, or he just takes it all otherwise".

Now this may not be what everyone who asked was told, but I remember it distinctly and though it made sense as I have read articles/books about strategies used by "the big boys" and indeed a lot of their wealth is paper money, borrowed monies etc.

I/ we didn't for one moment pretend we were in the same league as the "big boys" but decided that if this strategy is what is used in the industry, why shouldn't we use it. I guess we now know the reason... the down turn of the market. But we were also assured/ promised that we would never get a margin call as we would be looked after by Storm. We did ask lots of questions. But we always got what we though were reasonable answers.

You know the rest.

 

[bunyip]

There have been comments made off and on now over the many months of how could people/ pensioners on low/ no incomes expect to pay off such massive loans....didn't they question it?

Well, we did several times and this was the answer, more or less, that we received each time; "You wont. You will die owing a big debt, and your kids/ estate will inherit that big debt, but they will also inherit an even bigger income. That is how the big boys play the game. Do you think Kerri Packer is going to die with no debt? Hell no... he will have massive debts and be smiling because he will have left an even bigger income. This is how you get ahead with investments and making money...and this is how you get ahead of the tax man, or he just takes it all otherwise".

Now this may not be what everyone who asked was told, but I remember it distinctly and though it made sense as I have read articles/books about strategies used by "the big boys" and indeed a lot of their wealth is paper money, borrowed monies etc.

I/ we didn't for one moment pretend we were in the same league as the "big boys" but decided that if this strategy is what is used in the industry, why shouldn't we use it. I guess we now know the reason... the down turn of the market. But we were also assured/ promised that we would never get a margin call as we would be looked after by Storm. We did ask lots of questions. But we always got what we though were reasonable answers.

You know the rest.

Rather than question how you were going to pay off your debts, I think the comments have been more about how Storm clients expected to service their loans.
This is, after all, what it all boils down to in the end.......if you borrow so much that you can't meet the interest payments, then you've effectively sealed your financial fate.

I accept that Storm victims were generally lacking in financial and investment acumen. Yet I'm still perplexed at how anyone could borrow money without considering how they were going to pay the interest.
To quote Harleyquin....'we completely forgot about the interest we would be paying, we only thought about that aspect of the investment at a later stage.'

Consider a situation where Harleyquin or any other Stormer on an income of say, 60 grand, goes to a bank and asks for a loan of 10 grand to put a new kitchen in their house.
The bank says 'We'll lend you the 10 grand no problem. In fact we'll lend you 150 grand so you can renovate the whole house, build that granny flat you've always wanted, put on an extra room or two for the kids, buy that pool you've always dreamed about. You might even want to get yourself a couple of new cars as well, and take that European cruise you've been talking about.'
OK, what are you going to do? Do you grab the 150 grand as quick as you can, or do you stop and consider the interest payments and if you'll be able to meet them?
If your 60 grand income leaves you with only a 5 grand surplus after paying income tax and meeting living expenses, then blind Freddy can see that it's hardly prudent to take on a level of borrowing that requires you to find an additional 10 grand or more each year just to meet the interest payments.
It doesn't take years of investment and finance experience to work it out. Nor do you need to be a mathematical genius.
Common sense and thirty seconds punching figures into a calculator are surely going to tell you that a 5 grand surplus won't fund a 10 grand interest bill.

 

[cuttlefish]

"You wont. You will die owing a big debt, and your kids/ estate will inherit that big debt, but they will also inherit an even bigger income. That is how the big boys play the game. Do you think Kerri Packer is going to die with no debt? Hell no... he will have massive debts and be smiling because he will have left an even bigger income. This is how you get ahead with investments and making money...and this is how you get ahead of the tax man, or he just takes it all otherwise".

Bond and Skase are also counted among the number who applied that strategy very effectively .... for a time.

Did anybody ever ask why it was so easy for people with zero financial acumen to get so wealthy. There's some useful BS indicators/warning bells in finance ... one is if someone you don't know from a bar of soap is going out of their way to sell you an investment scheme, property or any other kind of money making venture the first question to ask is .... if its so effective, why are they trying so hard to push it on to me, someone you barely know ... rather than keep this secret financial success story all to yourself.

So if someone gives you a free overseas trip just for putting money into their investment scheme ... CLANG CLANG CLANG ... if someone gives you a free flight to look at an investment property ... CLANG CLANG CLANG ... if someone offers to make you as wealthy as Packer and Murdoch without you having to lift a finger ... CLANG CLANG CLANG.

But thats all not much use in hindsight.

 

[Solly]

There have been comments made off and on now over the many months of how could people/ pensioners on low/ no incomes expect to pay off such massive loans....didn't they question it?

Well, we did several times and this was the answer, more or less, that we received each time; "You wont. You will die owing a big debt, and your kids/ estate will inherit that big debt, but they will also inherit an even bigger income. That is how the big boys play the game. Do you think Kerri Packer is going to die with no debt? Hell no... he will have massive debts and be smiling because he will have left an even bigger income. This is how you get ahead with investments and making money...and this is how you get ahead of the tax man, or he just takes it all otherwise".

Now this may not be what everyone who asked was told, but I remember it distinctly and though it made sense as I have read articles/books about strategies used by "the big boys" and indeed a lot of their wealth is paper money, borrowed monies etc.

I/ we didn't for one moment pretend we were in the same league as the "big boys" but decided that if this strategy is what is used in the industry, why shouldn't we use it. I guess we now know the reason... the down turn of the market. But we were also assured/ promised that we would never get a margin call as we would be looked after by Storm. We did ask lots of questions. But we always got what we though were reasonable answers.

You know the rest.

Anastasia, what was the most surprising thing for me was the statement to me by a Stormer that the debt was never to be paid off. This strategy has never been presented to me as a "retail investor". I found this a very alien method for creating wealth for private investors and the thought of carrying large debt levels in markets that can be so volatile was daunting.

Their belief in the Storm model and faith in the principals was unshakable. I was at a social gathering with this Stormer before the collapse and when the matter of some jitters about Storm were circulating. At this stage I had no idea of what lay ahead but I started to ask some general questions about Storm and its model and whether it would be prudent to seek the opinion of others to ensure that their investments were safe.

I was quickly told how solid the Storm model was, that there were safeguards in place, Storm had weathered previous large markets adjustments, the principals where mega rich and they have large property holdings in TVL and around the country, had a private jet, the Comm Bank is behind them, etc, etc. Their last part of the conservation is still very vivid to me where I was told that there's nothing to worry about as EC will sort it all out.

Then when it all went belly up, I was very seriously concerned for a time that their losses may have become too much for them to cope with. They lost their whole life savings and effort.

I admire their strength and determination to battle the dark days they have been through and to cope and survive. I wish them all the best and hope one day I will see the spark of joy back in their eyes.

 

[Anastasia]

Rather than question how you were going to pay off your debts, I think the comments have been more about how Storm clients expected to service their loans.
This is, after all, what it all boils down to in the end.......if you borrow so much that you can't meet the interest payments, then you've effectively sealed your financial fate.....

I agree that we should have asked how we were to service the loans....in fact we did...and this was the answer: " You don't have to service the loans. The scheme pays it for you. Interest from loan to be paid 4%, interest earned from investment 11%, fund raises enough cash to service loans. If the market goes down, don't worry about it...there will be enough money in the dam to survive and besides we have arrangements in place where you won't get a margin call.

And this was what happened over the 11 years we were with Storm. Market dipped several times and we survived without a graze to our knees.

 

[Harleyquin]

Rather than question how you were going to pay off your debts, I think the comments have been more about how Storm clients expected to service their loans.
This is, after all, what it all boils down to in the end.......if you borrow so much that you can't meet the interest payments, then you've effectively sealed your financial fate.

I accept that Storm victims were generally lacking in financial and investment acumen. Yet I'm still perplexed at how anyone could borrow money without considering how they were going to pay the interest.
To quote Harleyquin....'we completely forgot about the interest we would be paying, we only thought about that aspect of the investment at a later stage.'

Consider a situation where Harleyquin or any other Stormer on an income of say, 60 grand, goes to a bank and asks for a loan of 10 grand to put a new kitchen in their house.
The bank says 'We'll lend you the 10 grand no problem. In fact we'll lend you 150 grand so you can renovate the whole house, build that granny flat you've always wanted, put on an extra room or two for the kids, buy that pool you've always dreamed about. You might even want to get yourself a couple of new cars as well, and take that European cruise you've been talking about.'
OK, what are you going to do? Do you grab the 150 grand as quick as you can, or do you stop and consider the interest payments and if you'll be able to meet them?
If your 60 grand income leaves you with only a 5 grand surplus after paying income tax and meeting living expenses, then blind Freddy can see that it's hardly prudent to take on a level of borrowing that requires you to find an additional 10 grand or more each year just to meet the interest payments.
It doesn't take years of investment and finance experience to work it out. Nor do you need to be a mathematical genius.
Common sense and thirty seconds punching figures into a calculator are surely going to tell you that a 5 grand surplus won't fund a 10 grand interest bill.

Bunyip you are spot on when you say 'if you borrow the money you consider the interest repayments as you have to repay that money' I would under normal circumstances think the same way. The Storm model was 'sold' to us as a strategy, we would never have to worry about those things as we were paying storm to manage this interest and it wasn't to be our concern, they were the experts who were going to look after us. The point is the loans were far too great and the margin loans were never explained. If we had known that we had a second loan called a margin loan we would have been very worried. This is a genuine investment strategy but not for low income workers or retirees that's where storm and the banks made their big mistake. I believe that it was storm policy NOT to mention the interest but to steer us all away from that line of thinking.

There are people out there who would like to go and do this all over again but they are the big earners paying big tax and they can afford to do this. The problem was that we were all told that we could do it too with storm looking after us. I have read all of your criticisms and knowing what I now know I agree with what you are saying but at the time we knew none of that.

This is also a multi layered problem though, the banks involved still lent a massive amount of money to low income workers. I earn less than 20 thousand a year gross and had a million dollar loan and didn't have the know how at that time to realise that it could be this dangerous as I firmly believed storms promises that they would manage this for us. Now we hear that the CBA's monitoring system was out of action between Sept and Oct when the big drop came it wasn't being monitored. We are all still learning and I don't like what I'm now learning.

When Storm advised us to borrow a large amount of capital, all the banks had to say to storm was 'no way these people cannot afford it and we will only lend them x amount of dollars; but they didn't - what did they do -they added to the problem by inflating our incomes to six figures and revaluing our properties to many times their true valuations and we all have the proof that they have done this.

We are members of SICAG and it's been the best thing to come out of all this. Suddenly there were thousands of people whe were left dead in the water financially and no idea how and why. I know that you who are very financially aware will criticise this and I don't care the point is we are not all as financially aware as many of you obviously are...but at this rate we are getting there really fast. SICAG has been a great emotional support and the committee and support they give us has been amazing.

When something like this occurs there is no support agency or any description set up to cope with such a problem. Lifeline were shocked but no help they could only listen and the other agencies that will come to your mind were exactly the same. Even the doctors, no idea, none of this has ever happened to them and they cannot possibly understand what it is like. It is soul destroying. Our biggest crime was we trusted who we thought was a genuine financial planner and we are now paying the ultimate price for giving them that trust and the banks are very much a part of this, they were the ones who backed this scheme financially.

The banks were very aware of the interest we were paying that's why they did it , they all made a fortune from storm and it's clients, we were their cash cows. Now that the all ords have gone up we would still be in the market, if storm had sold off when the market was going down and bought up when it crashed none of us would be in this position, They didn't do what they told us they were going to do. We have all been lied to and the banks have helped them do it with their irresponsible lending, they lent massive amounts to storm during 2008 when the market was going down. Why?

 

[mellifuous]

I'm not an investor in Storm, and I can tell you that I never would have been.

About 25 years ago when I got my first bag of money, I was 'advised' to invest into in an N.A.B. product - and what a waste that was.

I learnt there and then not to trust 'financial advisors' - I figured they were self interested and commission driven.

Instead, 20 years after retirement, I took the advice of a friend and invested with City Pacific's FMF.

The rest is history. A lot of us lost a lot, no matter where we invested. I'm pi77ed big time and I'll fight every inch of the way to get as much as I can back.

I admire your group for its tenacity. I only wish we had the same cohesion amongst FMF investors.

You folk fell where I never would, and I fell where you probably never would.

There's a trap out there for each of us, all we have to do is find it, and fall into it.

 

[Harleyquin]

I'm not an investor in Storm, and I can tell you that I never would have been.

About 25 years ago when I got my first bag of money, I was 'advised' to invest into in an N.A.B. product - and what a waste that was.

I learnt there and then not to trust 'financial advisors' - I figured they were self interested and commission driven.

Instead, 20 years after retirement, I took the advice of a friend and invested with City Pacific's FMF.

The rest is history. A lot of us lost a lot, no matter where we invested. I'm pi77ed big time and I'll fight every inch of the way to get as much as I can back.

I admire your group for its tenacity. I only wish we had the same cohesion amongst FMF investors.

You folk fell where I never would, and I fell where you probably never would.

There's a trap out there for each of us, all we have to do is find it, and fall into it.

Thank you for that. SICAG has been the best thing to come out of the storm debacle. Knowing what I know now I wouldn't touch storm with a ten foot pole unless i could give them all a decent whack with it.

However the idea of a group such as SICAG is brilliant and I would like to see something set up for everyone who needs this type of emotional, financial, legal and personal support. The guys on the committee are just brilliant. They have really put themselves on the line to help everyone. They say two heads are better than one, well two thousand are a two thousand times better than one. We have all realised there is a deep need for this type of group. We are only one group - this forum has shown me just how many others are in a similar position.

I would dearly love to find a decent genuine person who can help us with our finances and the sad reality is - it's never going to happen. We've learnt the hard way you have to do it yourself and forget about the financial experts - they don't exist.

 

[bunyip]

I agree that we should have asked how we were to service the loans....in fact we did...and this was the answer: " You don't have to service the loans. The scheme pays it for you. Interest from loan to be paid 4%, interest earned from investment 11%, fund raises enough cash to service loans. If the market goes down, don't worry about it...there will be enough money in the dam to survive and besides we have arrangements in place where you won't get a margin call.

And this was what happened over the 11 years we were with Storm. Market dipped several times and we survived without a graze to our knees.

I doubt if you got a loan at 4% interest. Nor does an investment in the stock market pay 11% 'interest'.
A simple check or two would have made this information available to you, even if you weren't particularly financially savvy.

The fact is that it really was quite silly and irresponsible of you to swallow their lies, rather than put in a small amount of effort to find out if their information was accurate.
Sorry if that offends you, but it's the truth.

 

[Anastasia]

I doubt if you got a loan at 4% interest. Nor does an investment in the stock market pay 11% 'interest'.
A simple check or two would have made this information available to you, even if you weren't particularly financially savvy.

The fact is that it really was quite silly and irresponsible of you to swallow their lies, rather than put in a small amount of effort to find out if their information was accurate.
Sorry if that offends you, but it's the truth.

I'm not offended....after what we have been through do you think your comments/insults can offend me.

However, for the record, we did do a lot of research...actually even confided with our accountant who is very well know and has a very good reputation...and yes we did have loans and returns at those percentages way back when we first got in.... but you are entitled to your view and your "all knowing everything" attitude. So be it...

 

[bunyip]

This is also a multi layered problem though, the banks involved still lent a massive amount of money to low income workers. I earn less than 20 thousand a year gross and had a million dollar loan and didn't have the know how at that time to realise that it could be this dangerous as I firmly believed storms promises that they would manage this for us.

You were offered a loan of 1 million dollars and you accepted it, even though your income was less than 20 grand.
Sorry, but a 10 year old kid could work out that you'd never meet the loan commitments, even without the market crashing.
Anyone who takes on that level of debt on such a small income to invest in the stock market, of all things, is very naive to believe that they, the investor, should bear none of the blame when it all falls apart.

Certainly, the banks and Storm were complicit in your downfall. Add in a sizeable stock market correction, combine it with a 'sit on your hands and do nothing' policy from Storm as the market slumped, aided and abetted by you, the investors, by not instructing Storm to get you out of the market before your investments were decimated.....your financial demise was assured.

Yes, I'm well aware that some clients did in fact instruct Storm to cash them out, but Storm ingored those instructions.
For that, Storm deserve absolute condemnation.
But as investors who were employing these people, it was the clients responsibility to insist that their instructions were followed, and to make sure that they were.
If they failed to do so then that's further reason why they must accept part of the blame for what happened.

Don't misunderstand me - in no way am I condoning the actions of Storm and the banks.
Both of them were unprincipled, dishonest and incompetent.
Both of them must accept their part of the blame. Both of them must be punished.
But the blame doesn't belong 100% to them - part of it belongs to you.

 

[mellifuous]

I don't think the objective view is really satisfactory - to my mind, it's the subjective view that's important. Further, I'm sure one size does not fit all.

From an outsider's perspective, the mere fact that the ANZ bank has given certain undertakings about homes is significant. Even the CBA's utterances are a valuable insight to the impact of this mess. It's clear the banks have liability and that must give hope to storm investors.

In the FMF, the CBA extended a facility from $150m to $240m when the fund couldn't even pay back the initial $150m. I liken our circumstances with respect to the Fund as to individuals in Storm. I think the CBA has a lot to answer for.

As far as I understand it, Banks don't tend to care about 'consequences' - their prime concerns are profits and loan security. In the ordinary course of business, these are perfectly normal pursuits.

However, there are many circumstances where banks should not lend, and they should restrain their desire for profits in preference to not putting others at risk of financial ruin as a consequence of lending.

'I told you so' doesn't help - regardless of the motivation for the investment. Individuals are badly hurt and are entitled to recover when and as much as they can.

 

[Big Max]

Thank you for that. SICAG has been the best thing to come out of the storm debacle. Knowing what I know now I wouldn't touch storm with a ten foot pole unless i could give them all a decent whack with it.

However the idea of a group such as SICAG is brilliant and I would like to see something set up for everyone who needs this type of emotional, financial, legal and personal support. The guys on the committee are just brilliant. They have really put themselves on the line to help everyone. They say two heads are better than one, well two thousand are a two thousand times better than one. We have all realised there is a deep need for this type of group. We are only one group - this forum has shown me just how many others are in a similar position.

I would dearly love to find a decent genuine person who can help us with our finances and the sad reality is - it's never going to happen. We've learnt the hard way you have to do it yourself and forget about the financial experts - they don't exist.

GG, Ironhalo et al. Your comments please?

 

[bunyip]

I'm not offended....after what we have been through do you think your comments/insults can offend me.

However, for the record, we did do a lot of research...actually even confided with our accountant who is very well know and has a very good reputation...and yes we did have loans and returns at those percentages way back when we first got in.... but you are entitled to your view and your "all knowing everything" attitude. So be it...

I'm pleased my comments don't offend you - they were never intended to - but it's regrettable that you think I'm trying to insult you.

Throughout this thread I've attempted to bring some balance to the discussion.
I've disagreed with the people who've laid all the blame on one party. It's just not realistic to claim it was all Storm's fault or all the banks fault or all the fault of the investors.
Similarly, I've disagreed with those who have attempted to absolve any of the above parties from all responsibility.....that also is unrealistic.

Whether you do or don't agree with me, whether you are or are not offended or insulted by what I say, I'll stick with my carefully considered opinion that every party involved bears part of the responsibility for what happened.....Storm, banks, and investors. And probably ASIC as well.

And for what it's worth - don't ever ask an accountant for investment advice, or even for his opinion about an investment that you're considering.
Accountants are experts in taxation matters, but taxation and investment are two separate areas, even though one affects the other.
Investment advice is outside the area of expertise of accountants.
Sure, some accountants are also licensed investment advisers, but all that really means is that they can legally sell you investment products on which they earn a commission. Guess which investments they'll recommend - the ones that pay them the best commissions.
I'm not suggesting that your accountant was an investment adviser trying to sell you a product - it sounds like you simply ran the Storm proposal past him to get his views.
The fact that he or she appears to have commented favourably on Storm's investment model, gives credence to my view that accountants should not be asked for advice or opinions about investments, unless your queries relate specifically to the taxation implications of investments.