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Storm Financial Group

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-Bevo- said:
A LAST-resort compensation scheme to bail out investors will be examined by the Rudd Government in the wake of the $3 billion collapse of Townsville-based Storm Financial

Another silly Rudd Idea not sure how it would work but the idea that investors should be bailed out for been incompetent or taking unnecessary risk is not the roll of Governments, this may promote risk taking if the government is there to bail out people from failed investments.
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Have to agree.

Bad financial advice is 100% THE FAULT OF THE ADVISOR.Failing to asses the clients fin position is 100% fault of the advisor. Not being on top of your client's margin loans is 100% the fault of the advisor.

Sue the banks if you can, but really, their role is as a money lender nothing more.

Stop the nanny state.
 
Judd said:
....
Nor did I get any clear indication what the committee's views were on the appropriate level of gearing for margin loans. Is it 10%? 15%? 20%? 60% Because, in my view, this is the crux as to why most Storm clients were trashed. Sure, they were critical of the one-size-fits-all approach by Storm Financial but that is all.

Nothing really about double gearing (it's triple really as the majority of companies have debt and margin lending is against equity. Just think about that for a moment.) But they seemed to OK it since the new requirements for margin loans are to take an holistic approach. Hmmm, I roll up with $900k in unencumbered shares and ask for a loan of $100k. Why do they need to know if I have a mortgage?

Waste of time.
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Do you really think it is the committee's role to recommend an appropriate level of gearing? I think this is something that would vary greatly depending upon the circumstances of the individual investor. A youngster earning a good salary with no committments is an entirely different proposition to a middle-aged couple with mortgage and kids and mid-range income, and different again to a retired pensioner - no one level of gearing is going to "fit" all three of these scenarios. It comes back to the "one size fits all" approach being entirely inappropriate in the financial advice industry. Same for double gearing - depends upon the client as to whether it's advisable (pun intended) or not.

I didn't get a great deal out of the report. Didn't really expect to. I did read it quite late last night though, and perhaps a second run-through will impress me a bit more. I would have liked to have seen a recommendation for commission-based advice to be scrapped, or relegated to non-advice salespeople. I would also like to see a mandatory degree qualification for financial planners (and I mean a proper degree) similar to that required by accountants. Something to keep the cowboys out of the industry would be nice.....
 
-Bevo- said:
A LAST-resort compensation scheme to bail out investors will be examined by the Rudd Government in the wake of the $3 billion collapse of Townsville-based Storm Financial

Another silly Rudd Idea not sure how it would work but the idea that investors should be bailed out for been incompetent or taking unnecessary risk is not the roll of Governments, this may promote risk taking if the government is there to bail out people from failed investments.
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I agree too - stupid idea.
Labor parties + control of purse strings = (bad)^:banghead:
 
cuttlefish said:
Good questions, I guess there's numerous ways it could be structured, all of which will of course have flaws, but in my view a basic starting point could be something like this:

* Licensed Financial Advisor is a regulated certification
* A Licensed financial advisor is not able to sell financial products or receive commission for the sale of financial products in any manner or form, from any party.
* The industry body for Financial Advisors markets itself appropriately and highlights this aspect of their industry and outlines the benefits
* It is illegal to market/brand oneself as a Financial Advisor if you are not certified and it is illegal to provide a statement of advice if not certified.
* Resellers/distributors of financial products do not need to be licensed financial advisors (and in fact can't be)
* Distributors of products can make product recommendations but any recommendation and any marketing material they use needs to have a disclaimer that they are not a licensed financial advisor and that before purchasing the product the client should consider seeking advice from a licensed financial advisor.
* The signing page of any purchase agreement for an investment product should have a tick box for the client to acknowledge this disclaimer.
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Cuttlefish, I see what you're getting at with this, but I don't really see it working well for the people who need it most.

And I think it would take about five minutes for a duly Licensed Financial Planner/Adviser to hook up with a product distributor, and lo, we are back to where we were.

I can see it now. The naive investor goes to see the Licensed Financial Planner, secure in the knowledge that because the Planner isn't actually going to be selling him/her anything, all the advice offered will be absolutely full of integrity, tailored to the nth degree to his/her personal circumstances.

The interview ends with smiles and joy all round, at which stage the investor says "ah, but I don't know where to buy this managed fund, those bonds, etc that you are so sure will deliver me everlasting financial freedom".

Whereupon the very ethical Licensed Financial Planner will say, "no worries, here is the name of a firm which will provide you with what I have suggested".
The client smiles happily, shakes hands, and goes off to be fleeced by the product distributor who in turn happily accepts his backhander from the very ethical Financial Planner.

Just essentially adding another layer to the whole transaction imo.

Or perhaps I simply lack any decent level of faith in humanity on most levels.
 
I haven't got time at present, too much work on and a mate needs a hand agisting and feeding cattle, so I will not comment on recent Ripoll report and folks reaction.

My initial superficial thoughts are.

1. SICAG Model has been a monumental disaster and will neither assist present victims nor more importantly future ones. It plays into the Manny Model of trying to get the banks to pay back all the pre-margin losses which they won't do. Manny would be grateful for their good work. SICAG are the only organisation in all of this not to say anything adverse about Manny. They are good at organising bbq's to give them fair due.

2. The Financial Planning Industry have carte blanche to continue ripping off muppets.

3. The responsible planners formerly working at Storm continue to, and will continue advising muppets and collecting commissions.

In Queensland it used be called "The Joke" in pre-Fitzgerald Inquiry times.

gg
 
Julia said:
Cuttlefish, I see what you're getting at with this, but I don't really see it working well for the people who need it most.

And I think it would take about five minutes for a duly Licensed Financial Planner/Adviser to hook up with a product distributor, and lo, we are back to where we were.

I can see it now. The naive investor goes to see the Licensed Financial Planner, secure in the knowledge that because the Planner isn't actually going to be selling him/her anything, all the advice offered will be absolutely full of integrity, tailored to the nth degree to his/her personal circumstances.

The interview ends with smiles and joy all round, at which stage the investor says "ah, but I don't know where to buy this managed fund, those bonds, etc that you are so sure will deliver me everlasting financial freedom".

Whereupon the very ethical Licensed Financial Planner will say, "no worries, here is the name of a firm which will provide you with what I have suggested".
The client smiles happily, shakes hands, and goes off to be fleeced by the product distributor who in turn happily accepts his backhander from the very ethical Financial Planner.

Just essentially adding another layer to the whole transaction imo.

Or perhaps I simply lack any decent level of faith in humanity on most levels.
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Julia - I agree entirely that is a scenario that could/(will almost inevitably) occur - but it would also be blatantly and patently against the law - immediately liable to criminal prosecution.

The analogy of the medical profession is reasonable imo. The shift that would occur is that distributors/salesmen for investment products would sell to financial planners instead of directly to retail - just like pharmaceuticals tend to market to Dr's rather than retail for specific products (i.e. anything needing a prescription).


Just like occurs for Dr's (has anyone ever had a script written for them on non-drug-company stationary with a non-drug-company pen?) there will be the inevitable gifts and subtleties - but at the end of the day anyone offering/accepting real financial conpensation to licensed financial advisors would be acting illegally and the case would be black and white - i.e. there would be no need to prove professional misconduct or any other such complexities.
 
"Ripoll does little to stop another Storm"

"In financial advisory circles they have been known to call a DFP (diploma of financial planning) a diploma of finger painting. In this business the barriers to entry are not exactly … exacting.

Bernie Ripoll and his colleagues ought to be commended then, in advocating better education for planners. But that is where the eulogy ends."

More by Michael West in the SMH here;

http://www.smh.com.au/business/ripoll-does-little-to-stop-another-storm-20091124-jhc1.html
 
"Too soft on banks"

"STORM Financial victims have slammed the parliamentary inquiry into the disaster for failing to take a harder line with banks.

Noel O'Brien, co-chair of the Storm Investors Consumer Action Group, yesterday criticised the probe headed by Labor MP Bernie Ripoll for not including lender liability laws among 11 proposed reforms to overhaul the financial planning sector."

More by Anthony Marx with Emma Chalmers in the Herald Sun here;

http://www.heraldsun.com.au/business/too-soft-on-banks/story-e6frfh4f-1225803475557
 
"Investors furious at Storm inquiry"

"SUNSHINE Coast investors burnt by the $3 billion collapse of Storm Financial are furious that a landmark inquiry into the company’s demise failed to take the banking industry to task

Sean McArdle, said he was ambivalent about the inquiry, because there was never an attempt to determine guilt or wrongdoing on the part of the banks."

More by Mark Bode in the Sunshine Coast Daily here;

http://www.sunshinecoastdaily.com.au/story/2009/11/25/banks-let-off-lightly-furious-investors-say/
 
Garpal Gumnut said:
I haven't got time at present, too much work on and a mate needs a hand agisting and feeding cattle, so I will not comment on recent Ripoll report and folks reaction.

My initial superficial thoughts are.

1. SICAG Model has been a monumental disaster and will neither assist present victims nor more importantly future ones. It plays into the Manny Model of trying to get the banks to pay back all the pre-margin losses which they won't do. Manny would be grateful for their good work. SICAG are the only organisation in all of this not to say anything adverse about Manny. They are good at organising bbq's to give them fair due.

2. The Financial Planning Industry have carte blanche to continue ripping off muppets.

3. The responsible planners formerly working at Storm continue to, and will continue advising muppets and collecting commissions.

In Queensland it used be called "The Joke" in pre-Fitzgerald Inquiry times.

gg
Click to expand...



At least your consistent gg, still managing to throw something in about SICAG even though the chatter is about the report. If you dont understand how SICAG has already assisted so many storm victims you really havent grasped why they formed in the first place and obviously either dont talk to many SICAG members or a VERY selective in those who you listen too......I understand the deserved critisism of the "Storm model" but as I have asked before, what exactly is the "SICAG model"...Would love to hear about the model they operate under. I havent been able to find their description of it anywhere.In the meantime keep up the great work...
 
"PJC points finger at Storm model"

"The Parliamentary Joint Committee (PJC) has found the lack of information that banks could provide on margin loan accounts "deeply troubling" but also found Storm Financial's investment model significantly contributed to the problem."

More by Michael Hobbs on financialstandard.com.au;

http://www.financialstandard.com.au/news/view/27388/
 
"Clouds gather over Ripoll findings"

"Australian financial planners and investors held their breath last week as the report into the country's financial products and services was finally delivered.

Many industry participants welcomed the recommendations, though others were left disillusioned."

The article by Kate Kachor in Investor Daily is here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/8009.htm
 

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