Storm Financial Group

[SJG1974]

Our reasons why!

Doobsy (and others) have asked me to explain why we signed up with Storm Financial in the first place.

In late 2006 when our shopping center was on the market, we started to look around for suitable investments that would ensure that any capital we had would not erode away over time. Our two prime objects at that time were (1) to ensure that our assets would be secure and (2) that they would appreciate over time.

We looked at a number of options. Allocated pension plans were considered. So was putting our money in the Bank and just living off the interest. However, with inflation and lack of growth, we thought that these were not viable options in the long term.

Glad you finally answered Frank. Perhaps I should have posted as Doobsy to get you to answer my questions...

I think it is fair to conclude that, based on the above, the reasons you went with Storm were a combination of greed, naivety and gullibility....areas which you have seemed determined to deny any responsibility for in your posts.

Greed- chasing returns that would give you more than the bank or an allocated pension, particularly given that you could have met your income needs by simply putting your money in the bank.

Naivety- having an objective of ensuring your assets were secure, and then double gearing them into the sharemarket.

Gullibility- believing what Storm told you without doing any independent research yourself, and accepting what they told you on face value, even though you obviously did not have any idea of the risks you were taking, or understand the strategy.

I am sure you aren't the only Storm investor who the above applied to. A harsh lesson learned Im afraid.

However, unlike you, there seem to be many other Storm investors taking responsibility for the role they played in their own demise, rather than taking no responsibility at all and placing 100% of the blame with third parties.

 

[Julia]

However, unlike you, there seem to be many other Storm investors taking responsibility for the role they played in their own demise, rather than taking no responsibility at all and placing 100% of the blame with third parties.

Yes, and some of these people have further taken responsibility to become financially literate. They're the people who will recover well and move on. To be determined to remain a victim is just counterproductive.

 

[bunyip]

Glad you finally answered Frank. Perhaps I should have posted as Doobsy to get you to answer my questions...

I think it is fair to conclude that, based on the above, the reasons you went with Storm were a combination of greed, naivety and gullibility....areas which you have seemed determined to deny any responsibility for in your posts.

Greed- chasing returns that would give you more than the bank or an allocated pension, particularly given that you could have met your income needs by simply putting your money in the bank.

Naivety- having an objective of ensuring your assets were secure, and then double gearing them into the sharemarket.

Gullibility- believing what Storm told you without doing any independent research yourself, and accepting what they told you on face value, even though you obviously did not have any idea of the risks you were taking, or understand the strategy.

I am sure you aren't the only Storm investor who the above applied to. A harsh lesson learned Im afraid.

However, unlike you, there seem to be many other Storm investors taking responsibility for the role they played in their own demise, rather than taking no responsibility at all and placing 100% of the blame with third parties.

Frank

I’m sure it galls you to hear it, but SJG is right in what he says above.

A few days ago I told you that Storm dangled a nice juicy carrot in front of you, dressed it up as sound financial advice, and made it look so financially attractive that you grabbed it with both hands without even bothering to subject their strategy to proper scrutiny.
Your posts of the last couple of days have confirmed that this is in fact what happened.

You were only looking for a modest 45 grand a year in retirement ($3750 a month), but Storm told you they could get you 96 grand a year ($8000 a month) if you mortgaged your home, took out a margin loan, then double geared on top of that, and sank the whole lot into one basket called the stock market.

You hide behind the excuse that you knew nothing about investment. Yet you had a substantial investment in your shopping center, and I’ll hazard a guess that you would have parked some funds in term deposits at times, also that you would have bought a house or two over the years. These are all investments, are they not?

You could have easily achieved a substantially higher income than your desired 45 grand a year, simply by splitting your capital three ways between cash deposits, residential real estate, and high yielding blue chip shares.
Such a strategy may not have achieved the 8 grand a month that Storm dangled under your nose, but it would have easily outdone the 45 grand a year that you wanted, it would given you diversification, and it would have produced capital growth to protect your investment from the ravages of inflation.
And all this without borrowing a single dollar, without putting all your eggs in one risky basket, and without paying an outlandish upfront fee of 7% to some bushranger sitting in a plush Townsville office.

But wait – you’ve told us you didn’t have sophisticated investment knowledge. So how could you possibly have come up with the simple conservative strategy that I’ve outlined above?
Tell me, how much sophisticated investment knowledge do you need to buy a few houses in a growth area, or to talk to a bank about term deposits, or to consult a stockbroker to find some well-regarded blue chip companies with a track record of paying decent dividends and producing capital growth?
You and Harleyquin greatly over-estimate the degree of sophistication and knowledge you need to implement a simple self-managed investment portfolio.

And other point – if you’ve spent 50 or 60 years living in our commercial world but in that time have failed to learn the basics about investment and finance, then I wonder whose fault that is??!! It’s not as if you didn’t have plenty of opportunities to learn some basic skills and knowledge in this area.

You took a wild, reckless gamble - you lost.
Admit your mistake, take responsiility for your errors of judgement, stop trying to convince everyone you were astute and circumspect, and move on.

 

[bunyip]

With respect doobsy, I disagree entirely. There is everything an investor needs to know available in this technological age. It's simply a matter of spending a bit of time acquiring financial literacy.

It does, of course, make sense for you - as a financial adviser - to promote the idea that people need 'expert help'. Nothing wrong with that. You're in business to make a living, and I'm sure you provide genuine assistance to many clients.

But I hold that it's simply wrong to suggest that it's beyond your average Australian to understand superannuation or to acquire financial literacy plus an understanding of how the market works.

I absolutely agree. There’s a wealth of information freely available to anyone who wants to lean the basics of investment and finance.
All we have to do is get off our backsides and take advantage of it.

In this day and age in a country like Australia, there are no excuses for anyone to live for half a century or more and yet have virtually zero finance and investment knowledge.

 

[Frank Ainslie]

Considering there was a strong bull market at the time, it's difficult to understand why you would give credit to Storm for this growth.
Surely you were aware of how the market had been growing when you consulted Storm???


Either you could or you couldn't. Not too hard to do the basic sums.

So did you quantify that indemnity insurance? i.e. find out the total number of clients, know what the total capital invested was of all these clients, and then determine that the indemnity insurance would absolutely cover you in the face of the firm failing? ???


So what? Before it failed so spectacularly, ABC Learning also went on a massive acquisition binge. What makes you think this is an indicator of a well managed company?


Really?



Hold on a moment: earlier you told us that they'd informed you not to expect any profits or capacity to draw an income for five to seven years.
You are directly contradicting yourself here.

Further, did you have them explain how exactly this $100K p.a. would be derived, i.e. X amount will come from growth of your capital, X amount will come from dividends, and X amount will come from franking credits?

If so, (and I rather doubt that you would have) how could you have felt assured of the growth factor? Or the dividend yield for that matter?



$8000 per month? I thought you said you only had an expectation of $45,000 p.a.?
Can't help wondering what you'd feel obliged to spend $8000 per month on in retirement. Yet another contradiction.


Disagree entirely. If the nanny state continues to increase at the same exponential rate, we will all soon be told when we may take a breath.

It doesn't matter how much regulation you have, there will always be scammers able to find a way round it. We should not over-regulate the thinking population in an attempt to safeguard those who want to have their hands held every minute.


This is an entirely justified complaint imo. But it was ever thus. Belonging to an industry's overseeing body is absolutely no guarantee of that firm's ethics. Most of it is window dressing. Never depend on a professional body offering any guarantee of ethical behaviour.

Julia,

“Considering there was a strong bull market at the time, it's difficult to understand why you would give credit to Storm for this growth.

Surely you were aware of how the market had been growing when you consulted Storm?”

You obviously pride yourself on being rather more astute than the average investor. I have no doubt that you are just that. However, it is unwise to judge everyone by the standards you set for yourself. Investors come in many guises and from different backgrounds. A study conducted by England's Financial Services Authority (FSA) in 2004 called "Consumer Understanding Of Financial Risk" has shed some light on how well people understand their investments. This can be found at: http://www.investopedia.com/articles/07/UnderstandRisk.asp#axzz1doQVDhVt

Based on this study you would probably fall into the category of a “Controller”. “Controllers are often experienced investors who rely on their own understanding and make their own decisions.” Controllers are sophisticated investors (or at least think they are!) and prefer to take charge of the investing process. They are very interested in the financial sector and have a good understanding of both products and markets. They are aware of and understand the array of products that are available and they know what they want. They also spend a considerable amount of time researching products and markets, and they actively send off for financial statements, buy the latest books, and even attend investment seminars and conferences. This does not necessarily make them risk friendly, but they understand risk and know how to construct an optimal portfolio. Such investors often purchase on execution only, which means that they don't seek an advisor's advice.

With respect to controllers who think they are sophisticated, there are certainly those who ought to delegate more of their investing tasks to a professional. Investors who seriously overestimate their knowledge or abilities can get into trouble.”

Based on this, I guess we would call you a "sophisticated investor". Yet, you too could get into trouble if you assume that you know everything and therefore don’t bother to look beneath the surface. Take for instance your remarks about professional indemnity insurance. You simplify this by stating, “So did you quantify that indemnity insurance? i.e. find out the total number of clients, know what the total capital invested was of all these clients, and then determine that the indemnity insurance would absolutely cover you in the face of the firm failing?

Certainly, Storm didn’t have enough insurance cover in dollar terms, but this was NOT the reason that Storm’s professional indemnity insurance offered no protection to Storm’s clients. In other words, there are gaps even in your knowledge. Therefore, no amount of investigating on your part of a financial adviser’s professional indemnity insurance cover would have enabled you to spot the fatal flaw unless you knew what you were looking for! In this particular aspect, you could therefore be termed an “unsophisticated investor”. You will therefore appreciate that no particular person can know everything! The point is that with regard to professional indemnity insurance, I would not expect you to know what many in the industry do not! You can see now why assuming is a dangerous thing!

As for most of your other remarks, you are commenting after the event when it is easy to be wise. The collapse of the ABC learning centers for instance was still on the horizon when we joined Storm!

In the article I have previously mentioned, it also states that ‘Education’ and ‘Financial Sophistication’ Are Not the Same Thing

“It is important to note that general or even business education doesn't necessarily translate into specific knowledge about the world of investment. A business graduate is certainly likely to know something about investments, but this knowledge may be very theoretical and, therefore, less applicable to the graduate's own experiences. Conversely, a doctor who happens to be very interested in getting the most "bang for his buck" on his investments may turn out to have a relatively sophisticated understanding of investing. Likewise, retired people with no formal financial education or qualifications may spend hours pouring over the financial pages of the newspaper every day. In this case, they may know more than their advisors about day-to-day developments.”

I, myself, had to be knowledgeable in financial accounting in order to manage companies where interpreting ‘balance sheets’ and ‘profit and loss statements’ was essential. I am also a trained book-keeper (I had to be to do the books for our various businesses), but this demands a different form of expertise. Many in Storm were business sophisticates in their own right having operated small businesses and the like all their lives. Therefore, to write all ‘Stormies’ off as simpletons is not realistic or accurate.

You stated that I misled you when I mentioned a figure of $45,000 earlier. The figure of $45,000 emanated from a Court document and a Media article. We are not responsible for what others write about us.

Think about it! We were retirees, not retards. Why would we invest through Storm unless we could get a good return (or so we thought) for our money. One uses a tax agent so one can reduce one’s tax to the minimum. The principle is no different!

Doobsy works in the market place and therefore has an understanding of the differing nature of investors. I would tend to give him the benefit of the doubt in this instance!

 

[doobsy]

Insights from the darkside. I would say for over 50% of the ppl i see one of the first things i need to do is explain super is a tax structure where you have the same investment choices as investing outside in personal names. This misunderstanding may be apathy it may be age based whatever. Time is an issue. I have wanted to learn Spanish for 12 months but running a business, having a six month old i adore, trying to stay in shape and have some sort of social interactions means i havent found the time. I think for many ppl investing is like this. It gets put back behind other things because life gets in the way.

The other point is unless you are retired or unemployed you do not have the time to stay up to date with markets, strategies, technical points and govts changing laws. Ppl need an expert. Even if sometimes it is simply to tell them nothing has changed and to keep doing what they are doing.

 

[Julia]

Julia,

“Considering there was a strong bull market at the time, it's difficult to understand why you would give credit to Storm for this growth.

Surely you were aware of how the market had been growing when you consulted Storm?”

You obviously pride yourself on being rather more astute than the average investor.

On the contrary: I have no special skills, neither did I receive any education in financial matters. But since being left without a home, a job or any money after leaving a marriage in my mid 30's I realised I needed to understand how to make some money with relative safety.

Investors come in many guises and from different backgrounds. A study conducted by England's Financial Services Authority (FSA) in 2004 called "Consumer Understanding Of Financial Risk" has shed some light on how well people understand their investments. This can be found at: http://www.investopedia.com/articles/07/UnderstandRisk.asp#axzz1doQVDhVt

Oh, please. If you are going to relegate people to their place amongst the quite uneducated and across the full sphere of intelligence levels, probably all of the posters on this forum would be considered of exceptional capacity in terms of understanding investment, yourself included.

Based on this study you would probably fall into the category of a “Controller”. “Controllers are often experienced investors who rely on their own understanding and make their own decisions.”

For god's sake, spare me the trite and banal labels.
Like many others here, I'm just someone who has attempted to acquire a basic level of financial literacy, enough to protect myself against shonky operators and understand risk management.

The collapse of the ABC learning centers for instance was still on the horizon when we joined Storm!

If you'd taken a five second look, you'd have quickly seen that they were drowning under a mountain of debt. Did you ask Storm about their balance sheet/debt levels?
If so, what evidence did you insist on?

In the article I have previously mentioned, it also states that ‘Education’ and ‘Financial Sophistication’ Are Not the Same Thing

I haven't bothered to read your article. It's not relevant to this discussion.

In common parlance, a definition of a 'sophisticated investor' is usually one with a defined net worth: from Investopaedia fyi:

For certain purposes, net worth and income restrictions must be met before a person can be classified a sophisticated investor. The distinction makes an investor eligible to buy into certain investment opportunities, such as pre-IPO securities, that are considered "non-disclosure" or "non-prospectus" issues. Typically, a sophisticated investor must have either a net worth of $2.5 million or have earned more than $250,000 in the past two years to qualify.

I'm not going to comment on my net worth, it's none of your business.

I, myself, had to be knowledgeable in financial accounting in order to manage companies where interpreting ‘balance sheets’ and ‘profit and loss statements’ was essential. I am also a trained book-keeper (I had to be to do the books for our various businesses), but this demands a different form of expertise. Many in Storm were business sophisticates in their own right having operated small businesses and the like all their lives. Therefore, to write all ‘Stormies’ off as simpletons is not realistic or accurate.

Yet you still fell for the greed pitch.

You stated that I misled you when I mentioned a figure of $45,000 earlier. The figure of $45,000 emanated from a Court document and a Media article. We are not responsible for what others write about us.

I can't be bothered trawling through back pages, but you have, I'm quite sure, previously stated that you only wanted a modest income in retirement.
If you consider $8000 per month modest, then clearly you're living on a different planet from that on which most of us exist.

Think about it! We were retirees, not retards. Why would we invest through Storm unless we could get a good return (or so we thought) for our money. One uses a tax agent so one can reduce one’s tax to the minimum. The principle is no different!

Yet, as Bunyip has pointed out many times, you discarded any notion of reality, common sense and risk management

Doobsy works in the market place and therefore has an understanding of the differing nature of investors. I would tend to give him the benefit of the doubt in this instance!

On the one hand you describe yourself as smart, experienced and capable, and indeed to have acquired a reasonable net worth, one would imagine this to be the case.
Yet, on the other hand, you seek to paint yourself as a poor innocent victim, uneducated in financial matters, and an unwilling victim to the slaughter.

You can't have it both ways.

 

[Julia]

Insights from the darkside. I would say for over 50% of the ppl i see one of the first things i need to do is explain super is a tax structure where you have the same investment choices as investing outside in personal names. This misunderstanding may be apathy it may be age based whatever. Time is an issue. I have wanted to learn Spanish for 12 months but running a business, having a six month old i adore, trying to stay in shape and have some sort of social interactions means i havent found the time. I think for many ppl investing is like this. It gets put back behind other things because life gets in the way.

The other point is unless you are retired or unemployed you do not have the time to stay up to date with markets, strategies, technical points and govts changing laws. Ppl need an expert. Even if sometimes it is simply to tell them nothing has changed and to keep doing what they are doing.

We can always find time for what we consider a priority. Personally, I'd say that taking care of your financial well being is every bit as important as keeping in shape in order to take care of your physical health.

It does not require massive inputs of time. It just requires about half an hour a day of keeping abreast of the news, global and local, and subscribing to a couple of objective sources of financial news analysis. Then a one-off self education course via the ASX website or that of an online broker, then an equally one-off reading of a couple of basic books, and you're on your way.

I don't buy this "no time to do it" stuff. I have friends who are highly intelligent and well educated, successful in their chosen careers but who keep saying they have no time to educate themselves in basic financial literacy. They say this as they sit for three hours over lunch, or describe a Sunday afternoon just 'going for a drive'.

In short, they prefer to whine about how "super is a con", failing even to grasp the basic fact that Super is simply a tax advantaged vehicle for holding assets, and acknowledge that they will enter retirement almost entirely dependent on the government age pension.

We all make our choices. And we are where we are as a result of the choices we make.

 

[Solly]

Just a quick comment about apportioning blame.

I can understand why some participants in this event are taking the position that complete blame lies elsewhere and not with them.

We shouldn't lose sight that there are current actions in progress to seek a remedy and that there may be subsequent related actions.

I believe that it could be detrimental to make any admission of fault that could be harmful to your position, especially in a public forum.

S

 

[Frank Ainslie]

To Bunnyip, SIG1974 and Julia,

My reason for joining this forum has never been to justify why we and others invested using Storm as our financial advisers. I have merely explained our rationale because I have been asked to by people like Doobsy who seem to be genuinely interested. To others like yourselves, whatever I or other “Stormies” say will never be enough anyway and I realize this. Therefore my postings are not aimed at you but rather those that now operate within the financial sector and want to improve the way they do business.

There is much to learn from the Storm debacle if people are willing to listen to those that were caught up in the Storm collapse and understand first hand what occurred.

I believe this forum can be enlivened by constructive debate about some of the issues involved and the weaknesses that have been inherent in the financial advisory sector to date. By exploring some of these issues, we can also inform any would-be investors of the things to look out for that were not apparent to us at the time.

It would be easy to stay within the confines of my own group or within SICAG because it offers some safety from our detractors. However, I believe that by so doing, it achieves little because these are closed forums and those within are all, for the most part, people that will never invest again. Their minds are now forever closed because they have been deceived by those they thought they could trust. We need to get our message out to the public at large and this forum may be one way of doing this.

Having said this, it is not my intention on this forum to belittle the financial advisory sector. I must admit that at times I do have the occasional "dummy spit" when I think about what has happened to us. However, I also know it would be foolish on my part to condemn all financial advisers for the wrongs of a few. Good financial advisers have a place in the scheme of things and they are beneficial to society. However, having stated this, it is apparent that their house needs to be put in order.

Julia has said that she doesn’t think there is a need for more regulations. Obviously, she is at odds with this Government who has at long last recognized that there have been loopholes that have allowed “cowboys” to flourish. The Banks have dangled carrots to these advisers that have been detrimental to the investors involved - investors’ interests in such cases being secondary considerations. The principle of “caveat emptor” (buyer beware) is a concept that Julia endorses, but it has no place in an industry where “full disclosure” is a must for unsuspecting investors. Indeed, Government regulations are based on this concept.

Having said all this, financial advisers need to be able to operate in a workable environment where they are not bogged down by unnecessary paperwork and restrictions. They also need to make a decent living or there is no incentive for them to ply their trade. Hopefully, a balance can be struck whereby everyone is happy!

For my part, I do not have the time or inclination to go over old ground. Therefore I will not be answering any further posts that do not have something constructive to say.

There is a window of opportunity here to delve into the reasons behind the Storm collapse and formulate a blueprint for anyone that is seeking to invest. Whether people on this forum wish to do this is entirely their prerogative. I am willing to invest my time with them in doing this, but I am not willing to waste any more of my time on people that only want to listen to themselves speak and have closed their minds to the views of others. It may give them some satisfaction but it’s leading nowhere fast.

 

[Solly]

To Bunnyip, SIG1974 and Julia,

My reason for joining this forum has never been to justify why we and others invested using Storm as our financial advisers. I have merely explained our rationale because I have been asked to by people like Doobsy who seem to be genuinely interested. To others like yourselves, whatever I or other “Stormies” say will never be enough anyway and I realize this. Therefore my postings are not aimed at you but rather those that now operate within the financial sector and want to improve the way they do business.

There is much to learn from the Storm debacle if people are willing to listen to those that were caught up in the Storm collapse and understand first hand what occurred.

I believe this forum can be enlivened by constructive debate about some of the issues involved and the weaknesses that have been inherent in the financial advisory sector to date. By exploring some of these issues, we can also inform any would-be investors of the things to look out for that were not apparent to us at the time.

It would be easy to stay within the confines of my own group or within SICAG because it offers some safety from our detractors. However, I believe that by so doing, it achieves little because these are closed forums and those within are all, for the most part, people that will never invest again. Their minds are now forever closed because they have been deceived by those they thought they could trust. We need to get our message out to the public at large and this forum may be one way of doing this.

....................................

There is a window of opportunity here to delve into the reasons behind the Storm collapse and formulate a blueprint for anyone that is seeking to invest. Whether people on this forum wish to do this is entirely their prerogative. I am willing to invest my time with them in doing this, but I am not willing to waste any more of my time on people that only want to listen to themselves speak and have closed their minds to the views of others. It may give them some satisfaction but it’s leading nowhere fast.

Hi Frank

I appreciate that you are posting here under your own name and putting forward your opinions for discussion and sometimes ridicule and dissection.

I am pleased that I read your 'bio' from your site, I now have a very good understanding of your history and pathway to Storm.

When you decided to go with Storm, did they at any time show you any of their back of house monitoring systems and methodology that they claimed to use to track client's portfolios ?

S

 

[SJG1974]

We can always find time for what we consider a priority. Personally, I'd say that taking care of your financial well being is every bit as important as keeping in shape in order to take care of your physical health.

It does not require massive inputs of time. It just requires about half an hour a day of keeping abreast of the news, global and local, and subscribing to a couple of objective sources of financial news analysis. Then a one-off self education course via the ASX website or that of an online broker, then an equally one-off reading of a couple of basic books, and you're on your way.

I don't buy this "no time to do it" stuff. I have friends who are highly intelligent and well educated, successful in their chosen careers but who keep saying they have no time to educate themselves in basic financial literacy. They say this as they sit for three hours over lunch, or describe a Sunday afternoon just 'going for a drive'.

In short, they prefer to whine about how "super is a con", failing even to grasp the basic fact that Super is simply a tax advantaged vehicle for holding assets, and acknowledge that they will enter retirement almost entirely dependent on the government age pension.

We all make our choices. And we are where we are as a result of the choices we make.

Agreed Julia.

If I use my circumstances as an example. I consider myself financially literate. However, I see my adviser because I expect him to be aware of strategies that can help my position, strategies that I would not know even existed. Thats his job.

Now if he recommends something to me, the first thing I do is jump on the internet and google it. While I trust what he tells me (his track record has been great in this regard), I want to make sure for my own peace of mind that what he is advising is legitimate and that I completely understand what he is recommending. He is fine with me double checking things. And there have been times where I have come back to him with questions etc. and he is happy to go over them with me.

I would NEVER, ever invest in something I do not understand. I would NEVER, ever structure my assets in a way that I do not understand. There is that much information available on the internet now that you can do your own research. Surely your finances are just far too important to trust entirely to someone else? In my opionion, this is a no brainer.

And yet it seems that so many Stormers were prepared to hand it all over, not understanding what it was they were getting into, placing blind trust in a strategy they so blatantly obviously did not understand.

Frank may be on his crusade to clean up the industry, and good luck to him.

But no matter what new rules and regulations come into play, there will always be a rogue firm or two out there trying to make money off other people's misfortune. It has been going on for ever and will continue to.

Unfortunately, no matter what changes the industry undertakes in the future, it still won't protect people from themselves, because that is at the heart of all of this...

 

[bunyip]

Just a quick comment about apportioning blame.

I can understand why some participants in this event are taking the position that complete blame lies elsewhere and not with them.

We shouldn't lose sight that there are current actions in progress to seek a remedy and that there may be subsequent related actions.

I believe that it could be detrimental to make any admission of fault that could be harmful to your position, especially in a public forum.

S

In other words, Solly, people like Frank are going to push their own agenda while denying all personal responsibility for their actions. Why?...because they feel that this course of action is the most likely to result in them getting a payout.

It's not particularly honest....but that's what money does to some people.

 

[bunyip]

I believe this forum can be enlivened by constructive debate about some of the issues involved and the weaknesses that have been inherent in the financial advisory sector to date. By exploring some of these issues, we can also inform any would-be investors of the things to look out for that were not apparent to us at the time.

Having said this, it is not my intention on this forum to belittle the financial advisory sector. I must admit that at times I do have the occasional "dummy spit" when I think about what has happened to us. However, I also know it would be foolish on my part to condemn all financial advisers for the wrongs of a few. Good financial advisers have a place in the scheme of things and they are beneficial to society.

Frank

Correct me if I’m wrong, but didn’t you tell this forum just a couple of weeks ago that you were scheduled to address a public meeting, and you’d be advising them to steer clear of all financial planners?

Had a change of heart, have you?
If so, then I trust you’ll be honest enough to tell another public meeting that you may have been a little hasty in warning them off all financial planners, and now you feel that there are in fact some honest planners out there who are worth consulting.

 

[Solly]

In other words, Solly, people like Frank are going to push their own agenda while denying all personal responsibility for their actions. Why?...because they feel that this course of action is the most likely to result in them getting a payout.

It's not particularly honest....but that's what money does to some people.

bunyip, I believe Frank has the right to push any agenda he feels fit in this forum, just as anybody else has the right to counter or agree. I am pleased that there is one ex-client who is willing to be publicly identified and engage.

I hope Frank will respond one day as to why he is taking the above tack.

Maybe the courts will decide if this is an honest approach.

In debacles like this I'm always reminded of Herbert Spencer's quote from "The Principles of Biology" in 1864;

"This survival of the fittest... is that which Mr. Darwin has called 'natural selection, or the preservation of favoured races in the struggle for life'."

 

[Frank Ainslie]

bunyip, I believe Frank has the right to push any agenda he feels fit in this forum, just as anybody else has the right to counter or agree. I am pleased that there is one ex-client who is willing to be publicly identified and engage.

I hope Frank will respond one day as to why he is taking the above tack.

Maybe the courts will decide if this is an honest approach.

In debacles like this I'm always reminded of Herbert Spencer's quote from "The Principles of Biology" in 1864;

"This survival of the fittest... is that which Mr. Darwin has called 'natural selection, or the preservation of favoured races in the struggle for life'."

Hi Solly,

These postings are becoming more asinine by the minute.

What agenda? What possible reason could I have for stating what I have? I have won few friends on this forum and doubt that I ever will. No matter! Winning a popularity contest should not be what this is all about. People here have been given the opportunity to hear it as it was from someone that was there! Not as they and others have garnered from what they have read in the Media.

Unfortunately, instead of embracing, some detract, instead of trying to understand, some decry, instead of seeking after truth, some distort. Every time I have answered questions thrown at me on this forum I have tried to answer in an honest way and yet some people are still not satisfied. They never will be!

Dealing with many of Storm’s victims directly these last thee years I have learned more about human nature than in all my preceding years. I have seen the suffering of many and I have witnessed the triumph of the human spirit. Many that were in Storm may be old but they are far from beaten. Some of the young of today could take a leaf out of their book.

This is one side of the coin. The other side of human nature, that of people that have no concept of what many elderly people in Storm have had to endure, has also been evident in some of the abuse that Stormies have had to put up with by the uninformed in our society. This unsavoury element does not seek after truth but merely wants to aggrandize its own narrow-minded views of the world. They want to enhance their own importance.

“They got themselves into this mess! They only have themselves to blame!”

The reasons why this occurred are of no importance to them because they feel themselves superior somehow. They could never find themselves in such a situation because they are far too clever! Yet many of them have never run a business or done anything constructive in their lives to help others. Now we are going to hear their protests to the contrary because they want to justify themselves in people's eyes.

The picture they paint is not a pretty one but it’s an unfortunate reality of life that such people exist and I must accept that. After all, I have broad shoulders and I can handle the flack. Why they continue to aim shells at us though is completely beyond me. What do they hope to gain from such? They have already exposed themselves for what they are! I do not feel that I have to expound any further on their natures. It’s there for all to see. Personally, I am not interested in the opinion of such people because they have nothing to offer.

If people on this forum of the more enlightened kind want to hear what I have to say about the financial industry from my three years of research and my findings when so doing, I am willing to exchange ideas. Hopefully, in this way, we can warn investors about some of the things they should be looking out for! Now, what possible agenda could I have for making this offer other than stopping investors from making the same mistakes we did?

“Your Honour! I’ve been a good boy! I’ve tried to help others. Does this count?”

If there is any one left out there with a degree of objectivity that wants to debate these matters with me, feel free. I am always here. The others among you that are completely one-eyed should give the other eye a chance. Life is a funny thing! Some day they may lose their sight in that one eye and have nothing to fall back on!

 

[bunyip]

bunyip, I believe Frank has the right to push any agenda he feels fit in this forum, just as anybody else has the right to counter or agree. I am pleased that there is one ex-client who is willing to be publicly identified and engage.

I hope Frank will respond one day as to why he is taking the above tack.

Maybe the courts will decide if this is an honest approach.

In debacles like this I'm always reminded of Herbert Spencer's quote from "The Principles of Biology" in 1864;

"This survival of the fittest... is that which Mr. Darwin has called 'natural selection, or the preservation of favoured races in the struggle for life'."

Solly

I agree - Frank can push any agenda he wants....I'm not trying to deny him that right.

Frank

The agenda I believe you've been pushing on here is to shovel as much blame as possible on to the banks, while denying that you're responsible for your own actions.
Shoring up support and sympathy for your views is not going to be detrimental to your objective of getting money from the banks.
But admitting any fault yourself certainly could be.

Those are my views Frank - I respect your right to hold a different viewpoint.

 

[basilio]

The Storm debacle was always a disaster in the making. The excessive gearing and the very high costs associated with the investment meant that the company would take its profits very quickly while the investors would have to hope and pray the market would still be going vertical.

From what I understand there was some very dubious practices undertaken by the Storm advisors as well as the banks who loaned money for extra gearing. In particular I remember that a number of peoples financial situations were misrepresented in order to get the bank loans.

Storm was not the only failure . There are many more investors who lost their shirts in investment companies that were either badly managed or manged with the main eye on the promotors rather than the investors. We are hearing a lot about Storm because its very big, it was very ugly and Frank and others have decided to keep the discussion going with the intention of public education and perhaps some moral support.

I think its a bit presumptuous to say Storm investors were all greedy or stupid and that if they had their wits about them they wouldn't have invested and lost their money. In my view many of the financial investments offered in the marketplace are dubious. Think about the housing investment packages, pine plantation deals, emu farms, and so on. In my view when an organization decides to establish and promote a dubious deal they take very good care to make smell good. Storm was probably just a bit stinkier than most.

 

[bunyip]

To Bunnyip, SIG1974 and Julia,


There is much to learn from the Storm debacle if people are willing to listen to those that were caught up in the Storm collapse and understand first hand what occurred.

I believe this forum can be enlivened by constructive debate about some of the issues involved and the weaknesses that have been inherent in the financial advisory sector to date. By exploring some of these issues, we can also inform any would-be investors of the things to look out for that were not apparent to us at the time.

There is a window of opportunity here to delve into the reasons behind the Storm collapse and formulate a blueprint for anyone that is seeking to invest.

Frank

Indeed there is much to learn from those who were caught up in the Storm debacle.
And whether you realize it or not, there is also much to learn from some who were not caught up in Storm. You can keep believing that ‘we’re wise after the event’, but the fact is that some of us on here have been managing our own investments for many years, and in that time we’ve seen many shonky schemes come and go. We haven’t done everything right, we’ve made mistakes ourselves at times, but we’ve mostly managed to steer a path that’s allowed us to make reasonable returns in relative safety.

You could learn a lot from us, Frank, but instead you’ve been more inclined to write us off and dismiss our views and experience as irrelevant nonsense from people who just don’t understand.

Here are a few bits of advice that you may want to consider, or pass on to others. Or discard if you think they’re worthless.

* Don’t put all your eggs in the one basket.
Split your money up between different asset classes, rather than relying on the fortunes of just one.

* If it sounds too good to be true, then it probably is.
Salesmen can be very accomplished at dressing things up to look much better than they are.

* Think for yourself.
Letting others do your thinking for you is not a safe option. That doesn’t mean you shouldn’t consult professionals, just that you must put some thought and effort into scrutinizing the strategies they suggest.

* Use common sense.
A number of Stormers have told me their biggest regret is not using a modicum of common sense that would have enabled them to see the dangers inherent in the Storm strategy.

* Don’t be lazy.
Laziness is when you believe everything salesmen tell you because you couldn’t be bothered to conduct a small amount of research to check the veracity of their information.
Laziness is when you couldn't be bothered to avail yourself of the many opportunites that are freely available to aquire some basic knowledge and skills in investment and finance.
Laziness is when you sit on your hands and do nothing while your manager lets your business bleed to death. (Can you imagine the owner of a cattle property doing nothing while his manager lets the breeding cows die in a drought? Can you imagine a factory owner sitting on his hands and taking no remedial action while his manager allows costs to spiral out of control, or in some other way let’s the business go down the tube?)

It’s all very well for you, Frank, to accuse Storm and the banks of sitting on their hands and doing nothing while Storm clients burned (as you stated in one of your posts). But you did exactly the same thing yourself.
DocK stepped in and over-ruled Storm by selling her investments before they got down to margin call level. Other Stormers could have done the same. And yes, I know Storm talked some out of it when they tried, but they owned their business, not Storm, and the final decision was theirs.

* Don’t be a gambler.
The Storm strategy was a giant gamble that was guaranteed to fail. Why?...because its continued success relied on an impossibility – a constantly rising stock market. Bear markets follow bull markets like night follows day. One of the strongest bull markets in history had been in place for some years when you signed on with Storm. Bull markets create a feeding frenzy where every man and his dog is piling into the market to get a slice of the action. Such irrational exuberance can push stock prices to levels that are out of all proportion to company earnings. Clearly this is not sustainable indefinitely. Nobody knew how long the bull market would continue, the only thing certain was that it would end sooner or later, and the success of Storm’s strategy would end with it.
Therefore the Storm strategy was always doomed to failure sooner or later. On that basis alone, quite apart from all the other aspects of the Storm case, investors should have shunned Storm's strategy.
You may not have been wiped out if your margins calls kicked in in time and you had sufficient cash reserves to weather the downturn, but at the very least your losses would have been substantial – the combination of a plunging market and an aggressive gearing strategy would have seen to that. And many people without decent cash reserves would have been wiped out, even if margin calls were delivered in a timely manner.
Storm’s strategy was an accident waiting to happen.

Frank – you can lobby the government and the financial planning industry all you want. And you may or may not be successful in bringing about some changes.
But regardless of what new or modified regulations are introduced, no matter what penalties are imposed on shonky operators, no matter what restrictions are placed on banks, investors will still get burnt if they wade into investment in a careless manner without adhering to the general guidelines I’ve outlined above.
The long and short of it is that no amount of rules and regulation can protect gullible and complacent people from themselves.

 

[SJG1974]

Spare us the high moral ground Frank. You do nothing but contradict yourself with your long-winded ramblings.

The reasons why this occurred are of no importance to them because they feel themselves superior somehow. They could never find themselves in such a situation because they are far too clever!

This is funny coming from a man who all along has ignored the real reason why this occurred- that being you handed your life over to a third party who promoted a strategy you did not even nearly understand.

And I would have thought that researching something you don't understand before committing your life savings to it is not being far too clever, but using some basic common sense. Its not rocket surgery Frank.

Now, what possible agenda could I have for making this offer other than stopping investors from making the same mistakes we did?

How can you stop people from making the same mistakes you did if you can't even acknowledge the mistakes you made????

The others among you that are completely one-eyed should give the other eye a chance. Life is a funny thing! Some day they may lose their sight in that one eye and have nothing to fall back on!

I like this one...one eyed. Thats a good one Frank.

If anyone on this forum has been one-eyed, it is you, by placing the blame for your demise with everyone or thing associated with Storm except the one person who could have prevented it more than any other- yourself.

Most around here accept that there were many parties involved in Storm and its clients' demise.

Perhaps it is you who should open the other eye and take some responsibility for the decision YOU made to invest YOUR money in a high risk strategy that YOU obviously did not understand. And just blindly followed the advice because he had qualification, sat in a nice office and (supposedly) had PI insurance to back him up.

Goodness me.