Banksia Financial Group bites the dust

[k.smith]

You cant regulate stupidity, the simple fact that its often successful people with lots of money to lose that are the victims of shonky investments would seem to indicate that they are not dumb, just bad decision makers when they step out side their financial comfort zones...switch from making money (familiar) to investing money (different).....

I believe that it's more often the ordinary working people with their lifetime savings to lose that are the victims of shonky investments.... and that is why ASIC is repeatedly warning of the threat to the SMSFs...

I'm glad that some are so comfortable in their financial comfort zones that their future is wonderful...but the reality is that lots of ordinary hardworking people have lost their a lot more than their comfort zone.
"Making money" for many is working hard for a wage which includes a compulsory 9% super contribution, now gone.

......I would hate to see any sort of SMSF appropriate intelligence test set-up, i hate how everything seems to get turned into an industry now so university leavers can have cushy jobs...look at the crap you have to go thru now just to drive a car in some eastern states.

I agree with that ... too many industries within industries, too many "hangers-on".

Look at what happens when a MIS goes down, for example... the investor is last in the $$$ chain (although it was their $$$ that went in first)

Love the stats..."..Statistics: 103 Closed Trades since July 07, Winning Trades: 86, Losing Trades: 17, Expectancy/$1 Risked: $0.68.."

I wonder how many ordinary people have stats like that?

 

[k.smith]

So all the more reason for people to know what they are doing with it.

k.smith: we will perhaps agree to disagree. You apparently prefer to feel that someone else should protect you from making your own decisions. I take the opposite view.
Pretty much end of discussion.

Yes, I will agree to disagree. But let me know when there is a education program which gives out diplomas where ALL can be confident that the decisions that they make will first and foremost preserve the nest egg that they have saved. I will keep discussing ... the sight of 400 elderly MFS investors on a bleak winters day in 2008 just makes me do it...

 

[So_Cynical]

I'm glad that some are so comfortable in their financial comfort zones that their future is wonderful...but the reality is that lots of ordinary hardworking people have lost their a lot more than their comfort zone.
"Making money" for many is working hard for a wage which includes a compulsory 9% super contribution, now gone.

Don't go mixing me up with the haves and have nots...i most certainly belong in the have not camp.

Love the stats..."..Statistics: 103 Closed Trades since July 07, Winning Trades: 86, Losing Trades: 17, Expectancy/$1 Risked: $0.68.."

I wonder how many ordinary people have stats like that?

The stats are an accurate reflection of what i have done and where my strategy has lead me since 2008, probably not ordinary or average...but certainty not extraordinary.

--

The mind set of the person looking to accumulate wealth in the markets is certainly different to the person trying to hang on to wealth or grow that wealth beyond the norm...perhaps to many think that 6 or 7 or 8% is all to easy so fall into the trap of thinking this is so?

 

[Julia]

Love the stats..."..Statistics: 103 Closed Trades since July 07, Winning Trades: 86, Losing Trades: 17, Expectancy/$1 Risked: $0.68.."

I wonder how many ordinary people have stats like that?

I wonder how many 'ordinary people' have worked as hard at learning his craft as So Cynical?
From what I know of him, he has absolutely not come from privileged circumstances and has doggedly kept at acquiring education and skills for some years. Yes, now he is profitable and deserves to be.

It's a choice. Put in the work, drop the victim mentality, and it's entirely possible.

 

[ASICK]

I wonder how many 'ordinary people' have worked as hard at learning his craft as So Cynical?
From what I know of him, he has absolutely not come from privileged circumstances and has doggedly kept at acquiring education and skills for some years. Yes, now he is profitable and deserves to be.

It's a choice. Put in the work, drop the victim mentality, and it's entirely possible.

Julia, I wonder how you'd go telling the hard-working folk who invested (and will lose) in Banksia, "if it's entirely possible, drop the victim mentality"? I mean, face to face, just to see if they'd appreciate your thoughful advice. I would have thought the ones who cry would be the ones who'd be helped to recovery by telling them, "get over it - it's your fault, you didn't do your homework".

 

[Julia]

Julia, I wonder how you'd go telling the hard-working folk who invested (and will lose) in Banksia, "if it's entirely possible, drop the victim mentality"? I mean, face to face, just to see if they'd appreciate your thoughful advice. I would have thought the ones who cry would be the ones who'd be helped to recovery by telling them, "get over it - it's your fault, you didn't do your homework".

The GFC built up over months. The situation was all over the media for all this time.
The collapse of Lehmans in 2008 prompted governments all over the world to act.
The Australian government announced a government guarantee of all savings in banks, building societies, credit unions. All of these institutions very quickly responded with massive advertising that they were GOVERNMENT GUARANTEED across print and electronic media.

It's pretty hard to imagine that anyone could have missed not only the advertising but the ongoing warnings of government to protect savings by ensuring they were held in an institution which carried the guarantee.

If savings had been placed in an institution prior to this, the holder of such a deposit simply had to ask that institution "Are my savings with your organisation guaranteed by the Government Guarantee?"
If they were not, surely you'd remove them in favour of an organisation that did qualify?

k.smith said

Yes, I will agree to disagree. But let me know when there is a education program which gives out diplomas where ALL can be confident that the decisions that they make will first and foremost preserve the nest egg that they have saved.

That is just a facetious comment. No one needed any sort of fancy qualification to take notice of what I've outlined above.

There was also the suggestion that So Cynical was unduly talented, or came from a privileged situation, rather than any acknowledgement that he has achieved profitability through personal determination to do so. He could equally have said 'oh it's all too hard'.

I'm very sorry that people have lost money (though as I understand the Banksia situation, it's unclear as to how much is lost), and I understand how absolutely distressing this is especially for elderly people.
But that is no reason to suggest e.g. anyone opening a SMSF has to sit some sort of test. As I've said, if you're going to go to that extent, you should equally apply the same test to anyone investing in anything.

 

[ASICK]

Eye-to-Eye

The GFC built up over months. The situation was all over the media for all this time.
The collapse of Lehmans in 2008 prompted governments all over the world to act. The Australian government announced a government guarantee of all savings in banks, building societies, credit unions. All of these institutions very quickly responded with massive advertising that they were GOVERNMENT GUARANTEED across print and electronic media.

It's pretty hard to imagine that anyone could have missed not only the advertising but the ongoing warnings of government to protect savings by ensuring they were held in an institution which carried the guarantee.

If savings had been placed in an institution prior to this, the holder of such a deposit simply had to ask that institution "Are my savings with your organisation guaranteed by the Government Guarantee?" If they were not, surely you'd remove them in favour of an organisation that did qualify? ...

So, in a word, how would you best describe a person who invested his life's savings in Banksia? and in a sentence, what would you say [directly, eye-to-eye] to an investor who lost her life's savings in Banksia?

 

[k.smith]

I wonder how many 'ordinary people' have worked as hard at learning his craft as So Cynical?
From what I know of him, he has absolutely not come from privileged circumstances and has doggedly kept at acquiring education and skills for some years. Yes, now he is profitable and deserves to be.

It's a choice. Put in the work, drop the victim mentality, and it's entirely possible.

Do you really believe it is "entirely possible" for all 468,000 SMSFs to "put in the work" and become proficient at smart risk allocation?
I am sure that even with "personal determination" for some it isn't...

http://www.dailytelegraph.com.au/even-the-experts-concede-confusion/story-fn6ccy9u-1226179645140
''... 82 per cent had either never heard or didn't know the meaning of the popular banking phrase loan to value ratio which is the loan amount divided by the value of the property or asset, expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in an LVR of 80 per cent. Some thought it was a little like shares, or something that happened when interest rates were too high....''

I have never heard of the expression "unduly talented" and I have lots of admiration for people who achieve success through hard work and self education.
But the issue is not about the skill of making profits, or knowing how to save.
The issue is losing a lifetime of compulsory super contributions because SMSFs (themselves regulated) can invest in what are "approved" investments in a MIS schemes( which appeared to be regulated to many of us, but are not regulated)
Investors decimated in failed MIS funds are now the recipients of a new influx of propaganda material from their fund managers spruiking a rehash of the same @%%$$$ all over again.
In the post GFC financial marketplace, with the tabloids warning of further upheavals on an almost daily basis and with interest rates at the banks falling to very low levels the time is ripe for propaganda spruiking "reliable income" with high % interest to reach it's mark. Beware Beware....Risk entering more risk !

 

[k.smith]

The GFC built up over months. The situation was all over the media for all this time.
The collapse of Lehmans in 2008 prompted governments all over the world to act.
The Australian government announced a government guarantee of all savings in banks, building societies, credit unions. All of these institutions very quickly responded with massive advertising that they were GOVERNMENT GUARANTEED across print and electronic media.

It's pretty hard to imagine that anyone could have missed not only the advertising but the ongoing warnings of government to protect savings by ensuring they were held in an institution which carried the guarantee.

Perhaps the name "Banksia" and that they have a BSB number, and, as I understand it, that the branches were staffed by locals were all factors that contributed to investors feeling that they were in a bank? I find it hard to imagine that anyone would expose their savings, let alone their super, where it would knowingly be at risk. Your comments just highlights again how it is APRA intervention rather than education that is needed to preserve superannuation capital.

 

[Julia]

Re: Eye-to-Eye

So, in a word, how would you best describe a person who invested his life's savings in Banksia? and in a sentence, what would you say [directly, eye-to-eye] to an investor who lost her life's savings in Banksia?

I'm not obliged to make judgements about anyone. This is a stock and investment forum.
It is an environment where anyone can make what they consider a relevant comment on the topic.
I have simply pointed out some basic facts. You have chosen to ignore these.

And, as far as anyone investing 'their life savings' in any one institution, that makes no sense.
Even the best run financial organisations can fall over. There was great belief in Lehmans in the US, yet it collapsed.

Even amongst the big four banks in Australia, all of which are well regulated and responsible, I'd never place 'all my life savings' with any of them, but rather divide it up in order to mitigate even remote risk.

 

[Julia]

Do you really believe it is "entirely possible" for all 468,000 SMSFs to "put in the work" and become proficient at smart risk allocation?
I am sure that even with "personal determination" for some it isn't...

I have not suggested every person is going to be motivated to educate themselves to the level of being able to successfully trade shares for themselves, as demonstrated by a forum member earlier on this thread.
What I am suggesting, however, that it is absolutely not beyond a reasonable suggestion to think that anyone in 2008 should have been aware of the government guarantee and should have checked their investments accordingly, or especially if placing new money with any institution, similarly checked that the funds were government guaranteed. As I have already described, the situation was hugely reported and advertised.

''... 82 per cent had either never heard or didn't know the meaning of the popular banking phrase loan to value ratio which is the loan amount divided by the value of the property or asset, expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in an LVR of 80 per cent. Some thought it was a little like shares, or something that happened when interest rates were too high....''

That has nothing to do with the simplicity of checking that any funds invested were eligible for the Government Guarantee.
If you don't understand a term, all you have to do is Google the phrase, and dozens of appropriate explanations will come up.
Or ask the question on this forum. Someone will explain the same day.

Investors decimated in failed MIS funds are now the recipients of a new influx of propaganda material from their fund managers spruiking a rehash of the same @%%$$$ all over again.
In the post GFC financial marketplace, with the tabloids warning of further upheavals on an almost daily basis and with interest rates at the banks falling to very low levels the time is ripe for propaganda spruiking "reliable income" with high % interest to reach it's mark. Beware Beware....Risk entering more risk !

Indeed. All the more reason for people to check out potential investments and especially to remember that if the offer is of a higher interest rate than is being paid elsewhere, there is a reason for this, and this reason is essentially that it entails more risk.

Perhaps the name "Banksia" and that they have a BSB number, and, as I understand it, that the branches were staffed by locals were all factors that contributed to investors feeling that they were in a bank? I find it hard to imagine that anyone would expose their savings, let alone their super, where it would knowingly be at risk. Your comments just highlights again how it is APRA intervention rather than education that is needed to preserve superannuation capital.

Why does the fact that the branches were 'staffed by locals' mean the investment is safe? I don't see any connection.
As far as education is concerned, OK, fine with me if you continue to regard this as unnecessary, and to encourage others to similarly be in denial. Up to you entirely.

 

[Judd]

Maybe if k.smith would like to do research such as this rather than spread an ideology.....

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23

 

[Judd]

Omitted to add a bit about BSBs

What is a BSB number?

A BSB number (or Bank/State/Branch number) is used for the purpose of abbreviating a customer's bank information. It is far easier to assign a customer a BSB number than to have a customer remember a large string of text. Instead, a short array of numbers is assigned in a block that can be easily deciphered by any bank or business to determine pertinent bank account information.

Took less than one minute to Google that. Read the description very, very carefully. Then think. Then ask yourself the question in relation to Banksia who was the customer?

 

[k.smith]

Maybe if k.smith would like to do research such as this rather than spread an ideology.....

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23
''...Self-managed super funds: A statistical overview 2009-10..''

Want a break down of how my losses are being accounted for in my SMSF?

The worst will actually hit the books this financial year.

 

[k.smith]

Omitted to add a bit about BSBs



Took less than one minute to Google that. Read the description very, very carefully. Then think. Then ask yourself the question in relation to Banksia who was the customer?

http://afr.com/p/national/shadow_banks_face_crackdown_SjC9MuhMMNJYO32Z8I6AVP
''...The regulator is also concerned about the use of automatic teller machines in some branches, while government sources are concerned about such companies obtaining bank state branch (BSB) numbers assigned to real banks...''

''...Many non-bank finance companies advertise that they offer “savings accounts” and “at call deposit accounts”, terms that are typically associated with banks. Banksia’s access to a BSB assigned to ANZ Banking Group allowed it to offer transaction accounts into which clients had their salaries and Centrelink payments paid...''

For the record, I am NOT a Banksia investor.

 

[k.smith]

I have not suggested every person is going to be motivated to educate themselves to the level of being able to successfully trade shares for themselves, as demonstrated by a forum member earlier on this thread.
What I am suggesting, however, that it is absolutely not beyond a reasonable suggestion to think that anyone in 2008 should have been aware of the government guarantee and should have checked their investments accordingly, or especially if placing new money with any institution, similarly checked that the funds were government guaranteed. As I have already described, the situation was hugely reported and advertised..

The funds that I am exposed to froze early in 2008. Like so many in this fund, my 24 month investment was made prior to the fund's deconsolidation from the parent company, well before the debt facility blew out, and well before the last PDS was issued.

Up until 2008, the words "Government Guarantee" were hardly mentioned.

I am not an investor with Banksia. I made my comments about Banksia in reply to this question in a previous post.

That has nothing to do with the simplicity of checking that any funds invested were eligible for the Government Guarantee.
If you don't understand a term, all you have to do is Google the phrase, and dozens of appropriate explanations will come up.
Or ask the question on this forum. Someone will explain the same day.

I know that the investors in the funds that I am exposed in average age in now around 75 yrs.old. Few use computers (although my experience is that a lot of them are learning of late...)

Indeed. All the more reason for people to check out potential investments and especially to remember that if the offer is of a higher interest rate than is being paid elsewhere, there is a reason for this, and this reason is essentially that it entails more risk.

I have a pretty healthy appraisal re risk these days. So do you. I would check them out. So would you.
But then we know about risk, don't we? Lot's still don't, should, won't and can't.

Why does the fact that the branches were 'staffed by locals' mean the investment is safe? I don't see any connection.
As far as education is concerned, OK, fine with me if you continue to regard this as unnecessary, and to encourage others to similarly be in denial. Up to you entirely.

please google...

http://www.heraldsun.com.au/news/vi...hanging-fortunes/story-e6frf7kx-1226528476112
and

http://www.triapartners.com/triapar...ksia hints at another SMSF disaster&type=NjQ=

 

[Judd]

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23
''...Self-managed super funds: A statistical overview 2009-10..''

Want a break down of how my losses are being accounted for in my SMSF?

The worst will actually hit the books this financial year.

Any losses in your SMSF is a result of your decisions. It is disingenuous to then translate your loses as also being applicable to other SMSFs the trustees of which have made different and probably better decisions than you.

And I don't have an SMSF.

 

[k.smith]

Any losses in your SMSF is a result of your decisions. It is disingenuous to then translate your loses as also being applicable to other SMSFs the trustees of which have made different and probably better decisions than you.

And I don't have an SMSF.

There are 12,000 unitholders in the Pacific First Mortgage Fund.
Net loss attributable to unitholders for the year ended 30 June 2012, after impairment losses of $143,932,955 (2011 : Loss 87,565,011) totalled $128,785,463 (2011 : Loss $63,910,239)

Just one MIS disaster of many.
MY decision has taught me a lesson, and the experience has taught me that investing in MIS exposes one to the risk that one can loss all of one's investment. SMSFs should not be exposed to such risk. It is against what super is intended for, and what we as a nation support.

 

[Judd]

There are 12,000 unitholders in the Pacific First Mortgage Fund.
Net loss attributable to unitholders for the year ended 30 June 2012, after impairment losses of $143,932,955 (2011 : Loss 87,565,011) totalled $128,785,463 (2011 : Loss $63,910,239)

Just one MIS disaster of many.
MY decision has taught me a lesson, and the experience has taught me that investing in MIS exposes one to the risk that one can loss all of one's investment. SMSFs should not be exposed to such risk. It is against what super is intended for, and what we as a nation support.

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=21&H21

As at 30 June 2010, the average asset allocation for SMSF's in "Other Managed Investments" was 5.1%. "Listed Trusts" 5.1%, "Unlisted Trusts" 8.9%. So some were/are more and some/are less. Haven't a clue what percentage your SMSF was exposed was to in that regard and I don't care but again stop assuming that your decisions are also made by the vast majority of trustees of SMSFs.

 

[k.smith]

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=21&H21

As at 30 June 2010, the average asset allocation for SMSF's in "Other Managed Investments" was 5.1%. "Listed Trusts" 5.1%, "Unlisted Trusts" 8.9%. So some were/are more and some/are less. Haven't a clue what percentage your SMSF was exposed was to in that regard and I don't care but again stop assuming that your decisions are also made by the vast majority of trustees of SMSFs.

I'm not here to discuss the specifics of my SMSFs portfolio.
The fact is that tens of thousands of people have lost their savings in MISs.
I know for a fact (because I have a copy of the fund register of unitholders) that there is a large exposure by SMSFs in this fund, which suggests to me that this would also be the case in other such funds.
Now that I understand the risk that one can lose not just some, but ALL of their capital investment in such schemes,( not clearly disclosed in the PDS at the time of investing imo) it defies logic that such investments can be appropriate for SMSFs.