Storm Financial Group

[Solly]

Fear and despair where did that come from?

They were spouting, healthy returns on long term investments....

Clownsville? I live in brisbane thanks......

I should have written this better, I mean did they use tatics that if you didn't follow their methodology you'd end up poor and broke and living on welfare in your old age. I've been to seminars that bring up the old "1% will end up financially secure and 99% will end up struggling in old age."

Good to see you live in Brisneyland, that's were I do most of my work myself . I was just being smart about the "clowns" in the industry.

 

[Solly]

Way back in October, the world WAS a different place, lets not forget that!

I agree but I would demand that a slick, smarter than anybody else Financial Planning Coy would have a strategy in place to mitigate risk in any market circumstance.
After all that is why they were taking the commissions and fees. Expecially if clients were asured in face to face meetings and the like that all is ok and to trust what they were doing and follow their advice.
As for "black swan" event bullshait, if it's a "once in a hundred year event" you have must have strategies in place to account for these movements. You only have to look at history to see major unplanned events have happened, are happening and will happen again.

If you build a house in a flood plain you put your house on stilts because history tends to suggest that it will rain and flood in that location again.
Looks like nobody saw this "Storm" coming, now they all are flooded. ":nosympath

 

[Smiley]

I do not think blaming the investors work here. Like many of the senior years I had many friends and even relatives who have been stormified. There was a lot of word of mouth/referrals and those in retirement and retirees went to Storm as they wanted someone to help them with managing finances.

Storm declared over and over that their approach was well tested and conservative and they would protect people. Those like myself and Steve Reynolds did not do it to make millions or out of greed but just to help with retirement, leaving something for the children. As others have stated when one tried to get out they balked. If it had not been for a relative with Storm I would never have gone near the place, but he was so convincing too and I figured some investment would be better than just the aged pension.

The real problem here was the blind faith by Cassimatis that the market would not drop significantly and did they care? They had those commissions coming in and fobbed people off who wanted to get out.

After all we go to experts for our health (doctors), for legal matters (lawyers), etc but I will never go to a financial planner again. I am not losig my house but in my 60s I now have a large mortgage for house that was paid for 3 years ago.

 

[Ijustnewit]

1 post, no idea of the situation, obviously have not read the entire thread..

Bad comment, poor form....

No one was greedy investing with storm, infact the majority of people who are in the situation, as with myself and steve reynolds (a long time personal friend of myself) were trying to sell out on many occasions, but were stalled or blocked by storm.... we were trying to sell at a loss, to minimise further damages, is that greedy? yet we were stalled until we were in negative equity... would you not be crying a bit if your advisor was telling you one thing but the outcome is another...


I will never trust another Financial advisor again, as with many others... however if you think were just whinning and think storm is a good company let me know I would be happy to refer you to my advisor...

the reason I am posting here, is to let as many people know what storm are, I feel it morally important for me to at least try and stop this ever happening to another person.....

Well said Monario, we were stalled and blocked by our Storm advisors all the way down. They would'nt let us get out. For people on this forum that haven't dealt with Storm to be crictical of the victims is unfair. Only Storm clients know how CONTROLLING they were. As i said we tried to bail about 5 times and the answer was allways NO NO AND NO!!!!

 

[daisy]

Back in 2000 and 2001 Howard and Costello were carrying on about how we would all have to look after ourselves in retirement because the pension just wasn’t going to cut it. There was story after story about how much money you would need to have in your kitty so you could retire and maintain your current standard of living. Who doesn’t want to do that? If that’s greed then we are all guilty. We owned our house but with only five or six years to go before my husband retired we didn’t have enough money for what everyone was saying.
We asked our accountant for advice and he tried to sell us a master fund. There were so many fees our money was better off in the bank. So we started doing the rounds of financial planners. I knew NOTHING. I was so financially naive that I didn’t even know that managed funds were used to buy shares. I didn’t know where the money went. I had never thought about it.
We live in Townsville, Cassimatis advertised on T.V. and we ended up at his seminars. I learnt a lot from those seminars but when Cassimatis told us we needed to take out a 450K margin loan (at the time our house was worth 130K) we baulked but only because we had already had financial problems over a failed business and had lived under the sickening stress that brings. We had recovered by selling our big beautiful Queenslander and buying a smaller cheaper cottage and we had made a resolution that we would never put our house on the line again. We didn’t know about risk, bull and bear markets, margin loans and LVRs. It was just a simple matter of been there- done that, not going to do it again.
So I learnt about the market myself, rolled our super over into a DIY, got an online broker and went for it. We also changed our accountant. It just so happened that our timing into the market was impeccable. Beginners’ luck. But I had a lot of learning to do and it was that learning that got us out before the end of 2007.
We did well out of the market and will get back in when the time is right but there were times over those bull years when we looked at each other and said if we had done what Cassimatis told us we would have been laughing. But if we’d gone with Cassimatis we would have left it all up to him, done whatever he said, and we wouldn’t have known to get out.
I am so sick of hearing the word greed being associated with the poor people who have lost everything because of Storm. Retirees who were only trying to set themselves up for self sufficiency and a comfortable retirement have lost everything. Don’t people think they are already going through enough mental anguish without heaping more coals on their heads? Whenever someone does that they betray their own lack of compassion and empathy. All these poor people are guilty of is the fear that the politicians created back then, naivety and lack of experience.
I liked Mr. Cassimatis. I’m still puzzled as to why he let what happened happen. He was already loaded so I find it hard to believe it was just because of the fees and at any rate he must have been able to see that it was all going to end in tears. And he can’t have not known it was on the cards because his float fell through apparently because there was no bear market strategy. This will always remain one of life’s mysteries to me. The only spin I can put on it is maybe his ego got in the way and it all just spiralled out of control. Fat consolation that is to the people who lost everything though.
As for the Clownsville comment ...that just shows your personality for what it truly must be.

 

[Smiley]

Thank you Monario, Justnewit and Daisy - what's that saying about having to walk in another's shoes before you know what they have been through.

To use a Greek term, hubris got Cassimatis - it is like ego or tempting hte gods and just thinking you know everything.

I was promised they would always get out enough to cover my house if the market started to drop - they didn't. The Storm apporach is debt and more debt. Otherwise take someone who has retired and have them mortgage their house and put all their super payout into the market.

Word is that ASIC won't even chastise them.

 

[sqwark7600]

I am so sick of hearing the word greed being associated with the poor people who have lost everything because of Storm. Retirees who were only trying to set themselves up for self sufficiency and a comfortable retirement have lost everything. Don’t people think they are already going through enough mental anguish without heaping more coals on their heads? Whenever someone does that they betray their own lack of compassion and empathy. All these poor people are guilty of is the fear that the politicians created back then, naivety and lack of experience.

Spot on daisy. I agree and personally find that the general tone of comment and discussion on this trajedy is "silly fool you; I would never have done that". Lack of life experience and ego driven naivety seems to be alive and well.
And for those smarter amongst us where does one who does not have the time, drive or training to predict the markets invest one's super savings if not in property, money market or shares through a financial adviser?
My opinion; your call.

 

[myusernam]

If you are criticising storm members for their naivity you have to remember that if you are a member of this forum then you likely to be fairly pro-active and self educated towards investment. Not all people are as savvy and therefore go to an advisor. They are scared about investing in the sharemarket and wouldn't do it alone, so they take the 'safer' option of going through an advisor. Why not go through the biggest and most prominent advisor in town?

 

[daisy]

If you are criticising storm members for their naivity you have to remember that if you are a member of this forum then you likely to be fairly pro-active and self educated towards investment. Not all people are as savvy and therefore go to an advisor. They are scared about investing in the sharemarket and wouldn't do it alone, so they take the 'safer' option of going through an advisor. Why not go through the biggest and most prominent advisor in town?

You must have misread my post.

 

[awg]

but were stalled or blocked by storm

I keep reading this sort of comment.
How can they stop you? ... Unless you were tied up with contracts through banks or storm.

Why didn't this ring bells for you?

I would suspect the vast majority of FP clients are not pro-active.

When I was with a well respected organisation, and I got sick of them advising me against selling.

I commenced emailing them with my sell instructions, with return receipt on email.

If they had failed to follow my instructions promptly, they would clearly be open to claims for losses.

I did in fact force them to pay up once, when they neglected my instruction, and I lost money, took a LOT of jumping up and down though.

With respect to Storm, the money is probably now down the toilet, no hope of recovery.

Storms plan was so flawed it blows ones mind, using that much leverage at all time market highs was huge risk.

When I put in place my initial plan for retirement income, I calculated what would be:

a) the most I could lose, before it really hurt...20%
b) the most I could lose, before I would be damaged critically 40%

this took into account leverage and share market risk.

that is why I repeatedly cashed down, thereby limiting my damage much closer to a than b.

anyone that exposed themselves to 100% risk..well, you have got to ask why?

I once exposed myself to about 80% total risk, (without fully realizing ) and made money, but the stress of it made me sure never to do it again

As for any FP encouraging or even allowing retirees, (or anyone) to do that is not fit to hold a licence IMO.

ps: I wonder what the principles of Storm were doing while things were going pear shaped, being that it was around the end of the year to -Xmas, and they are very wealthy people, maybe they were having a nice holiday in Nicosia or somewhere

 

[Sir Osisofliver]

To all Storm clients.

You have my sincerest sympathies for your current circumstances. I feel for those people (especially retiree's) that have been caught out by the highly questionable tactics of Storm financial advisors.

On behalf of my industry I most sincerely apologise that you have been treated in such a fashion.

http://www.youtube.com/watch?v=MpHWr7GgzMg

I can see a great deal of you have decided however that now all financial advisers/stockbrokers/bankers etc etc are useless parasites, freeloaders, fee taking %$@#'s who you wouldn't urinate on if they were on fire. I'f I'd just lost my life savings and now had a huge debt over my house, massive stress affecting my health and relationships and all the other negative effects of their actions, I'd be feeling that way as well.

Let me assure you however, that not everyone in the industry is out to take you for every dollar that they can. That there are indeed caring professionals in this industry. The good professionals that truly care will hopefully learn from their mistakes and be able to provide better service in the future (but no one wants to be someone's learning experience). Hopefully the bad ones will decide to find something else to do.

All I seem to be doing lately is helping people who've been shafted by their planners/brokers/accountants and try and get them back on track to financial security and independence, so I can ffully appreciate what you are going through. With any luck you will find someone who can advise you who genuinely cares about your financial future.

I hope you all learn the lesson of control and that you do not allow anyone else the same level of control over your life ever again.

Sincerely,
Sir O

 

[Bob]

I wonder what is the real reason Comm Bank dumped them...?

Yeah, that's a good question. Can anyone enlighten me on what happened here?


Bob

 

[awg]

Yeah, that's a good question. Can anyone enlighten me on what happened here?

Surely the same reason ANZ dumped OPUS,

They ( Storm) were into margin and to protect their (CBA) secured debt

 

[Jifromoz]

If anyone is interested this presentation by Storm makes very interesting veiwing

http://www.stormfinancial.com.au/multimedia/index.html

Cheers

 

[Bob]

Surely the same reason ANZ dumped OPUS,

They ( Storm) were into margin and to protect their (CBA) secured debt

The penny has dropped. I was under the impression that the margin loans were against blue chip shares, obviously the debt was against the Storm company


Bob

 

[sqwark7600]

Surely the same reason ANZ dumped OPUS,

They ( Storm) were into margin and to protect their (CBA) secured debt

Maybe this will help:
http://www.investordaily.com.au/cps...utm_medium=email&rdeCOQ=SID-3F579BCE-6FD1C182
:swear:

 

[Judd]

On behalf of my industry I most sincerely apologise that you have been treated in such a fashion.

Sir O,

This is what I placed on another web-site.

Now for a bit of a rant but not aimed at Financial Planners as such. I understand that this mob was proposing to float on the ASX (heaven forbid) but got nowhere as the institutions were not, to put it mildly, impressed with the model proposed. Now this is where I have a problem. If that was the case where were the ethics of fund managers or the FPA, assuming it was aware of the float, the model and Storm itself, in not shouting from the rooftops that it was trash and clients involved in such aggressive gearing were going to get burnt. You know, you do not need Government legislation such as the FSRA, if the relevant associations just got in and hammered the cowboys. Indeed, what is the point of having industry associations if they don't do that. I know, I know, the usual arguments trotted out is that we are not law enforcers and we cannot be everywhere at once, blah, blah, blah and the other arguments are that these associations are only in it for themselves and stuff the client.

If these bodies were run along the ethical lines such as displayed by Bruce Teele and his counterparts at other major listed investment companies and they stuck to it through thick and thin, I believe you would find that onerous regulation on the industry, and the subsequent flow on of compliance costs to the client (IT''S OUR MONEY OR HAVE YOU PHUCKING FORGOTTEN THAT?), would be reduced considerably and that the reputation of the industry would be enhanced.

It is absolutely no use for the FPA or any other industry body to tout that they have a code of ethics and expect their members to abide by that code. It must be enforced, monitored and audited. Otherwise what's the point? However, the FPA does little in that regard. So why wouldn't the general investor avoid advisers when all that happens is that when things go wrong IT IS ONLY THEN the industry bodies step in and simply go "Oh Dear. How sad."

Jesus, it would have been so simple. The FPA was aware of the concerns - have to be blind, deaf and dead not to - so get in, do a few reviews of plans against demographics - asking clients first as part of the auditing process of the FPA. And after stress testing if not happy withdraw the planers membership of the FPA and place advertisements in local papers as to why. Sure your going to get some heat and possible litigation but if you stay the course, that just disipates after a few years. Otherwise the FPA is just a gutless wonder. Grind these bastards into the dirt, they are cowards and when confronted with litigation they simply bluster and go to water.

I am so angry on behalf of these people who have probably been ripped off.

 

[awg]

Maybe this will help:
http://www.investordaily.com.au/cps...utm_medium=email&rdeCOQ=SID-3F579BCE-6FD1C182
:swear:

that article has the most pathetic-assed excuse ever

" we will help client recover lost equity etc"

how did they propose to do that?

pray for a market reversal?

It seems that Storm must have been responsible for calculating individual margin position within the (pooled fund: assumption).

And they must have FAILED TO DO THAT.

If the whole fund was in negative equity, the margin lender would have closed it out.( which they did)

It seems incredibly incompetent, if that is the case.

I could work it with a calculator, let alone decent software.

Storm MUST have known about the equity position of each customer on a daily basis, if they had even basic software!...maybe 24 or 48 hours behind.

I think there will be a huge stink when whatever went on behind the scenes at Storm hits the light of day.

The position of CBA/Colonial is likely to be invulnerable.

If you look at margin lending agreements, I think you will find a clause that allows the lender to call back the money under certain circumstances. (like any lender for anything, even residential mortgages)

ie close you out.

I believe with CBA it is 24 hrs notice

 

[awg]

The penny has dropped. I was under the impression that the margin loans were against blue chip shares, obviously the debt was against the Storm company


Bob

As I understand it Storm had an app $30 million secured debt with its bankers. This would have been for their buildings.

The margin loan situation is different, as I understand it was against managed index funds, such as Colonial or Vanguard.

As the value of these has dropped 30-40% from the NOV07 high, if you were geared at 60%+, then your equity was wiped to $0.

Seems when Colonial became aware the situation was untenable, they have closed out the entire fund.

The secured bankers have STORM offices/Directors guarentees etc as security.

The margin debts belong to the individual loan takers, secured against THEIR properties.

 

[Julia]

I started to invest with storm at age 23 (now 30) to help self fund my retirment, and generally make life easier in the future, I DID NOT draw an income of any kind from my investment.. This was my first investment of any kind, and I openly admit I was naive and did not know much, this been the main factor to why I was paying for advice and managment rather than doing it myself....

The high leverage, that people claim we were set up with is not entirely true, if I remember correctly my initial LVI was 50-55%, as the market began to tip I noticed this changing, I asked the questions.... and was assured that we would be safe, and considering I was in it for retirement and not short term gains, it would be unwise to sell out... And it was specifically stated that storm did not operate in this manner, as it was not effecient to try and pick the top and bottoms of spikes and falls, and selling and buying would be a costly excersise..

And in this last above, they were no different from any of many FP's and commentators saying the same.

As the LVI grew higher and higher and repeatedly asked about selling, and at one point contacted challenger, who explained to me I must go through storm fo rany dealings, Storm continued with the advice that things were safe and that in time markets would return...

I had a face to face update with my advisor late october, I asked for an exact figure of when I would be in margin call, and he explained that I had nothing to worry about as that could not happen, and an exact figure would be hard to calculate, I had a rough idea, and asked if I was already in Margin call... The reply was NO!, I recieved a phone call 5weeks later from macquarie explaining that I had been in margin call from the 5th of oct.

Are you keeping notes of these dates and advice given?
Hopefully Storm will be called to account by ASIC.

Hindsight is 20/20, I should have got seperate advice, should have forced them to sell etc. etc.. but I was investing through an advisor who was giving me false and misleading info, not to mention lying to me about my margin...

So, now.... I ask, can you explain how I was been greedy?

I haven't suggested any of you have been 'greedy'. Credit is due to you for trying to secure your financial future originally. I previously asked if some investors had been motivated by not enough income on a day to day basis.
(I was poor at one stage and during that time undertook a risky investment to increase the cashflow. It all stacked up in the documentation, but it turned out that the people operating it were crooked and I lost, not least because of the massive fees charged by Worrells in the liquidation.)

I was following advice I paid for, are they not liable in some fashion for what they have done?

You'd have to hope so. Probably some fine print to exclude them from ultimate responsibility. You'd need legal advice on this, I suppose.

Yes by the way, alarm bells were ringing, and I agree I am partly to blame for the extent of the losses, but when you are been advised... well do I have to go on?

Is the finance industry regulated in anyway to control this sort of activity?

Monario, maybe have a read of the "Financial Planners" thread.
It may be small comfort, but at least you're young and have time to make up the lost ground in the future.