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Storm Financial Group

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2 really interesting submissions to the inquiry blew me away

One from the Storm IT guy

Another one from a Storm employee with assets of over $10 million

sorry I cant quote the submission numbers, but they are mind boggling really (I think they are both skint now)

Read the Financial Review, and it regularly has stories about very smart businessmen worth many millions, gone broke.

Happens all the time, will never stop
 
Big Max said:
GG, Ironhalo et al. Your comments please?
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Max

I'm happy to accept your invitation to comment.
Harleyquin's glowing endorsement of SICAG doesn't change the views that I've expressed on a number of occasions......

* SICAG are to be commended for the progress they've made towards getting justice for Storm clients.

* They should be going hard after Storm as well, rather than focusing solely on the banks.

* The endorsement of the Storm fees model should be removed from the SICAG home page- it's crazy to make favourable comment on a fees structure that belted clients with 7% up front fees.

* There's a conflict of interest in the SICAG committee being partly comprised of former Storm advisers and/or their relatives.
 
Harleyquin said:
Does that mean that if I am advised to have brain surgery from a brain surgeon that I'll have to educate myself about brain surgery first before I have the operation or do I trust him because he's a professional.
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Very few people would have any kind of major surgery without getting at least a second and often a third opinion and asking a lot of questions about the operation and potential risks and side effects.

Especially if it was offered by a surgeon that had a big flashing neon sign on his building and offered you pastic surgery that was going to take 25 years off your apppearance.

Also with surgery, the patient is nearly always referred to the surgeon by another qualified medical professional (typically a GP). And reputable surgeons will often encourage patients to get a second opinion from another surgeon. And in spite of all of this there are still many people that end up with complications and unexpected and life changing results from having major surgery - and few of them end up succesfully suing because they were fully warned of the risks.
 
Big Max said:
GG, Ironhalo et al. Your comments please?
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Max

Who are you trying to convince, us, you , "Money spiders" clearly you have a glowing testimony from a happy person,( fantastic) but are you out there trying to help people through a difficult time or sell a product.????

Lets get it in perspective, we are not the enemy, all people have done is offered views or advice, not expect you to gloat over a joyous post ..
 
Big Max said:
GG, Ironhalo et al. Your comments please?
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My thoughts exactly bunyip.

Max

Would you care to comment on bunyip's points ?

gg
 
Max,

How many times do you want me to say it (in six different languages) that I applaud the work of SICAG? Have you not read my previous posts?

My biggest bug bear is that there are still people in SICAG who are EC sycophants who still adamantly believe that they were screwed by the big, bad evil banks (and don't get me wrong, a seperate level of hell is reserved for those involved at CBA/Colonial) but it's time to look at the whole picture.

You have repeatedly said 'well the banks were the only ones we could target really, so hence that was out strategy.' Wrong.

Now that we have the banks out of the way, how about we hold Manny/Julie over the barrel for their part in all this including:
1. Manny moaning about the banks, but then happily taking clients on bank subsidised jaunts around the world.
2. Taking millions of dollars as the company went under under dodgy pretenses (and signing a relative to the board of directors to do so), and
3. Why Storm was still signing on clients in Dec while insolvent.

I say it's time we turn on the advisers now as well, who were happily skimming percentage commissions off the top of investor step-investments as they drove their elderly clients just before Storm folded into financial ruin.

Guess there's no chance of that there with so many of them lurking in the SICAG membership/fan club eh? Re: Ron Jelich, Andrew O'Brien et al....I could go on?

I applaud what you've done, I just think some of the individuals who have suddenly 'seen the light' and who have aligned themselves with SICAG to be offensive to all five senses.
 

AWG can you elaborate on why you can't quote the submission numbers?

These submissions sound like they would be very informative.
 

Ironhalo

I think we're probably wasting our time in trying to convince Max that we're not the enemy and we're not entirely against SICAG.
He clearly holds the rather narrow viewpoint that if we have any criticism at all of any aspect of SICAG's modus operandi, if we suggest some way in which they can do an even better job of representing the interests of their members, then we must be dead against them.

Nothing could be further from the truth - but Max believes what Max wants to believe.
 
Grey Ghost said:
AWG can you elaborate on why you can't quote the submission numbers?

These submissions sound like they would be very informative.
Click to expand...
I think he is referring to Allan Mcdonald's submission - IT guy submission no. 376; ex storm adviser who lost millions sounds like Ron Jelich.
 
Grey Ghost said:
AWG can you elaborate on why you can't quote the submission numbers?

These submissions sound like they would be very informative.
Click to expand...

Smiley said:
I think he is referring to Allan Mcdonald's submission - IT guy submission no. 376; ex storm adviser who lost millions sounds like Ron Jelich.
Click to expand...


I just cant remember that is the only reason.

Solly puts them up, and I have only read a few

It was in the 300s..between 310 to 340 if memory serves me

It wasnt Jelich, it was a female who had done some "marketing consultancy" work for Storm, and objected, amongst other things, to being treated by the banks as a ex-Stormer, as they evidently were dealt with by a different process.

What surprised me, is she demonstrated that she was a sophisticated investor, as she had shares worth more than $10 million, built up over a long time, but still got caught out by basic investment mistakes

ie over-gearing, non-diversification, a failure to recognise that market crashes are inevitable, poor risk management, inaction, greed, etc etc.

The IT guy was at the beating heart of the mess and confesses that he realised the whole thing was poorly run, but that he was sucked in by salesmanship and employee loyalty, and lack of investment knowledge.
A very honest submission.

I do not look down on people who lost their money, I have had a long-term interest in these matters, but still make mistakes, and sometimes feel naive.
I lost money in the GFC, but was fortunate to cut my gearing at the outset, as per my plan, hence my interest..could have been me!

A good salesman can part the cash from you amazingly well, and it would have taken immense discipline to pull out of something that had been so successful.

I once worked for a wonderfully gifted salesman. He completely believed himself, and was so convincing, he often made sales to people who did not need it. That opened my eyes right up..he was a so-called Christian, but he would have sold his daughter to the slave trade if the commission was high enough.

BTW, as per my very early questions..whatever happened re the situations where people requested redemptions, but they were not acted on...I am not a lawyer, but that is hideous.

People responsible for that should be in jail IMO, no doubt at all, white collar crime...if you work for an organisation that is acting in a unconscionable manner, then you have no alternative but to object in writing, resign, or face the consequences.

Sometimes I think the tribal justice system makes more sense than ours.
If you stuff up peoples lives, make good, or they decide what happens to you
 

We never asked to go into the stock market, we asked for financial advice. When we were told how much we could borrow as a home loan we voiced our concerns to storm and to others, we were told 'this is how financial planners invest today and it is tax effective.' We were paying so much PAYE tax that I was virtually working for nothing.

Once we agreed to this financial advice we knew we were taking on a loan for a little over half a million and we only found out about the margin loan, for another half a million, after the collapse and were horrified that we had a second loan. In hindsight we should have been aware of it but we weren't. We can certainly accept our share of the blame for that but we were never made aware by storm that we had a second loan. I thought we may have been the only one but since asking other stormies I have found out that this in fact was a common occurrence. I would have asked about margin loans if I'd known what one was, I had never heard of them. Storm may have assumed we knew, we didn't, and I believe that they deliberately down played the margin loan issue.

As far as the loan commitments were concerned we were told not to worry about the debt, not to worry about anything associated with the debt just leave it all up to storm and we did. The common thread running through all the submissions to the parliamentary inquiry tell us the same thing was told to everyone irrespective of where they lived so the advisors were well drilled by their boss. They appeared to be a very successful company who knew what they were doing. We asked our advisor what qualifications he had, he was well qualified. I think I've said this before but Storm were members of the FPA and ASIC approved. The FPA and ASIC obviously supported storms strategy or both of them would have done something about it long before this collapse. What else do you ask?

I thought I had done enough research before investing with these people. I asked storm investors who had been with storm for some time, saw a lot of extremely clever people at the storm seminars they were very happy with their investment and recommended storm. I know other stormies who asked accountants and others who were recommended to storm by their banks. I was told that accountants couldn't give financial advice - is this right? Who would you have gone to, to find out more and what other research would you advise that we should have done?

I asked another financial planner after the collapse if we should have asked a lawyer and he said 'why there was nothing legally wrong with their paperwork it wouldn't have helped.' I do agree that we should have asked someone else to explain their strategy to us but I still don't know who we should have asked. It's time to clean up the financial planning industry if it's ever going to be viable, so many have become quite disillusioned with them. I now know others who have been through the same thing with other planners and said 'you should have asked me I would have told you never to trust one, don't trust anyone with your money' Wish I'd asked them before I went to storm.

I would never take on this level of debt again, for many of the reasons that you have all said, yet I know a couple who have repaid their debts and are now going back into the market doing the same thing and this couple were one of the people who I asked, they recommended it, are very astute business people and believe that storm did nothing wrong. They do believe that the Cassimatis' haven't done the right thing but say the advisors are not to blame for this, they honestly believe in storms strategy. They blame the CBA totally for this collapse and have explained to us why they believe the CBA are totally to blame and it makes sense to me. Who do you believe? They have done extremely well and knew the risks, accepted them and can afford to commit to this level of debt. They have told me that they should never have allowed those who cannot afford it to get so far into debt.

In the past when a client reached margin call the banks sent out a letter advising clients and storm that they were in margin call and giving them five days to correct their LVR's. Why didn't they do the same thing this time? The bank say they don't have to. Have the banks rules changed since 2003 and if they have why didn't they tell storm or their clients that they have changed their rules? Clients were never advised this time but the banks say that they did advise storm. Who do you believe. It is vital that this is sorted as the banks sold everyone down at the worst possible time and suddenly there was 72 million super cheap shares on the market. Who bought them? Many believe there is insider trading involved. What does everyone else think?

Why did the CBA lend Storm Financial so much money and why did they demand it back in 24 hours thus forcing Storm into receivership? Was there a good reason for doing this and if so what was it? Had they supported storm through this difficult down time none of this would have happened. The CBA stayed very close to Storm Financial when they were doing well but as soon as things started to get a little dicey they dropped storm like a hot potato and all it's clients with it leaving them all dead in the water. Something smells really badly there. What are your thoughts?

I hope this parliamentary inquiry gets to the bottom of exactly what did happen. The banks have been protected for far too long in this country and it's about time they were brought to task for their irresponsibility in lending anyone money if they cannot afford it, and as much as I hate to now admit it, you're right we have to accept our share of the blame as well I guess. My only comment there is we were told that we didn't have to worry as the experts would take care of everything and we would eventually be self supporting and we believed them - our biggest mistake. We were told we wouldn't make anything for about five years. If the bank hadn't foreclosed on storm when it did this prediction may very well have come true. Who knows, I certainly don't.

The margin loan issue is the big one here and there is very little legislation at present protecting those who cannot afford to have a margin loan but hopefully those who do understand the margin loan concept, want to continue to have one and can afford it can still apply for one as before. I don't know exactly what this legislation involves but something needs to be done to protect those who cannot protect themselves without affecting those who can.

You're right there were many many storm clients who wanted to be cashed up long before the crash and storm would not do it, why, because they would then be losing money, it was all about money in the end, when it should have been about the clients. Storm and the banks all knew this crash was a possibility, we could all see what was happening in the US early in 2008, and we all knew the market was dropping, it was never a matter of if but when. I know many who were told 'don't follow the herd' when they wanted to take their money out of the market. Storm should have been doing that anyway if they were doing their job properly. They weren't and we are all aware of it.

I have found it very hard to blame ourselves when we thought that we were paying storm to take good care of our finances for us. I blame myself every day for trusting them as they have destroyed so many of us financially and emotionally. They say what doesn't kill you makes you stronger and we might be dead financially but in other ways we have much to live for and if anyone out there in forum land has any great ideas on how thousands of ex stormies with no money and no home can get ahead and prosper don't keep that info to yourself....share it around a little.
 

Harleyquin, did your Statement of Advice mention the margin loan?
 

Here's a direct link to the submissions for the parliamentary inquiry if anyone would like it.
http://www.aph.gov.au/Senate/committee/corporations_ctte/fps/submissions/sublist.htm
 


I encountered a parallel situation.

One I was not aware of when I initially entered into my WRAP fund.

Macquarie was the provider, but MY provider was a third party, who badged the service under their own name ( a very reputable provider)

I had to deal entirely with my adviser from bank X, if i rang Macquarie, they fobbed me off, they took virtually no responsibility at all.

Once, my adviser took 2 weeks leave, and bank X employees could not action my market requirements re Managed Investments sales, as they were " not authorised"..ie not FPA, I complained about this in writing more than once. ( leveraged CFS Oz equities fund was one such fund!)

I had a separate broker for shares, so that was OK.

If the market had tanked while he was on holidays, I could not have sold out.

Eventually he got another FPA as his sidekick.

The basic idea was you didnt sell...just buy and hold for the long term.

My compaint led to Macquarie paying me some compensation.

I joined ASF, commenced a SMSF instead, for better or worse.

The reason CBA etc sold everything up is obvious...there was negative equity.

Storm did not act quick enough to prevent this happening.

Banks will not support negative equity, even though, if they had, the market has now recovered, but who was to know it would not have kept falling.

I worked out my plan in a very straightforward manner..ask myself what happens if the market falls 20%...or 40%, as per 1987, with respect to my gearing etc etc...back of the envelope stuff.

I am kicking myself a bit, cause I very nearly decided to buy Put Options for both 20% and 40% falls over 12 months, at the height of the market, to negate the risk outlined with my envelope calcs.

I agree that 99% of people are not in a position to manage their money for various reasons, including lack of knowledge and time, or inclination.
Of course, this is just my opinion from talking to people I know personally

The posters on ASF who believe otherwise are kidding themselves IMO, which isnt to say that people should not learn and investigate as much as they can.

I am a bit of a do-it-yourself man, but you have to ask a lot of questions, I can tell you that I have copped some serious scorn over the years, some of it justified perhaps, due to maybe biting off more than I can chew, but there you go

How ironic that ASIC is now cracking down on really educational stuff such as Tech/A system type threads, that are more helpful than most, if you want to get up to speed on all this stuff
 
mellifuous said:
As far as I understand it, Banks don't tend to care about 'consequences' - their prime concerns are profits and loan security. In the ordinary course of business, these are perfectly normal pursuits.
Click to expand...

It doesn't appear they gave due consideration to loan security in this instance.

However, there are many circumstances where banks should not lend, and they should restrain their desire for profits in preference to not putting others at risk of financial ruin as a consequence of lending.
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It's simply not in the bank's interests to lend to people who can't service the loan and this to me is the most puzzling aspect of this whole grubby affair.

Many Stormers have alleged that the value of their property plus level of earnings was highly inflated but no one seems to know who did this inflating.
The most obvious here would seem to be Storm fiddling the figures they offered to the bank with the loan applications.

If, as has been said by several stormers, clients just passed their signing rights over to Storm, and didn't check documentation plus have a copy of absolutely everything, they can hardly be all that surprised if they have become pawns in Storm's ponzi scheme, designed to make Storm principals and advisers wealthy.


Completely agree. Accountants can be very helpful with tax and planning, but often are breathtakingly ignorant about investment.

Yep, usually quite true, as with bank employed financial planners.
 
So did you give Storm the right to sign documents on your behalf?
Did you ask for and receive copies of all documentation?
Did you initially receive a written plan explaining how they suggested you invest, what the projected time span of the investment was, what results they suggested would accrue?



As far as the loan commitments were concerned we were told not to worry about the debt, not to worry about anything associated with the debt just leave it all up to storm and we did.
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I guess this is the bit that blows me away, i.e. that you could be so trusting of something which was clearly unreasonably too good to be true.

Yes, ASIC appear to have received little attention for their inaction thus far.
Hopefully this will be addressed. They are worse than useless for the most part, a waste of tax payer dollars.

All you needed to do was get out a calculator as has been already suggested.
And make sure you were given support documentation for what they claimed would be happening.

Or even, however peculiar such a question might appear to be, ask
"What happens if the market falls significantly, a la 1987????"





Lawyers, like accountants, are not experts in investment.

And it's quite unfair to brand the whole FP industry as being as corrupt as Storm. Some of them are certainly about as useful as **** on a bull, but most of them are not outright corrupt.






Again, we come back to who fudged the figures? No one, to my knowledge, has ever clarified this in all these pages.



In the past when a client reached margin call the banks sent out a letter advising clients and storm that they were in margin call and giving them five days to correct their LVR's. Why didn't they do the same thing this time?
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A reasonable guess would be because clients signed over all responsibility to Storm so the banks advised Storm rather than the client. So why would you blame the banks if that is what happened, rather than Storm if the latter failed to either pass the warning on to the client, or take appropriate steps to ameliorate the problem?


As above. They are not going to advise clients if their instructions are that Storm is acting 100% on the client's behalf.


The banks were simply protecting their own interests and that of their shareholders, don't you think? They stood to lose money if they did not sell as was apparently their right. They're not a charity. Do you know that they did not give Storm plenty of warning that things were getting close to the edge?
If Storm were really acting on your behalf as they had promised, wouldn't they have been watching the market and preventing your getting a margin call??


This paragraph is essentially a rewording of earlier remarks, harleyquin and the same response applies. I'm sure we are all holding our breath in anticipation of the inquiry's examination of responses by both Storm and the banks.





Nothing wrong with margin loans as a facility. Like anything, though, they can be misused.
 
awg said:
What surprised me, is she demonstrated that she was a sophisticated investor, as she had shares worth more than $10 million, built up over a long time, but still got caught out by basic investment mistakes
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There's a trap for each of us - all one has to do is find it, and fall into it.

'sophisticated investor'?, like James Packer?

There's an old saying about gamblers, 'they're either losers and liars'.

The truth is that investing just about anywhere but a bank is gambling.

The 'winners' of today are probably going to be the 'losers' of tomorrow - no need for anyone to be smug about it.
 
Julia said:
It's simply not in the bank's interests to lend to people who can't service the loan and this to me is the most puzzling aspect of this whole grubby affair.
.
Click to expand...

It's my view that the bank lent to the FMF because it didn't take into account the 'consequences' of their lending. The bank took into account the security for their loan - that is, the fund had the assets, and in the end could 'service' the loan, but at the expense of investors money: The bank was safe, we were not.

I think that respect to Storm clients, it was exactly the same scenario, in the event things went pear-shaped, the bank was safe, not so the clients.

I call it 'enabling' - any silly thing a lender wants to get up to, the bank will enable it, providing their investment is safe: the consequences for the lender have not been an issue that the bank considered.

There is no need to be puzzled by the behavior of a bank - they derive their profit from lending (full stop).

http://www.youtube.com/watch?v=coItaKim-vQ

An interesting tv series to watch is 'the Ascent of Money' - in my opinion banks today are no different from those guys who sat behind desks in the Florentine ghetto many moons ago - they're just learnt to wear suits and work out of big buildings.

If they could take their 'pound of flesh' as Shiloh had wished, then they would.
 
"Storm planner providing advice"

"A FORMER Storm Financial planner has been working in North Sydney, advising people on their remaining Storm-affected finances, to the distress of some former customers.

The planner, Anne O'Neill, was working last week as an authorised representative of another financial planning group, AAA Financial Intelligence, which charges commissions on investments of up to 6.6 per cent."

More by Stuart Washington in the SHM here;

http://business.smh.com.au/business/storm-planner-providing-advice-20090830-f40w.html
 
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