Storm Financial Group

[sqwark7600]

Bit early to be on the sauce isn't it C.

 

[Julia]

I consider Korda Mentha a very reputable firm. They are the administrators for Ansett and have done a brilliant job to date especially for ex-employees.

:sheep:

My opinion; your call.

Thanks, Sqwark. Stands to reason CBA will hire someone competent.

Does anyone know if Storm would have had professional indemnity insurance?
If so, would it go near covering the losses of investors?

Btw, still hoping for some practical suggestions ,to accompany the inspiring words, re just what steps investors can take to meet obligations which exceed their capacity to pay. Solly??

 

[Jifromoz]

Hi J. Well done on your proactivity keep it up, but remember Worrells is now Storm and Korda Mentha are CBA. Personally I would be very careful submitting anything through either without solid independant legal advice.

:sheep:

My opinion; your call.

Sqwark, I contacted the people at FICS. They said that if the loss is above the stautory limit then you have to go to Storm and seek their agreeance in claiming a higher amount. With Storm going into Administration and receivership now, you have to go via them. You have no choice as FICS will not look at it if it is over the Stautory levels that they are allowed to look at.

PS
Cutz - I note your comments but some of the people here are actually trying to help here. I'm assisting retirees who have not only lost their nest eggs but also have a debt on their houses that they should never have been given in the first place and now cannot afford. Your negative and ill informed comments are not for this forum and in my opinion quite repulsive.

 

[cutz]

Sorry to offend, i didn't want to start another thread.

 

[Garpal Gumnut]

PS
Cutz - I note your comments but some of the people here are actually trying to help here. I'm assisting retirees who have not only lost their nest eggs but also have a debt on their houses that they should never have been given in the first place and now cannot afford. Your negative and ill informed comments are not for this forum and in my opinion quite repulsive.

Jifromoz,

Cutz view is valid. This is a stock forum.

The Storm clients were schmoozed in a cult like atmosphere and swallowed the line through naivity, greed or ignorance.

It is a classic remake of many other financial disasters.

Rescue fantasies on the part of advisers is the last thing these people need.

They need to start a class action and go for the culpable with the biggest pockets.

I can guarantee that all the money is gone, from the entity, just going on past debacles.

Also anyone helping them or offering to help, is not Mother Theresa. This is to do with money, lucre, everyone will charge them.

Any class action lawyer will take %30-%50 including fees off any payout they get.

The best lesson from this is Stay away from financial advisers

gg

 

[Portfolio]

"Stay away from financial advisors"??? So how do you manage your financial affairs?

 

[Garpal Gumnut]

"Stay away from financial advisors"??? So how do you manage your financial affairs?

Pick a topic, any topic, and do a search on aussiestockforums.

Educate yourself.

Do a google search.

Do anything but whatever you do STAY AWAY FROM FINANCIAL PLANNERS

gg

 

[nomore4s]

"Stay away from financial advisors"??? So how do you manage your financial affairs?

um, by yourself.

My expirences with financial planners hasn't been so good that I would continue to use them, none of them have offered a plan I couldn't set up myself.

Even if you do use one, imo you need to fully understand what they are doing with your money and the risks and costs involved.

 

[cuttlefish]

Cutz - I note your comments but some of the people here are actually trying to help here. I'm assisting retirees who have not only lost their nest eggs but also have a debt on their houses that they should never have been given in the first place and now cannot afford. Your negative and ill informed comments are not for this forum and in my opinion quite repulsive.

Jifromez - I have all sympathy for the situation the Storm clients are in, and Storm was extremely irresponsible in pushing these debt driven highly leveraged investment strategies to retirees. However - nobody put a gun to anyone's heads and said take out a mortgage on 80% of your home - the Storm clients need to take some responsibility for the situation they are in.

The other perspective is that there are two sides to the asset bubble. There are numerous young people desperate to have the priviledge to have the stability of their own unencumbered home and who are willing to work for 30 years to pay that off, who have simply been priced out of the market due to the bubbling property prices. I know of the effect this has had on the younger generations lives and decisions as well - people postpone having children so both partners can work long hours just to be able to be in a position to buy the holy grail - a basic family home - something that possibly many retirees took a little too much for granted. Many who have achieved the first step on the property ladder have then turned around to have children only to find they left it a little too long - a devastating thing for any couple.

There are also retirees that worked and saved hard earlier in their working life to buy investment property or shares when capital gains were eeked out year by year in single digit percentage gains, or at best low double digit figures - putting aside luxuries and holidays etc. - only to suddenly see a bunch of latercomers that didn't exercise the same prudence suddenly jump on the bandwagon to instant wealth and waltz around as though they were some kind of financial genuises.

I know people that fall into all of the categories described above.

I think Cutz could have been a lot more tactful - but there are two sides to every story and situation, and a forum is a place for open and two sided discussion.

Unfortunately the irresponsible lending practices of financial institutions has led to all sorts of bizzarre abberations in asset pricing, and peoples relative wealth and financial situations, that has had all sorts of negative repercussions in many and varied ways.

 

[sqwark7600]

Sqwark, I contacted the people at FICS. They said that if the loss is above the stautory limit then you have to go to Storm and seek their agreeance in claiming a higher amount. With Storm going into Administration and receivership now, you have to go via them. You have no choice as FICS will not look at it if it is over the Stautory levels that they are allowed to look at.

PS
Cutz - I note your comments but some of the people here are actually trying to help here. I'm assisting retirees who have not only lost their nest eggs but also have a debt on their houses that they should never have been given in the first place and now cannot afford. Your negative and ill informed comments are not for this forum and in my opinion quite repulsive.

Hi Jifromoz, with respect my previous holds and further, I don't believe that Storm administrators are there to up their debt and if there is a statuory limit on FICS claims and the Storm clients claim is above that they should be proceeding through the courts if they are not willing to accept the potential for the lower outcome.

Especially for Cutz:
This is one of the disadvantages of wine: it makes a man mistake words for thought. ~Samuel Johnson
The avoidance of taxes is the only intellectual pursuit that still carries any reward. ~ John Maynard Keynes

:alcohol:

My opinion; your call.

 

[Jifromoz]

Hi everyone,
Sorry for my rant. A bit of stress around here at the moment. I agree with you cuttlefish. People do need to take some responsibility for what has happened. This would also include the previous principals from Storm. From the press releases they have released, they are blaming everyone but themselves and their approach to stormification of clients.
Cheers

 

[sqwark7600]

Jifromoz,

Cutz view is valid. This is a stock forum.

Cutzy’s view is his view if you alone agree-fine, but that doesn’t make it valid. Storm clients invested in index stock funds and so are entitled to be here or do you want the moderator’s job?.

The Storm clients were schmoozed in a cult like atmosphere and swallowed the line through naivity, greed or ignorance.

To be schmoozed=?: They simply went to a FP because they were possibly naïve and ignorant of investment options and wanted to make money-and so….?



It is a classic remake of many other financial disasters.

This is a classic throw away line. And so…

Rescue fantasies on the part of advisers is the last thing these people need.

Rescue is not a fantasy and these people need advice on their options

They need to start a class action and go for the culpable with the biggest pockets.

So…and…?

I can guarantee that all the money is gone, from the entity, just going on past debacles.

You can guarantee as much as you have control over. You can’t guarantee on the basis of past performance, ever FPs acknowledge that!

Also anyone helping them or offering to help, is not Mother Theresa. This is to do with money, lucre, everyone will charge them.

Strange that. Hope you enjoy all the free lunches you have been having lately.

Any class action lawyer will take %30-%50 including fees off any payout they get.

Last time I looked 70-50% return of capital is better than nothing at all.

The best lesson from this is Stay away from financial advisers

So don’t take advice from professionals, remembering it is advice not an order. I would put it this way: take advice but consider it carefully before acting upon it.

gg

:iamwithst

My opinion; your call.

 

[cutz]

Sorry Guy’s,

But who do expect to bail you out of this situation, the banks? Probably not, remember when you took out a line of credit and used it to fund 100% of your portfolio you pretty much handed your **** on a platter. The banks also have obligations to the responsible public, a LOC is nothing unusual or illegal, and it could even be used as valuable tool.

How about the government via the taxpayers? why ? You didn’t seem concerned to write off all your expenses including your vacations against your income therefore avoiding taxes, don’t expect sympathy here.

Someone mentioned the Corda Mentha did a good job with Ansett so you guys should be O.K but have a read of the history and you probably find that Ansett still had assets that were worth $$$$ after the disaster.

Now I do realize that a few innocent people are caught up in this mess and I like to extend my apologies but I’m sure the majority knew what they were getting themselves into, in pursuit of the easy dollar.

So my bit of advice is lower your expectations and don’t set yourselves up for extreme disappointment down the track, as G.G pointed out the money is gone, just check the charts of the stocks or funds you were invested in, stock won’t come bouncing back in a hurry, it could take years. Every now and again the market dishes out its fury as a stark reminder that’s its no place for the school of get rich quick.

 

[basilio]

Storm is a disaster. The trouble is it was a very foreseeable disaster from the beginning. The basic plan of persuading investors to borrow substantially on their homes and then for Storm to borrow again in the investors behalf (double gearing) was always going to be an extremely risky strategy. Potentially great if there were continuing excellent share market results , dangerous if the market just meandered along, and downright disastrous if there was any significant downturn.

But the part I find most culpable is the very high fees charged by Storm for the "privilege" of being Stomified. This was at least 7% of the monies invested (and I imagine that included the monies borrowed by customers). According to The Age story today the bulk of Storms profits came from these upfront fees rather than the trailing commissions. So it was clear that the name of the game from Storms POV was getting punters to invest as much as possible in the market rather than worrying about the trailing commissions. A Get Rich Quick scheme for Storm.

This disaster makes the financial planning industry look bad. What I find hard to digest is that

1) The industry as whole seemed incapable of monitoring its members and weeding out financially dangerous practices
2) External bodies like ASIC seem to have no role in actively investigating scheme that a prudent advisor would recognise as financially risky. They only seem to become involved when everything falls over.

Its only slightly off topic but I can see similarities to the very detailed analysis given to the American SEC on the Madoff scam in Nov 2005. Here a very capable industry analyst detailed 26 plus red flags on the Madoff hedge fund which demanded closer scrutiny. But nothing happened.

There is a very good story in todays Age on Storm.

Clients count cost after Storm's trail of misery
Eric Johnston and Vanessa O'Shaughnessy
January 17, 2009

IT WAS a label that suggested they had made it, or graduated to the next level of financial success.

So much value was invested in the term that less than a quarter of the 14,000 clients of collapsed financial planning company Storm Financial could use it.

The word was "stormified", and it meant that the client was charged an upfront fee to be inducted into a high-risk investment strategy supposed to guarantee excellent results. About 3000 clients were "stormified" ”” given hefty margin loans to invest in the sharemarket, in many cases remortgaging their homes to boost their earning potential.

http://business.theage.com.au/busin...ter-storms-trail-of-misery-20090116-7j81.html

Quote:
Here is the submission by Markopolous (anonymous at the time)
from 2005 about the activities of Mr.Madeoffs brokerage. Page 14 contains his conclusions.

Nov 7, 2005
http://online.wsj.com/documents/Mado...s_20081217.pdf
Talk about smoking gun ? How about a 21 inch cannon.

That attachment has to be one of the most comprehensive and understandable analysis of a financial fraud I have ever seen. It demands immediate action and yet was ignored. I think the people who did not follow up on the report are also guilty of criminal offences.

I suggest that all forum members should take the opportunity to read the report and consider the questions they ask of any investment opportunity.

 

[Stan 101]

Sorry Guy’s,

For what; speaking your mind? Granted it may have been strong and to some insensitive but that is your view on the issue and you must stand by your opinions.
You put your points across and expressed your concerns without singling out individuals. As you mentioned, we as a nation have all paid or will pay for this debacle.
Maybe if a few harsh words were muttered to the people in trouble now before they signed with Storm, their situation may be a just a little different.


cheers,

 

[Julia]

Solly I agree with a lot of your sentiments - its all very good advice. Its important also to remember that when people are in the thick of facing their own despair it can be hard sometimes for them to see that future and find that motivation.

Precisely what I was trying to suggest in response to Solly's original remarks. At this early stage many people will still be feeling considerable shock and grief for their losses.

Many will feel deep guilt (towards their partners, their children, their pets, their friends etc.) for allowing/creating the mess.

Guilt towards their pets???

At the late stage in life they are at, many will feel that its not possible to move on.

Correct. And all the motherhood statements about taking charge and moving ahead are well and good, but won't fund a $3000 mortgage payment when you simply don't have it. This is why I've asked the suppliers of the inspiring words to offer some practical suggestions as to just how people will meet their financial commitments when they don't have the income to do this.
So far nothing has been forthcoming.

* Help them to understand that, regardless of the circumstances that led to the situation, they shouldn't blame themselves or feel guilty and that they are forgiven. Help them to understand that their intentions were right, they were only trying to do the best for their family and loved ones

However - nobody put a gun to anyone's heads and said take out a mortgage on 80% of your home - the Storm clients need to take some responsibility for the situation they are in.

To paraphrase a remark of yours to me earlier, Cuttlefish, there might be an element of irony in the apparently contradictory tone of your two posts above.

*

If you are able and willing to give them financial support let them know.

Are you suggesting ASF members should consider offering financial support?

Quite often this process will help to make people realise that its often the simple things in life - time with family, friends, a walk on the beach, playing with a pet dog/cat etc. that are the most important ingredients to happiness - and these can be achieved with only a minimal amount of money and support.

Agree that walking on the beach with a dog is a great experience.
Doesn't put a roof over someone's head, however.

Thank you Solly for those beautiful words of wisdom on page 17.

I'm still hopeful Solly will follow up his beautiful words with some practical hints. Not sure that the mortgagor will find beautiful words OK instead of payments owing.

 

[Garpal Gumnut]

:iamwithst

My opinion; your call.


Any class action lawyer will take %30-%50 including fees off any payout they get.

Last time I looked 70-50% return of capital is better than nothing at all.

Thanks sqwark, I'm not a financial adviser but here goes.

I walk into Storms gold plated loo , have a leak and walk back to my Storm adviser for my espresso with $100 five years ago.

Less $8 for inital up front fees and $1 a year for the privilege of knowing them p.a. Less another $5

So the $100 is now $87.

Less a fee of say $6 over the last few years to have your house valued here and there.

So that is $81. Let me check that, see I'm not a financial adviser, I need to do it with a Mont Blanc and a piece of paper.

And sure the market has gone up and down since then but suppose I was real unlucky and just lost 33% over the last few years.

And then there were other fees.

It is now $54.

Oops its zero as the administrators have come in.

So say Korda Mentha and Slater Walker Lawyers and CBA/Macquarie all behave and charge their usual fees and their insurers agree, do you honestly think I will get $70 or $50 back.

How do they work out how much I lost? $100, $81, $54,

Then Korda Mentha take their cut
Then Slater Walker take their cut 30-50% of whats left not the original $100

So I will not have performed better than the market.

Say there is found to have been criminal liability. Will the banks and insurers pay?

As they say in the Castle, Yer Dreaming.

The XAO has lost 41% in the past 12 months.

gg

gg

 

[Macquack]

Guilt towards their pets???

The pet dog may be the first thing to go.

How much does a german shepard cost to run per week?

 

[sqwark7600]

I recently read that the reading age of the average Australian (proud to be one) is between 15 and 16 years. I am being provided with ample evidence on some posts on this thread that it is unfortunately a fact.
Patronising hindsight about the pros and cons of margin lending, index funds and bear market exit strategies are all about spilt milk, which hopefully the pet cat gets to drink before being disposed of.
Bernie Madoff is out on bail for fraud and his was a Ponzi scheme not a margin lending scheme gone wrong. He fooled some of the smartest investers in the world including poor old Adolf Merkle who suicided. He was not a Storm advisor.
This is about unsophisticated investers examining their options having made the worst decision in their financial life and trying to pick up a few pieces.
I think Julia is on the money for a call for practical solutions and Daisy has the stressors under control. Solly how about another soliloquy.
Meanwhile practical solution #1: Pass all financial PDS by a panel of 14 year olds to test their readability.
On a more realistic note I think Slater and Gordon have it right in their plan to go after the banks for the money or at least the homes.


:iamwithst

 

[daisy]

Practical solutions. It’s hard to offer practical solutions because everybody’s circumstances will be different.
Buy a nice bottle of wine and sit down with pen and paper. Make a list of all your assets and all your debts. Include in the asset side anything that can be sold and replaced with a cheaper version which will release some funds (like a house or a you- beaut car.) Add the cost of the cheaper version to the debit side. On the asset side add anything that can be sold that you don’t need. Like a boat or expensive jewellery.
So basically liquidate, liquidate and liquidate some more. If you are young enough you will be able to start again. If you are retired it’s a much tougher prospect. It depends how much you will be left with. I don’t know what the bankruptcy laws are like if the debit side is too big. There is also reverse mortgages for retirees. So provided you can hang on to a property you can get the pension and release a bit of equity on your house. Reverse mortgages aren’t paid back unless the property is sold or becomes part of a deceased estate. I’m under the impression if you do release some equity on your house under one of these plans the money doesn’t count towards pension means testing.
That’s all I’ve got. Sorry,