Storm Financial Group

Solly · 28 January 2010

"Ex-Storm adviser hits back at FPA allegations
Considers court action"

"Former Storm Financial adviser considers legal action against the FPA over breach allegations."

More by Kate Kachor in Investor Daily here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/8388.htm

Solly · 28 January 2010

As reported in Business Day on brisbanetimes.com.au.

"Storm Financial's website, stormfinancial.com.au, has been taken over by a ''finance and home loan'' provider based in Malaysia but with a British home web address."

Take a look;

http://www.stormfinancial.com.au/

bunyip · 28 January 2010

Harleyquin said:
Yes Bunyip that's right Cassimatis was the 'incompetent' responsible for all of the issues that you've raised. He didn't become an incompetent overnight he's always been incompetent and many are only finding out after the event just how incompetent he was.

My question to you is 'Obviously the largest bank in Australia with it's top financial people would also have realised that EC and Storm's advice was highly questionable SO why did they lend them so much money for the company and all of their clients when it's quite obvious to them that storm and it's chief director was a complete incompetent?'

I asked this question once before and was told 'that's what banks do they lend money', well obviously they do irrespective of how incompetent the 'asker' is and irrespective of how fraudulent the lending practices are.

The banks backed this incompetent and his incompetent company with as much money as they could give them. We now know that for a fact. Read the 'Banking Code of Practice' - there's not too many 'rules' in there that they havent broken. So why do the banking fraternity bother with a banking code of practice if they intend to do exactly as they like.

Harleyquin

Have you put your questions to the banks who financed Storm? They'd be better qualified than I would to give you an answer.

But knowing banks as I do, I can understand their thinking in lending to Storm Financial clients. (Note that I didn't say I agree with their thinking - only that I understand it).
The bull market from early 2003 to late 2007 saw Cassamatis making money hand over fist for himself, his clients, and for the banks who financed Storm's investments. He was regarded by many people, banks included, as a very smart and capable investment advisor/manager, and he was getting the results that appeared to prove it.
No surprise then that the banks were so keen to do business with someone they saw as a competent man with a rapidly expanding client base.

Banks are in the business of lending money - they're not in the business of performing detailed analysis of the investments they finance. And they're not in the business of checking the competence of the people who are borrowing the money, nor of the people who are acting on behalf of those who are doing the borrowing.
They don't need to be...if the bank has sufficient security, if the borrower or his representative can produce figures to show that the loan commitments can be met, and if the bank can see a relatively safe dollar in it for themselves, they'll lend.
That's how investment funding works and probably always will.

Harleyquin · 29 January 2010

Hi Bunyip I believe that neither we nor storm could produce the figures to show our loan commitments could be met and yet the banks still lent the money as they've done in most cases and I've seen enough paperwork to prove my point without going into further details. Very few storm clients could afford the repayments. Prior to going to storm for advice most storm clients were just looking for financial advice to secure a comfortable retirement, most asking specifically for a safe secure form of investment and not millions but certainly someone to lead them in the right direction as far as investing goes.

I've spent a considerable amount of time reading all of the comments on this thread and having read all of your comments and those of others like you, you have obviously educated yourselves to the point where 1. you'll never need investment advice 2. you'd probably make a better financial advisor than many who come under this so called professional banner and 3. you seem to have a natural instinct for knowing exactly what to do and when to do it. To reach this point you obviously have an aptitude for investing in order to gain the skills in this area that you have.

Like everyone there are a number of things that I'm very good at but understanding investing and investing in the share market in particular and how it all works is something that I am finding extremely challenging, it is certainly not coming easily, and since finding a financial planner is such a hit and miss approach I would very much like to see changes made so that the storm financial scenario can never be repeated to this extent. Whatever those changes need to be to protect those seeking help with their finances, I leave very much to the experts in this field.

Julia · 29 January 2010

Harleyquin said:
Whatever those changes need to be to protect those seeking help with their finances, I leave very much to the experts in this field.

Experts in this field? Such as?
Again, you're going to depend on someone else to ensure your safety.
No regulating authority will ever be able to protect you completely.
Learn to manage your own money.

All this has been said before.

bunyip · 29 January 2010

Harleyquin said:
Hi Bunyip I believe that neither we nor storm could produce the figures to show our loan commitments could be met and yet the banks still lent the money as they've done in most cases and I've seen enough paperwork to prove my point without going into further details. Very few storm clients could afford the repayments. Prior to going to storm for advice most storm clients were just looking for financial advice to secure a comfortable retirement, most asking specifically for a safe secure form of investment and not millions but certainly someone to lead them in the right direction as far as investing goes.

I've spent a considerable amount of time reading all of the comments on this thread and having read all of your comments and those of others like you, you have obviously educated yourselves to the point where 1. you'll never need investment advice 2. you'd probably make a better financial advisor than many who come under this so called professional banner and 3. you seem to have a natural instinct for knowing exactly what to do and when to do it. To reach this point you obviously have an aptitude for investing in order to gain the skills in this area that you have.

Like everyone there are a number of things that I'm very good at but understanding investing and investing in the share market in particular and how it all works is something that I am finding extremely challenging, it is certainly not coming easily, and since finding a financial planner is such a hit and miss approach I would very much like to see changes made so that the storm financial scenario can never be repeated to this extent. Whatever those changes need to be to protect those seeking help with their finances, I leave very much to the experts in this field.

A few points worth considering......

1.... If you couldn't produce figures to show how your loan commitments were going to be met, then you shouldn't have borrowed the money.
It's not rocket science. You don't need a degree in finance or years of financial or investment experience. You need only a calculator and a pen and paper. If your income is 100 grand and your commitments will be 125 grand, then obviously you can't afford the loan and you shouldn't take it out - it really is that simple.

2...Somebody must have produced figures, false or otherwise, to show how the loans would be serviced, otherwise I doubt if the bank would have loaned the money.

3....Massive borrowing for stockmarket investment is not 'a safe, secure investment'.
OK - you weren't knowledgeable or sophisticated investors but most of you witnessed a major market crash in 1987 - history was bound to be repeated sooner or later.

4...You're unlikely to get the legislative changes you're hoping for to protect you against the likes of Storm Financial and the banks.
Banks lend money on the basis of the information supplied to them by the prospective borrower or his/her representative. That's not going to change, nor should it.
People like Cassamatis are going to advise clients to invest aggressively during bull markets. That's not going to change either, nor should it. Aggressive investing in bull markets is a good policy. But over-investing to the extent of having no hope of servicing loans is just plain suicidal. Therefore, even if you employ an advisor you can't just blindly follow his advice without doing a bit of thinking for yourself. If he's trying to push you into a bigger loan than you can service, then prudence should dictate that you say no.

Julia is right - relying on others is not the answer. You must learn to manage your own investments.

Harleyquin · 29 January 2010

Julia and Bunyip I intend to manage my own affairs from this point onwards and everything you've said in you're replies I am now very much aware of. Just wish that was the case prior to seeking what we thought was going to be so called professional advice.. and that's right we have been there many times before.

Like you I now realise that we all have no option but to manage our own money, take responsibility for whatever decisions we make in the future and with the help of maybe a trusted accountant to help point us in the right direction.

However I am extremely angry with the whole storm affair and the criminality involved, someone has stripped thousands of us of our life savings simply because we thought these people were trustworthy...and please don't bash me again for saying that...as it's the truth.

Why are some of these people allowed to operate in the financial planning area as professionals when some of them obviously aren't? Julia I know you're against more legislation but those seeking advice for the first time do need protecting, to find out afterwards that it's such a risk finding a reliable planner is upsetting to say the least...and I unfortunately don't have the answer to this problem, but feel that after this fiasco that there are areas in the industry which will come in for change and hopefully it's going to be for the better.

kermit345 · 29 January 2010

I've only just read this page of the thread so sorry if i've repeated anything that others have said. However as i've just been working in the finance industry over the past 12 months (i'm only 23) i've read all about and even helped a client to deal with the storm problem. However the old rule must apply where if you don't understand an investment and its consequences you probably shouldn't be in it.

Yes financial planners must be trustworthy professionals who you can throw your money at and hope that they can provide some growth with it so your better off in the future. However that is in an ideal world where you expect not everyone is out there to make money for themselves and have some self interest. Firstly, storm were charging massive fees for the advice they were giving out, this should of triggered a thought of are you getting what your paying for.

Secondly, they have to produce Statements of Advice, which outline the strategy and investments. If you did not completely read the SoA and understand the products they were putting you into then this is where you need to question the adviser to satisfy your own mind.

Unfortunately the whole finance industry feels the pain of a storm financial incident, as it reduces the faith placed in us as finance professionals. However people should be prepared to ask questions and understand where their money is going and take an active interest, it is of course your future your providing for, not your advisers.

By the way sorry if i've written anything I shouldn't have, only just started posting on here today and still getting a feel for how it all works, hope what i've written offers some form of discussion or interest.

bunyip · 29 January 2010

Harleyquin said:
Julia and Bunyip I intend to manage my own affairs from this point onwards and everything you've said in you're replies I am now very much aware of. Just wish that was the case prior to seeking what we thought was going to be so called professional advice.. and that's right we have been there many times before.

Like you I now realise that we all have no option but to manage our own money, take responsibility for whatever decisions we make in the future and with the help of maybe a trusted accountant to help point us in the right direction.

Harleyquin....If I were you I'd be very wary of trusting a 'trusted accountant' to give you investment advice or even point you in the right direction. Many accountants these days are licensed investment advisers as well, but the extent of their 'investment advice' is all too often simply advising you to buy the investment product that pays them the biggest commission.
Many a 'trusted accountant' was a commission salesman for Storm, so naturally they advised their clients to give Storm a call.
Accountants and bankers are finance professionals, but we need to delve a little deeper to see specifically what areas of finance they specialise in. Bankers are professionals in lending. Accountants are professionals in taxation matters. Neither are professionals in investment.

Solly · 29 January 2010

I met with my Stormer mate again this afternoon. He let me know about these podcasts from Slater and Gordon.

He was most concerned about the one about the margin loans.

Looks like the CBA and S&G are taking very different positions.

http://www.slatergordon.com.au/pages/pod_casts.aspx

specialed · 29 January 2010

bunyip said:
Harleyquin

Have you put your questions to the banks who financed Storm? They'd be better qualified than I would to give you an answer.

But knowing banks as I do, I can understand their thinking in lending to Storm Financial clients. (Note that I didn't say I agree with their thinking - only that I understand it).
The bull market from early 2003 to late 2007 saw Cassamatis making money hand over fist for himself, his clients, and for the banks who financed Storm's investments. He was regarded by many people, banks included, as a very smart and capable investment advisor/manager, and he was getting the results that appeared to prove it.
No surprise then that the banks were so keen to do business with someone they saw as a competent man with a rapidly expanding client base.

Banks are in the business of lending money - they're not in the business of performing detailed analysis of the investments they finance. And they're not in the business of checking the competence of the people who are borrowing the money, nor of the people who are acting on behalf of those who are doing the borrowing.
They don't need to be...if the bank has sufficient security, if the borrower or his representative can produce figures to show that the loan commitments can be met, and if the bank can see a relatively safe dollar in it for themselves, they'll lend.
That's how investment funding works and probably always will.

I agree with your analysis Bunyip. But lets not forget that the CBA, through CGI also spent a considerable amount of money "sponsoring" some of the many Manny events. This sponsorship, whether intented or not appeared to many as an endorsment of the Storm product, and added to the perception of a close relationship. Banks do not just put their name to just any product. They do it with careful consideration of the implications and the benefits to their name and image, and you would presume, an analysis of the model. They were quick to join up to the storm ride but even quicker to jump off....

Solly · 30 January 2010

Solly said:
"Claim of no mistakes in Storm case"

"ASIC denies it missed the "smoking gun" before the demise of Storm Financial, a Queensland-based financial adviser that collapsed in January last year, with investors losing more than an estimated $3 billion."

Read more in The Australian Financial Review of Jan 27 2010.

The below is an interesting quote from this article by ASIC Chairman Mr Tony D'Aloisio.

"We are very conscious and concerned about the losses that the Storm investors suffered and I can assure you that we are working flat out to complete our investigations on whether or not we are able to launch proceedings to assist them in recovery actions."

Quincy · 30 January 2010

Solly said:
"Claim of no mistakes in Storm case"

"ASIC denies it missed the "smoking gun" before the demise of Storm Financial, a Queensland-based financial adviser that collapsed in January last year, with investors losing more than an estimated $3 billion."

Read more in The Australian Financial Review of Jan 27 2010.

Here's the article : - View attachment AFR - 27 JAN 2010.pdf

Kevin07 · 30 January 2010

I have also made investments with advise from a financial advisor and lost out. Lost heaps. Im not happy with the situation. For me it was a considerable hit. I knew the market was risky and that there are no guarantees so I make my bets with that in mind. I invested an amount I could afford to lose. I also diversified my investments - cash, deposits and the market.

I knew what I was doing and I knew what the financial advisor was advising. I was 35 at the time and I have been dealt enough blows to have a skeptical mind. I could have opted out when I wanted and doubled my money but I didnt. It was still my choice. Honestly I will say a little greed crept in.

Will anyone bail me out? Nope. So why should Storm victims be any different to me? I was provided bad advise. Good at the beginning and then it went bad.

I certainly feel for the victims but for those throwing super and houses into the share market - I just cant work out why you would regardless of the advise. What I also cant work out is the average age of the victims. A lot were near retiring or had and so where did all the life experience go? You know the kind of stuff that makes you all the wiser in this dog eat dog world.

Garpal Gumnut · 30 January 2010

Quincy said:
Here's the article : - View attachment 35554

Thanks Quincy,

I noticed that link was missing, Solly must be lost in a trolley or a dolly, or both.

I don't buy the AFR anymore, its so left wing now.

gg

Garpal Gumnut · 30 January 2010

Kevin07 said:
I have also made investments with advise from a financial advisor and lost out. Lost heaps. Im not happy with the situation. For me it was a considerable hit. I knew the market was risky and that there are no guarantees so I make my bets with that in mind. I invested an amount I could afford to lose. I also diversified my investments - cash, deposits and the market.

I knew what I was doing and I knew what the financial advisor was advising. I was 35 at the time and I have been dealt enough blows to have a skeptical mind. I could have opted out when I wanted and doubled my money but I didnt. It was still my choice. Honestly I will say a little greed crept in.

Will anyone bail me out? Nope. So why should Storm victims be any different to me? I was provided bad advise. Good at the beginning and then it went bad.

I certainly feel for the victims but for those throwing super and houses into the share market - I just cant work out why you would regardless of the advise. What I also cant work out is the average age of the victims. A lot were near retiring or had and so where did all the life experience go? You know the kind of stuff that makes you all the wiser in this dog eat dog world.

Kev, many would agree with you, and I know many Stormers would acknowledge the fact, the main reason they can keep going for recompense is that the banks were involved and they have big pockets.

Many of the victims were retired and not young, so many of the posts have a despondent tinge to them as they don't have the years available to get back to where they were.

gg

Anastasia · 30 January 2010

I am back. I needed time out from everything....time to heal, gather the forces etc. I have picked myself up for now and my life is going on despite no resolution of "anything" to date. But there is one thing that I wish to get up on my soap box about and that is the many reports stating how many dollars Storm victims lost. That figure since 2008 has never changed.

But surely it must as my husband and I to this day and many beyond are still losing. As much as we are trying to rebuild our lives it just cannot happen. BoQ is still taking $2000 plus off us each month in home loan interest only repayments. If we sell our home, we cannot afford to buy another home so would pay rent...still losing around $1400 to $2000 a month. (At least if we manage to hang on to our home for a couple of years we hopefully may have some capital growth to offset these payments). We have been unable to receive Centrelink assistance or the pension as we are not eligible...my husband is 58 and I am 57 and we are employable (of sorts).

So we are both now working not to rebuild our lives and move on but to simply tread water and keep on losing financially. Yes I accept that we were very foolish and we lost all and payed the price. So how come we are still paying for that mistake and will continue paying indefinitely? We are in no mans land.

To get back to my original soap box whinge...when reporting Storm victim losses how about quoting realistic to date figures or at least taking into account that the figure quoted in 2008 is still increasing and the final figure is still not determined.

Julia · 30 January 2010

Kevin07 said:
I have also made investments with advise from a financial advisor and lost out. Lost heaps. Im not happy with the situation. For me it was a considerable hit. I knew the market was risky and that there are no guarantees so I make my bets with that in mind. I invested an amount I could afford to lose. I also diversified my investments - cash, deposits and the market.

I knew what I was doing and I knew what the financial advisor was advising. I was 35 at the time and I have been dealt enough blows to have a skeptical mind. I could have opted out when I wanted and doubled my money but I didnt. It was still my choice. Honestly I will say a little greed crept in.

Will anyone bail me out? Nope. So why should Storm victims be any different to me? I was provided bad advise. Good at the beginning and then it went bad.

I certainly feel for the victims but for those throwing super and houses into the share market - I just cant work out why you would regardless of the advise. What I also cant work out is the average age of the victims. A lot were near retiring or had and so where did all the life experience go? You know the kind of stuff that makes you all the wiser in this dog eat dog world.

Perfectly fair comment. I think any of the millions of people who have had dodgy advice would agree with you.
Likewise, I'm still having some difficulty understanding why investors in Storm who were double geared are expecting to be compensated for their losses.

Solly · 31 January 2010

"Slater & Gordon continues Storm probe
Compliance systems questioned"

"The litigation firm will continue to pursue Paragem Partners regarding Storm Financial."

More by Victoria Papandrea in Investor Daily here;

http://www.investordaily.com/cps/rde/xchg/id/style/8420.htm

specialed · 31 January 2010

Julia said:
Perfectly fair comment. I think any of the millions of people who have had dodgy advice would agree with you.
Likewise, I'm still having some difficulty understanding why investors in Storm who were double geared are expecting to be compensated for their losses.

I would have thought by now that everyone was clear on why many storm investors are hoping to be compensated. The debate now appears to have shifted to "by how much". Evan Ralph Norris agrees that many Storm investors need to be compensated in some way- hence the resolution process. There is a difference between not understanding and not accepting or agreeing....

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