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Storm Financial Group

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Not trite at all. But as I said earlier, I'd go without something myself to care for my dog if necessary.

For example if someone is living in a house but is now forced to move to rental accomodation or even publicly funded accomodation they may not be allowed to keep pets in that accomodation.
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Yes, you're right, that's a very good point. Would be heartbreaking. I so hope that doesn't happen for any of them.

Cuttlefish, a single person on Newstart (the dole) gets about $440 per fortnight, plus a bit extra rent allowance if renting. That would about cover rent on a very basic flat in most places. Very difficult then to run a car, buy food, cover insurance and medical expenses etc etc.
A pension is better by about $140 p/f.
I'm not trying to make anyone feel more depressed, but the reality of losing all one's assets is pretty grim.

But yes, focusing on any still available source of happiness like a walk with the dog on the beach, can only be helpful.


If they felt their happiness was strongly tied to their financial success and 'social status' then its helpful to realise and be aware that happiness can be obtained without either of these things.
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Sure. I guess the concept that happiness was identified by either of those factors is something I don't understand. The purpose of money, imo, is to provide security and choices, but I don't get the acquisition of money for its own sake or to demonstrate 'success'.
 
Solly said:
A balanced article from Michael West
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There was also a good article in Saturday's "Courier Mail" by Anthony Marx.
Can't find an e-version of it so have emailed Mr Marx for this so it can be posted here.

I've also asked both Michael West and Anthony Marx if they can investigate what sort of risk profiling was done for clients, what sort of Investment Strategy was prepared, what explanation of leverage in a falling market etc, since none of the investors have responded to these questions on this thread.

Would also like to know the level of indemnity insurance compared to losses.
 
One thing is apparent from previous posts.

I learned this myself previously.

As much business as possible should be conducted by receipted email.

If you have a phone call with someone at Macquarie, FP, ( or anywhere), when you have finished, send them a receipted email, detailing the conversation that just took place.

Issue clear instructions or requests via receipted email

You will have a record of the names, emails, communications and decisions of each person you deal with.

Save them in a folder, and even print them out.

Keeps them on their toes, I can assure you.

I have had several adverse situations rectified by this method.

I am always very courteous in my communications, and try to get them onside with me. This is not easy, one must be patient. If they realise you are businesslike, you will usually be dealt with by a customer service manager

Having worked both sides, I know if you offend people in an organisation, they wont want to help you.

Having said that, I doubt you will get much joy in the present situation, as it is now a legal /policy matter
 

It is pretty grim outlook for sure. What worries me is that it can drive people to desperation and subsequently become targets for a new batch of rip-off, NLP style marketers to offer them hope. With statements like - "if only you had been with us..."

Was given some good advice many years ago - always ask the company/person trying to sell their wares, "what's in it for them?" "How are they making their money?" It sometimes helps to see more clearly if there is a conflict of interest.

Take care, everyone...
 
Julia said:
Not trite at all. But as I said earlier, I'd go without something myself to care for my dog if necessary.


Yes, you're right, that's a very good point. Would be heartbreaking. I so hope that doesn't happen for any of them.
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Unfortunately Julia, many Storm customers wont have that option, if they are broke.

Many rental properties and Caravan parks wont accept pets.

A big dog like a GS would eat $30 p week at least surely?

When they need Vet treatment, you are stuffed.

I know a couple of people who I advised to have their old animals put down, rather than spend several thousand on operations, which they didnt have, but they couldnt do it, cause their pets are precious to them
 
Herewith the article referred to earlier by Anthony Marx:

 

Don't worry I'm not trying to trivialise the situation - it would be extremely grim to go from financial self sufficiency to that scenario - but I am pointing out that we are lucky in Australia that there is a basic quality of life available to everybody via these mechanisms - which is far different to many other countries in the world - and something many millions of people around the world would covet. Our health system is also not great, but its there and accessible to everyone to more or less of an extent and far superior to many other locations in the world.

So to those that are affected - they may have to adjust their lifestyle - but if they focus on and understand the basic elements of their lifestyle that are important to their happiness/contentment they will be able to put things into better perspective.

Its a cliche - but health (even if not 100%, what health we have is to be appreciated), friends and family, and our personal freedoms are extremely 'valuable' assets and far more important than money.

Sometimes in times of crisis people are so desperate and depressed that they lose perspective and act in a way that risks losing these far more important 'assets' due to their sense of hopelessness.
 
One thing that concerns me deeply is the commentary that ASIC allegedly investigated Storm and gave it a clean bill of health as late as December last year.

This seems inconceivable unless they were using the most narrow definition of "health" possible. Why have a regulator who won't take action?


http://business.theage.com.au/business/asic-gave-clean-bill-of-health-to-storm-20090117-7jc4.html
 
This is a bit that I found extremely interesting regarding complaints and conduct reviews
Weeked Financial Review
"Sydney based Storm Director Peter Hutley- .....even held one of the 11 positions on the FPA's conduct review commission, which oversees its complaints and disceplanary process. He stood down this month"
 
Ok Practical solutions right?

Sir O's guide to financial independence Part 1.

1) Goals.

Identify goals that are important to you. At this stage I'd keep them as simple as possible. Eg Keep the house - not a simple goal - nor is it quantifiable. Try - Meet the interest payments. At least you can measure the goal.

2) Budgeting.

It's amazing how many people don't know the first thing about financial management. The first thing about financial management is budgeting. In it's simplest form that is what comes in versus what goes out. Some people think they know what budgeting is because they know they have enough money to pay their expenses. This ISN'T budgeting - that is called LIVING HAND TO MOUTH. I'd treat you differently if you DIDN'T start with a huge pile of debt that needs to be serviced, but for this purpose I'm going to assume you fall into that catagory. If your expenses are higher than your income you need to either a) increase your income or b) reduce your expenses.

Income.
Work out your income. Can this be improved? Do you need a goal to try and improve your income? You should think outside the box here. If you have a house, you may have a room not being used - rent it out as student accomodation, grow mango's in the backyard and sell them to your friends, think of ways to improve your income because there are only so many expenses you can cut.

Expenses.
Work out all your expenses. All expenses fall into one of three catcgories. Vital Costs, Necessary Costs, Lifestyle costs.

Vital costs are things like 10% investment monies, Electricity, Food, Rates, Mortgage etc etc

Necessary costs are things like Insurance, Petrol, Telephone, Clothing

Lifestyle costs are things like holidays, entertainment, gifts, gym fees etc etc.

If your expenses are larger than your income, start cutting your lifestyle expenses first.

If expenses are still larger than income, look at ways to cut necessary costs. Sell your car (if you don't need it), tell everyone that you know you will no longer be calling them and that they will have to call you. Be brutal if it's the only way you will keep the house.

If expenses are STILL higher than income... you need to downsize your vital expenses. This DOES NOT include the 10% of your income that you budget for investment. (This money right now will be used to pay your debt off in the near future. Longer term you will use it to invest wisely to increase your income). You will need to search for ways to reduce your vital costs. This may mean downsizing your home, or other extreme measures.

If you STILL cannot pay your expenses even after factoring in all the above...you will need to investigate bankruptcy as an option.

Part 2 coming when I get around to it.

Sir O
 
The latest update-Some practical suggestions.

Step #1 Wind up all margin lending accounts, especially if your interest payment rate is greater than your interest accrual rate. If you have trouble with your bank use the services on the Banking and Financial Ombudsman Service~FOS. Their site is at:
http://www.fos.org.au/centric/home_page.jsp

Step #2 Calculate your personal balance sheet. There are some useful calculators on this site:
http://www.nt.gov.au/business/resources.cfm?resourcetypeid=1

Step #3 If Step #2 results in a negative outcome you can't live with, voluntary bankruptcy is a legal government regulated option. I understand that if you have a super fund that it remains intact, you can earn a living, keep a modest car and there are ways of restructuring to keep your house. You need to suffer it for 3 years and lose your credit rating for 7 years. The Insolvency and Trustee Service Australia ~ITSA is the government agency responsible for the administration and regulation of the personal insolvency system in Australia.
Don’t be forced into bankruptcy check out the consequences of voluntary bankruptcy. Make sure you restructure as necessary prior to declaration. ITSA is on:
http://www.itsa.gov.au/
and there is a lot of information on:
http://www.fredappleton.com.au

Step #4 If Step #2 results in an outcome you can live with I would liquidate everything that you can live without. I’d think of transferring any non-liquid investments eg. property syndicates or locked mutual funds into your super.

Step #5 Make your holistic health your number one priority. If your loved-one goes quiet or demonstrates a personality change, watch them like a hawk. Suicide is a real danger; stress is carcinogenic. There are plethora of free counselling services available.

Step #6 Set yourself a budget and live within it. There is a calculator on:
http://www.nt.gov.au/business/resources.cfm?resourcetypeid=1

Step #7 Identify and activate new potential income sources.

Step #8 If your house is under threat maybe you can get a relative to buy you out at a reasonable price and rent from them, with the option to buy back in. Maybe move in with someone who needs care.

Step #9 Spend a lot of time on collating your Storm activities. Write every memory item up as a diary note and find and file every piece of paper, note, brochure etc. you have from Storm, your FP, the bankers, margin lender, responsible entity or fund manager.

Step #10 Every time you speak to someone on the phone related to your Storm situation take their full name and also request a reference number (some companies do keep phone logs). Write up a diary note detailing the conversation.

Step #11 Once you and yours are stabilised go after those that caused this with a vengeance. You have many covenants and powerful regulations crying out to lend a hand. Do it with a consolidated class action. For past precedents start with:
http://www.superreview.com.au/Article.aspx?ArticleID=218427
http://www.investordaily.com/cps/rde/xchg/id/archive/IFA0000000160.xml?rdeCOQ=SID-3F579BCE-4C8B1C13

Step #12 Don’t underestimate the power of networking. Communicate with your fellow Storm victims, join any group that they have set up to discuss the problem and their strategy.

At each step seek advice as there are a multitude of organizations and agencies waiting to provide gratis help.
Can anyone add or insert a step or two. If you are a specialist please contribute and give some guidance or direction on your Step specialisation.
:sheep:
 
awg said:
Unfortunately Julia, many Storm customers wont have that option, if they are broke.

Many rental properties and Caravan parks wont accept pets.
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Agreed. But some do.

A big dog like a GS would eat $30 p week at least surely?
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This is the second time I've been asked the cost of keeping my dog!!!
As previously replied, she costs about $15 per week and that includes
best available flea/worm etc treatment plus annual vet visit for vaccination etc.

When they need Vet treatment, you are stuffed.
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No. Vets will accept your paying off bills. Charities will help you with food, electricity, rent to offset cost of vet bills. It's a matter of priorities.


I know a couple of people who I advised to have their old animals put down, rather than spend several thousand on operations, which they didnt have, but they couldnt do it, cause their pets are precious to them
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I completely understand the preciousness of pets. However, there comes a time for all our much loved pets when we have to be realistic about their state of health and potential remaining life span. Hardest thing in the world to take that beloved dog or cat to the vet for that final time.
 

Sqwark, I reckon anyone following your steps above will immediately feel better. Exactly what I had in mind when I suggested practical steps would be so much more useful than pretty sounding words. Great advice.

Sir O: I guess you're right in suggesting not everyone employs basic budgeting. It's pretty sad when you need to spell out stuff that should have been understood as a 12 year old.
 
Many clients are scared and alone. A few are beginning to accept the gravity of their situations and doing so is the first step to their healing, but many don’t know what their situation is. They are conflicted by the stories of their advisers and terrified about the reported news and the grapevine has only perpetuated the problem.

There are some fundamental and dangerous flaws with the system and I regret that knowing this, like most revelations, is often too little too late.
Storm built an ethos and ideology that every person had the right to be as wealthy as they wanted to be. Their whole model was about “Optimisation” and the more of your financial function you “gave” to Storm the wealthier you would become. Discussions about Cars, Holidays, Expenditure, buying Property, Other investments were all dealt with at Store level and often you’d have been discouraged from straying from the course. To the point, as I’m learning now that Clients felt intimidated and embarrassed to share their true positions for fear of being made look stupid, and were gunned down when attempting to take money out of the investments but suffer some high persuasion for funds to enter the investment.

If a Storm client didn’t complete the steps they were often portrayed to be “under achieving” and service levels, I’m told, dropped for the more difficult clients who couldn’t get their heads around the increased gearing. The responsibility for becoming wealthy depended solely on whether or not YOU allowed Storm a prescriptive right to deal with your finances and dictate the sale of properties, increased borrowing, cashing in of Superannuations... You, the client had the right to be as wealthy as you WANTED to be. No matter the cost.

What I’ve come to see now, is that this defies basic physics. It is as asinine as saying “You can fly – if you really really want to”. Physics would dictate that you can flap your arms as hard as you like and never will you maintain flight. The idea of being as wealthy as you want to be should always have been “ All people have the right to be as wealthy as they can afford to be”.

In hindsight, I’m learning that many people share my observation. In explaining this, I must make two points extremely clear – in my professional experience, Index investment is the most successful long term investment strategy (particularly for inexperienced clients with time on their side) and I feel a much more stable and dependable methodology than an array of managed funds, direct stocks and so on. The second point is that “Borrowing to Invest” is fine...for people to whom it applies. That is, the idea of borrowing to invest in an Index fund can be a superb strategy to create long term wealth for those who can afford it – and affordability, like gravity, is a grounding force.

To see clients now, with Margin Lending interest in the tens of thousands, along with Equity Loan (against their properties) interest in the same vein means that typical Mum and Dad’s with perhaps 20k surplus income to consider for investment have now got interest bills that total nearly 100k, or 5 times their actual surplus...all of a sudden, we have a problem.

The Storm process talked about using equity to invest, because it was a much more stable idea to invest bulk funds sooner, thus allowing your stored capital to work for you; which in theory poses no problem. Home Equity is the cheapest available in the market (often 2%+ cheaper than Margin Lending) and for the most part while the repayments are being met, the value of the investment you make has no bearing on the security of your home. The Bank accepts that you are using the funds for investment purposes and is happy to release that equity for use provided you pay for the use (Interest).

Many people’s fear that using their home to invest was an unsafe strategy dissipated as they came to understand that as the value of the loan wasn’t linked to the investment, they couldn’t go into a negative equity situation with the bank (as long as interest payments were being met) and as such, couldn’t lose the home in the process. Since the majority of a person’s accumulated wealth was stored in their home and thus, inactive, it made perfect sense to mobilise the equity in a tax deductible method.

So if we could use Home Equity to invest a large capital amount relatively safely, how did we end up where we were? The Storm “Optimisation” process saw the sum of capital entering from Home Equity Lending – let’s say, for the sake of discussion it’s 400k (From a home valued at 500k – thus 80%) and the client has the capacity to make repayments of 28k pa. With 400k capital entering the market thus, buying a securable asset, new equity was forming. On the 400k Capital (which enters the investment stream as Cash) a client might be able to access a Margin Loan, that is, lending that secures itself against cash and investments instead of property. A Margin Lender is happy to provide lending on the same provisos of serviceability but in general their ability to lend is more concerned with the clients security. In the cases of Cash, a Margin Lender may lend 1 for 1. In the case of Managed Funds, Debt ratios reach a maximum at approx 80-85% which cause a sell down in the investment. Storm negotiated higher sell down points... of 90-95% and this is an issue that we will discuss moving forward. A debt ratio of 85% means the loan is equal to 85% of your secured assets value and you WILL be sold down unless you provide cash to bring you out of the margin so that the Margin Lender isn’t compromised. In a case where a Margin can’t be met, the asset is sold down and the Margin Lender retains the value of their loan.

The Compromise came in the downward negative market which was compounded by the constant ramping up of Margin loans to cover and prepay interest - this helped tip the investment into a negative equity situation sooner. Retirees were funding (I've seen the SOA's) entire years worth of investment servicing with the margin loan - excellent if Markets always go up! These clients couldn't afford to be as wealthy as they were. Sheer physics was against them!

Even Mum and Dads had 4x + on their serviceability. Asked where the greatest gearing was and it wasn't the margin loan, or the equity loan - it was in the gearing of a clients serviceability. These clients weren't stupid, and they WERE NOT greedy -they were introduced to a method of capitalism that made perfect sense (in the way it was presented to them). These people weren't out to make a quick buck or generate unrealistic gains. Don't let sales propoganda step in the way of true client intent. These people became ingrained in a process that spiralled out of control in the last 12 months and the critical decline has cost them.

I know of a client who was a large Margin LEnding client (in excess of 3M margin loan for the last 4 years - of which Colonial would have made their 280k pa+) who was sold down with a Margin LVR of 104%. He owes 150k to the margin lender. When queried, the Margin Lender claims that instruction came from Storm NOT to sell the portfolio - to which he replied chase Storm for the Money... and he said no, he'd pursue the client - when the client asked him what the cash out LVR was, he said 90%, and confirmed that was the contract LVR - and then he agreed that had the client been cashed out at 90%, the margin loan would have been covered and SOME money would be left for the client - but refused to accept the Colonial had breached their obligation under the Margin Loan contract by selling the client out past the LVR.

This is where I believe the MArgin Lenders are liable - for the deficit on the MArgin loans - but the question to be asked is "how did you get to the margin situation in the first place???"

Those people who think that Storm have done no wrong in the last 12 months are living in a fairy land. There are clients who were so misled in the last 3 months, they still believed that they were going to get back in EVEN though their LVR's were nearly 100%???? the second the clients took money from their CMT's to buy shares, there's every mathematical possibility they'd have gone to margin call instantly? (Max LVR's at 80-90%?)

It wasn't until Storm went into receivership that some gave up on the magic bullet. Their evangelical faith has been most disturbing - to the point I have heard Cassimatis is going to be making an appearance at the Burdekin collection of class-actionists - claiming as a victim, as a client of Storms - and believe it or not, the class actionists are "Pleased" that Manny will finally get a chance to share his side of the story???? So...for half the case he's the plaintiff...and the other half... the defendant?

I am sad that GG and others now form a verhment hatred towards Financial Planners - My Planners team are young, enthusiastic, educated and professional and have been able to navigate us safely through this market downturn under a very competitive fee structure that recognises their abilities. They have presented us with a sound long term investment structure that recognises volatility and deals with it accordingly.

I'm embarrassed that they operate in an "Industry" and not a "Profession" and that these ex-MLC cowboys who cut their teeth selling life policies door to door by finding nappies on clothes lines - thus an emotional in - (One of Emmanuels favourite stories apparently) to where we are at now.

Don't lose faith people, there are some amazing people out there well equipped to help you out who don't have gold rimmed loos, or frappacino machines - just good honest, ethical advice.

I wish you all well.
 

This guy's a class act. A victim as well ?
I believe it may be a case of "look at what the banks have done to us all".
I am now more eager than ever to see this go to trial.


Also for some reason it brings to mind this classic line....
"Now, you listen here! He's not the Messiah. He's a very naughty boy! Now, go away!"
 
Another intersting article from Mr West at The Age...

Storm's founders got $2m

"STORM Financial Group's founders and a select group of clients were the beneficiaries of cash payments from the business as the beleaguered financial services group was imploding before Christmas.

Storm's receiver, Rob Hutson from KordaMentha, confirmed last night $2 million was paid to Emmanuel and Julie Cassimatis on December 15 in a "dividend". Earlier in December, Commonwealth Bank began notifying Storm clients over breaches on their margin-loan positions.

Storm paid another $650,000 to four clients of the ailing group, also on December 15; payments that were recorded as "financial assistance". About 150 clients have received payments from Storm since the close of the financial year in June."..............

More here;

http://business.theage.com.au/business/storms-founders-got-2m-20090119-7kuw.html


Thank you Michael.
 
Thank you Sqwark and Sir O for so carefully putting these steps together (and providing websites)
I agree with Julia that just having this step by step list to follow when there is so much confusion around you should help lighten the load. I can think of nothing else to add.

And for all the “smart state” and clownsville comments I would like to say that Queensland in general and Townsville in particular is a beautiful place to live. That’s why the cross border immigration into Q’ld has been massive over the past few years. Outside Brisbane and the SE corner Townsville has had the biggest population increase because it is a wonderful place to live.

Our Strand which was revitalised some years ago is the most beautiful I’ve ever seen and in that I will include Tahiti and the Caribbean. This is a family town and our previous council excelled themselves in the family friendly design. There is a long winding path which takes you around the foreshore and lots of interesting bits and pieces to look at along the way. Plenty of seats to sit and eat fish and chips and feed the seagulls. A long jetty from which you can fish...

It’s never really cold up here so you don’t need lots of heavy clothes....and unlike Sydney where I grew up nobody really cares about fashion as a status symbol. In fact you can’t tell up here who has money and who hasn’t judging from their clothes. I like that.

All through the year there are festivals the bulk of which are free or next to. There are music clubs held at beer gardens in pubs which are free to be a part of and will welcome you into their community with open arms. You can be there all night and just drink water....I know because I’ve done it. The pubs don’t mind because they do well out of the night as a whole. Because it is an unsophisticated town there are all kinds of clubs you can join. My personal aim is to one day have enough time to join the Orchid Society and either do some voluntary work at our World Vision Shop or at the Aquarium. The Orchid Society have a little stall in the Warrina shopping centre from time to time and they are such nice people...one day...

There are 3 markets on Sundays where you can buy really good quality fruit and vegetables at great prices while wandering around in the sunshine soaking up the atmosphere. And you can buy really cheap plants there as well.

Queen’s Gardens and Anderson Park and the Palmetum are glorious places to walk through and take your sandwiches as a picnic lunch.
I could go on for pages but I’m not being paid for this by the tourist information board so I’ll stop now except to say that I live here by choice...
 

Daisy my experience is that the further North you go, the more "interesting" the people become... It's paradise for some and hell for others...but that's just like anywhere..... Now the Deck Bar at Bungalow Bay...well that another story....
 
Solly,There's some "characters' up here that's for sure.
The thing that fascinates me is that of the twenty or so years that I've lived here I've only met a handful of people that grew up here. Most people have come from somewhere else and stayed.
Thanks for the Michael West posts. I've gone from being fairly pessimistic about this because of the 'caveat empor' to quietly optimistic.
 
Anyone have a Townsville phone number for the support group? I'm interested in going to hear what people are saying.
 
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