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Storm Financial Group

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Garpal Gumnut said:
Intriguing does not adequately describe it, mate.

Byrnsie has been very quiet about it and may know more than you or I.

http://www.realestate.com.au/property-house-qld-townsville-106401181

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gg
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GG

I bet he does, if my memory serves me correctly, I think the last time I caught up with Byrnsie was many, many years in Brisneyland, he was quite athletic and drove a Karmann Ghia (VW).... I wonder if he still has it ? You'd really have to make sure you correctly engage first gear to negotiate Melton successfully.

S
 

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Julia said:
This tasteless comment does not deserve a reply, but I am utterly incensed that you would make such a personal remark to me.

For your information, I have indeed been raped. Repeatedly. As a child by my grandfather. From the age of six until I was ten. I had no redress whatsoever.

How dare you compare such an experience with some people who failed to apply common sense to shonky financial strategies suggested to them by rogue advisers.

I have never, ever felt like leaving ASF, despite some robust exchanges, but I will not be so personally insulted.
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Julia,

I've read your post over and over, and I have to admit to you that I'm astonished that you've been so upset by Frank's posting that you felt that you had to reveal this very personal, horrifying, childhood experience on ASF.

I don't post on ASF often, but read spasmodically.

I felt forced to respond to Frank's recent postings because I know (for a fact) that he has the attention of very few Sicagers, and none of their permission to speak on their behalf.

Apart from this open message to you via the forum, I've responded via the PM option to other members. I do not want to encourage negative postings from Frank.

I feel very guilty in that I may have 'encouraged' Frank to 'push the envelope' and hence his post where he relates what has happened to Storm clients as akin to rape.

From the outset, I myself, and I believe the majority of Storm clients have felt that we were betrayed by Storm, our own advisors, and the banks that Storm told us that we should ally ourselves to.

I'm going to commit myself to the same 'faux pau' that Frank always does,

but Julia... and all other ASF readers/posters, please excuse me....

I do believe that 'I' can actually speak on behalf of many former Storm clients, (with or without) their agreement/consent, because I think that I may be able to truly represent the views of the members of SICAG, who I've met in the past three years, and also the members of the SICAG forum, when I say to you that there are none amongst the Sicagers who would relate our financial circumstances now to any form of abuse, let alone abuse of a child.

On behalf of all of the storm clients I've met so far, and those I'll meet in the future, (and I'm sure that I DO/WILL HAVE their permission to speak for them), thank you Julia for taking the stance where you would evaluate what we're saying/trying to share on ASF.

And, Julia, and all other ASF members who are following this thread.... please keep Frank in your prayers.

There are none so blind as those who cannot/do not want to see........

MS
 
"CBA faces funding pressure

Shareholders praised Mr Norris for his efforts to restructure the company and improve customer service, although there was scant reference to the Storm Financial disaster, which saw the bank admit to flawed lending practices two years ago."
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More by Anthony Marx and Brittany Vonow @ www.couriermail.com.au
 
Mindstorm said:
I felt forced to respond to Frank's recent postings because I know (for a fact) that he has the attention of very few Sicagers, and none of their permission to speak on their behalf.

Apart from this open message to you via the forum, I've responded via the PM option to other members. I do not want to encourage negative postings from Frank.

I feel very guilty in that I may have 'encouraged' Frank to 'push the envelope' and hence his post where he relates what has happened to Storm clients as akin to rape.

From the outset, I myself, and I believe the majority of Storm clients have felt that we were betrayed by Storm, our own advisors, and the banks that Storm told us that we should ally ourselves to.

I'm going to commit myself to the same 'faux pau' that Frank always does,

but Julia... and all other ASF readers/posters, please excuse me....

I do believe that 'I' can actually speak on behalf of many former Storm clients, (with or without) their agreement/consent, because I think that I may be able to truly represent the views of the members of SICAG, who I've met in the past three years, and also the members of the SICAG forum, when I say to you that there are none amongst the Sicagers who would relate our financial circumstances now to any form of abuse, let alone abuse of a child.

On behalf of all of the storm clients I've met so far, and those I'll meet in the future, (and I'm sure that I DO/WILL HAVE their permission to speak for them), thank you Julia for taking the stance where you would evaluate what we're saying/trying to share on ASF.

And, Julia, and all other ASF members who are following this thread.... please keep Frank in your prayers.

There are none so blind as those who cannot/do not want to see........

MS
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Mindstorm

You shouldn’t feel guilty about responding to Frank as you did. Frank has had it coming for a long time – he comes on to this forum with the objective of shoving his personal agenda down everyone’s throat, and in spite of receiving a gentle rebuke from me for assuming to speak for others, he continued to assume that he speaks for everyone with his one sided and narrow minded views.
Then when he gets a more stern rebuke from you and DocK, he becomes aggressive, throws a tantrum, and behaves like a spoilt three year old brat.

You were not at fault, Frank was.
Prayers are not going to do him any good – the only thing that will do Frank any good is if he opens his mind, starts taking responsibility for his own actions and behaviors, and learns to conduct himself like a grown man instead of like a churlish teenager.
 
“A right of reply” (Part 1)

Bunnyip has taken a number of cheap shots at me since I left which, I believe, demand a reply.

He concedes now (that’s nice of him) that many in Storm were victims but I and a number of others were just plain greedy. He has no evidence for stating this but that doesn’t matter to ‘Bunnyip’ because that’s his view and it must be right?

Worrells Report – Pages 40 to 41

During the Worrells enquiry Peter Huntley, a director of Storm with relevant investment industry experience was asked a series of questions in Court, during which our particular case was mentioned.

“Liquidator's Barrister: Well, can I - well, let me give you a picture and tell me whether you think that this commoditised product would have been suitable for the hypothetical client in the picture?

It's a man and his wife. The man is 65 years old; the wife is 61 years old. They have between them a little bit of super, about $150,000. They have a house which they live in and want to continue to live in, which is worth about $400,000. But they also have another asset, which is a little shopping centre, and it's worth about $1 million. And they live modestly; they live on about $45,000 a year between them, and he plans - she doesn't work. He plans to retire and retire basically straight away, having reached 65. And what he has in mind to do or what they have in mind to do is to sell the shopping centre, get the $1 million subject to any CGT liability they may have. Would that be a couple that you would think this sort of commoditised advice would be suitable to?---

P Hutley: Look, I don't really feel in a position to - to give you a - a yes or no answer to that, because it depends also - if you go back to section 945 it depends on the investor's objectives, and you haven't told me what the objectives of the couple were.

Liquidator's Barrister: Well, let's have a look at that. The objectives are to have in retirement about the same sort of income they've been living on, about $45,000 a year; buy a new car worth $30,000, and have a trip overseas which they estimate will cost about $15,000, and they're their objectives. And so having told you that, can you now answer the question?

P Hutley: Look, I don't really feel in a position to - to give you a - a yes or no answer to that, because it depends also - if you go back to section 945 it depends on the investor's objectives, and you haven't told me what the objectives of the couple were.

Liquidator's Barrister: Well, let's have a look at that. The objectives are to have in retirement about the same sort of income they've been living on, about $45,000 a year; buy a new car worth $30,000, and have a trip overseas which they estimate will cost about $15,000, and they're their objectives. And so having told you that, can you now answer the question?

P Hutley: I think I'd like to claim privilege at this point, but there was nothing in the documentation that I saw about the way Storm approached its clients, and there was nothing in the information that I received about Storm's clients that suggested that a couple of that sort would be inappropriate to take on as investors. And in fact, at one point in Townsville I met some Storm investors. I believe there was a local pharmacist who told me that their investment with Storm had actually brought them assets that they didn't believe that they would have been able to achieve on their own. I - I don't think it's possible to say a client with a certain amount of income, or a client with a certain age is suitable or unsuitable to the Storm model. It all depended on the individual circumstance at the time, the discussion that was had between the advisor and the client. I can't sit here in this room and say, "Yes, it's wrong. No, it's not wrong".

Moving on:

“Storm adviser didn't care, argues barrister!” Daniel Hurst October 14, 2009

LAWYERS for the Storm Financial liquidators have accused one of the company's former advisers of not caring if the investment advice he provided to a retiring couple was based on inaccurate information.
The Brisbane adviser, Stuart Drummond, became involved in a heated exchange with the Worrells barrister Craig Wilkins when the Federal Court continued a public hearing in Brisbane yesterday….
He defended the advice he gave in May 2007 to a Brisbane couple, aged 65 and 61, (us again!) who were looking to sell a $1 million shopping centre and laundromat they owned to set themselves up for retirement.
They were told to borrow against their home and take out margin loans to invest in indexed funds. But they were hit by heavy losses and left contemplating the potential sale of their house.
Mr Wilkins challenged the suggestion the couple should borrow against their home, risking it for potential gains on the stock market.
''If you went to the casino, would you put everything you own on the table?'' he asked.
Mr Drummond said: ''Depends how much I had.''
The adviser said most people's investments were ''hugely overweight'' with property, and if potential clients did not like the advice they received they could walk away.
''It's called financial advice. We're there to tell people what we think they should do with their money,'' he said.
Mr Wilkins queried the written statement of advice Mr Drummond provided to the retiring couple, which contained graphs comparing investment options and referred to research showing ''recent slowing'' on the property market.
He accused Mr Drummond of handing over the advice ''not caring whether it was true or false''.
''It was never a case of not caring,'' the former adviser fired back”

“ASIC Release - 24 February 2011

“A former authorised representative of Storm Financial Ltd has been banned from providing financial services for four years after an ASIC investigation found he made false and misleading statements and provided inappropriate advice to a number of his clients.

Mr Stuart Craig Drummond, of Clayfield in Brisbane, Queensland, was employed as an authorised representative of Storm Financial Ltd and its predecessor, Ozdaq Securities Pty Ltd, between 31 May 2004 and 18 June 2009.

ASIC’s investigation found that Mr Drummond failed to comply with financial services laws in relation to advice he provided to a number of his clients between October 2004 and July 2008.”

Much of the evidence that ASIC relied on stemmed from our particular case!
"But why did you trust the man?" Why not? After all he was a qualified financial adviser?

Here’s an extract from a submission to the PJ-C that was not written by us but it could equally apply: “We had meetings with Stuart on a regular basis (approx once every 5 to 6weeks) and even more often towards the end of 2008. We relied totally upon the experience and credentials of our financial adviser who after all has a Master of Applied Finance Degree from the University of West Sydney.”

Any of you got one of those or are they printed in Singapore these days, and sent to you when you become a financial adviser?

Now, bearing in mind what I’ve just said, let me get this right! you want me, 'Bunnyip', to admit that I was partly to blame because our Storm financial adviser:

* made false and misleading statements in breach of s1041E of the Corporations Act 2001,
* engaged in misleading and deceptive conduct under s1041H of the Corporations Act 2001,
* promoted the Storm strategy without considering the suitability of the strategy for individual clients,
* provided Statements of Advice and Statements of Additional Advice containing misleading and deceptive information in order to induce them to invest using the Storm strategy, and
* didn’t have an understanding of the nature and risks of financial products recommended on the basis of the Storm strategy.

ASIC's words, not mine!

Now, have I got that right? And how did you arrive at that conclusion again, Bunnyip? Were you on the Joh Bjelke jury by any chance?

Someone asked earlier why we Stormies didn’t sue Storm. We ourselves have an ‘open and shut’ case against Storm but they are gone and dusted. This is a familiar story where financial advisers are concerned. They destroy peoples’ lives and then go to ground! Besides, we can barely scrape together money for a class action against the banks. Certainly, If we get any money back, we’ll be looking to sue some financial advisers later on. To use Joh’s words, “Don’t you worry about that!”

Now, if any former Storm investors on this forum want to accept partial blame for the behaviour of their Storm financial advisers, that is their prerogative. Perhaps they didn’t have the same experience that we did? If they did though, I would ask them to stop apologizing to others on this forum who mostly work in the financial sector anyway. Being who they are, these financial people are part of the problem – not the solution. Shifting the blame is something they are very good at doing if you let them.

We did the right thing in the beginning by seeking professional financial advice, Don’t let this lot tell you any differently. Our only mistake, if we did make one, was to put our trust in financial advisers who all tell you they will give you the best advice possible but rarely do. Just read your newspapers for proof of that!

As for our being “greedy” as Bunnyip puts it, it really takes a closed mind to think this one up or someone that hasn’t taken the time to inform himself of all the facts.
 
Mindstorm said:
Julia,

I've read your post over and over, and I have to admit to you that I'm astonished that you've been so upset by Frank's posting that you felt that you had to reveal this very personal, horrifying, childhood experience on ASF........
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Mindstorm, I'm immensely touched by your post and thank you sincerely.

It was out of character for me to divulge anything so personal in a public forum and I've since very much regretted acting so impulsively out of intense anger.
 
Right of reply (Part 2)

A number of so-called members of SICAG have deemed fit to comment stating that they do not share my points of view. Again that is their prerogative. Let’s put this SICAG issue to bed once and for all though.

Helen and I are members of SICAG and have paid our dues.

Someone has asked me to state just how many members are in my Group which by the way is called SOB. It’s an anagram or ‘Storming on Banks’’ but one of our members suggested it should stand for “Sick of Bull*******s” I couldn’t agree more.

I formed SOB which currently has 54 members because I was finding it difficult to post anything on SICAG about Storm without being attacked. For instance, I wanted to go after the rogue financial advisers such as Stuart Drummond but was told that we shouldn't be vindictive and I should mind what I say about people like him When one considers that SICAG also consists of people that were also former Storm financial advicers, this reaction is somewhat understandable.

Storm Macardle, the policeman, who has been an inspiration for all Stormies left SICAG because his integrity was questioned. Anyone knowing Sean would know that he has this in spades.

There is no membership fee to join SOB. Any time and money as in the case of my websites is down to me.

No former Storm advisers are allowed to be members of SOB. Ron Jelich who has given me invaluable information and is now genuinely fighting on behalf of us all wasn't even allowed aboard. This makes SOB a completely independent Group where people can discuss things freely without fear or favour.

SICAG is and will remain a wonderful support group for people, and I have every respect for Mark Weir who has had a difficult job balancing so many conflicting points of view. The fact that he has done it under trying circumstances is all the more laudable. So this post is not meant to be a smear on SICAG but rather a reality check. In other words, many in SICAG are coming from different directions!

There were between 13,000 and 13,500 investors in Storm. Only 1200 or so were completely wiped out by over-leveraging. SICAG has 234 members in its discussion group and a 1000 plus members in all. I would suggest that most members of SOB were in the 1200 that lost everything.

I never formulated SOB as a competitor to SICAG. Yet, I have met resistance at every turn from people claiming to be true SICAGGERS.

I organised a petition that was never pushed.

I supported Mark Weir when he was attacked by Slater & Gordon.

I have created two websites for former Storm investors that were never pushed.

I was also instrumental in getting our lawyers to instigate a BOQ class action off my own back. I have fought for CBA clients, Macquarie clients and BOQ clients for three years now Go to my sites if you want proof of this.

There is now a strategy in place to try and demonise me for reasons beyond my understanding. It’s a ploy that people have used throughout history to garner support. For those misguided individuals out there that want to do this, I would remind them that we are all in this together.

I’ll leave you alone if you leave me alone. I think we have enough worries without this type of behaviour.

These are some of the people I have personally helped. Ask yourselves before attacking me what you have done and who you have helped?

“Hi Frank,
What fantastic advice you gave
I can’t imagine how to thank you for helping me to get mad and get active. We have been apathetic too long and had you not come along Frank, we would still be hiding under a rock! When it’s all over we have to have a big party and all get loudly sozzled together. You are a tower and I really appreciate your support. I hope you and Helen have a super Christmas and we all have the best 2011 we can!
Warm regards,
Megan and John”

“Frank
What can I say - I have read everyone of your 'countless words' felt everyone of your fears- and as for doubts.... I must tell you that when I read your nightly 'mantra' I slept a little easier.....not one word was wasted on us and you gave us the belief so that we didn't need to doubt.
You are our Trojan Horse....we were merely the foot soldiers....at the ready! Thanks so much for taking out battle right to the doors or our opponents. We are elated with what is now unfolding in the media and surprised with the realisation that ASIC is indeed on our side.
Keep it coming please Frank - it is not over yet.
Many thanks
Deb and Barry”

“Dear Frank
I have always believed in you and trusted your opinions. I really do appreciated everything you have done, you are amazing.
Thank you once again,
Looking forward to meeting you one day, when we are celebrating
Janelle”

“Hi Frank,
I'm sure all will agree that you have played a very large part in putting us where we are today. Your constant attack on the Banks and anyone for that matter, who you thought might have a case to answer. I have a very good friend up here in Cairns, who I correspond with frequently, and we have named you "TSUNAMI" Frank. You are just like a tidal wave that just keeps pounding away and has given the Banks, ASIC and S&G, no peace at all, since this Debacle occurred. THE SICAG Committee, Sean McArdle, Stewart Levitt and his team for their integrity and anyone who has contributed to the SICAG Group's postings has played a part in getting us all through this awful crisis. Frank, your "well written and well researched" articles, however, were always coming at regular intervals, just when we needed a boost to keep ourselves going, you'd be there with something new. We salute you "TSUNAMI"
Frank.
Kind regards, Frank G.”

“Hi Frank ,
Thank you once again for your tireless effort.I am so sorry I didn't get to meet Helen yesterday. You were both speaking with people and I didn't like to interupt .I missed our TV interview as well ..maybe it is on the cutting room floor ?
May you be blessed for the hope you have given us in attacking ASIC and the banks.
God bless you ,Cheers Jan”

“Dear Frank,
Congratulations for the time, effort ,courage, and determination that you as a human being worked for all storm victims. Both costas and I also add our ongoing gratitude and thanks to you and Helen. When this is all over and have our lives back to normal,storm investors should organize a huge party to celebrate victory over the banks.
To end ,we wish you both the best of luck,strength, and good health for the test case.
Once again we thank you. Keep strong!.GOD BLESS YOU BOTH FOR CLIMBING
THIS HUGE MOUNTAIN FOR ALL OF US.
Regards jean kilili”.

“Hi Frank,
Thanks Frank I enjoyed reading your post. It's making me feel more positive and it's buoyed my hubby up no end I can tell you, this news has been good for his soul. Ruth”

“Frank. Thanks foronderful job, We would be lost without you
Eva Yelavich.””
 
To get some context then here Frank, in the Statement of Advice provided by Storm, having told them that your ongoing living expenses could be covered with an income of $45,000, what level of income did they say you could draw on an annual basis?

This isn't a dig at you, I am wondering just how much more they 'promised' that their strategy was supposed to provide.
 
Frank

Upon reading an earlier of your posts I thought you may have had a momentary brain drain.
Subsequent posts however show it was not momentary; you continuously make comments without thinking clearly. You just keep "shooting yourself in the foot."

Your most recent:-
Frank Ainslie said:
Our only mistake, if we did make one, was to put our trust in financial advisers who all tell you they will give you the best advice possible but rarely do. Just read your newspapers for proof of that!
Click to expand...

Were you illiterate before the Storm debacle or did you not read the newspapers before that time. If not, why put your trust in a financial adviser.
You just stated that by reading the newspaper one would have proof that financial advisers rarely give the best advice. BANG,BANG.

Frank Ainslie said:
And Julia and others,

If you were unfortunate enough to be raped the last thing you would want is to be continually questioned about your motives. Yet, we know that this is exactly what happens to women when they find themselves in such circumstances. We have been raped by financial advisers who acted in conjunction with banks. We don’t need anyone to keep on reminding us that we should not have walked down a particular road.
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Two barrels here perhaps:-

1st
I went to the races on Saturday, placed a bet, lost some money which means I was raped. Don't really know whether it was the bookie or the horse or maybe the jockey that raped me.
Similarly I bought an item for $20 at the store and later found the same item elsewhere for $15. Me or my wallet was raped again.
What the hell has losing $$$$ got to do with rape Frank???????????? BANG,BANG.

2nd
You specifically direct this at Julia (and others) who by name is presumably female.
Do you actually think about what you pen?????? BANG,BANG.

Frank Ainslie said:
Now you know how we feel!
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Unbelievable Frank; you have no brain and you have no shame. Others here have expressed their disgust but I am lost for suitable/postable words.
Be glad that this is on a bulletin board and not at a live gathering/meeting of members.After making that statement at a live gathering you would probably wish to launch legal proceedings against me (and perhaps others) for assault to your person.

I could go on with other examples but cannot be bothered.

About myself:-

I have no connection with Storm whatsoever and don't personally know any Storm clients or employees.
I am not a financial advisor, nor am I involved in any financial industry other than personally looking after my own investments and finances.
I reside in the city of Townsville, and as Storm was based here have taken an interest in this debacle.
Storm's collapse of course featured in the local newspaper which mentioned matters similar to some posted by yourself, one of which I quote:-

Frank Ainslie said:
"When applying for an earlier loan, in August 2006, the bank had on file a rate notice dated August 2004 which indicated a pension discount for Mr Reynolds, so the $100K income claimed in the application is obviously not true...
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Since reading similar in the newspaper I have always had a question which I have thought of asking on this thread, but have not bothered. As I am currently posting here I take the opportunity to pose the following to you or anyone else wishing to clarify the issue.

I would assume that an applicant for a loan would have to submit a signed declaration/statement outlining assets held, earnings,etc to show capability for repayment. Did the applicant fill out and sign such a statement????. Did the applicant sign a blank statement and let others fill in the blanks. In the above quote 'pension/$100k income obviously not true', if not true the application would be fraudulent.
Did the applicants sign a truthfull application?
Did the applicants sign a fraudulent application?
Did the applicants sign a blank application???
Who presented the applications to the lender, the client or Storm? This might also impact on who is advised of a margin call.

Answer these and I might then re-assess the apportioning of wrong doings which currently are greatly against Storm.
 
Frank,

Why do you keep carrying on with the same tripe....all the while shooting yourself in the foot?

Let me get this straight....You had over a million dollars in investable assets, and wanted just $45,000 per annum to live on?

Now I know you don't like banks, and you have proven that common sense isn't your strongest asset, but did you realise that you could stick your money in the bank and earn 6% p.a., which would give you your $45,000 p.a. plus some cream on top? And potentially tax free if super is used? Surely a worldly business man like you would have known this Frank?

Instead of taking this simple and conservative strategy, you had a financial adviser convince (con) you into borrowing against your home and leveraging even further to provide you with an income that I am sure they promised would be well above the $45,000 you wanted.

The risk Frank, did you not consider the risk, or did you just blindly follow what was told to you? This was your life Frank, and you risked it all by following a strategy that you clearly did not understand; a strategy that you had no need to go anywhere near to achieve your modest goals. Yes your adviser sold you up the river, but you didn't have to jump in the boat Frank. Did he hold a gun to your head?

At the risk of repeating myself, WHY Frank? Why did you do this? Why did you pay an astronimical fee, gear yourself to the gills, plonk it all on the sharemarket and basically follow a strategy you clearly did not understand, when all you wanted to live on was $45,000 p.a.

WHY???????????????????
 
GG

You really know how to start a killer thread.
Almost 650,000 views and also I'm here still posting links as well, almost 3 years on.
What's your prediction in the short term, for this saga?

S
 
Solly said:
GG

You really know how to start a killer thread.
Almost 650,000 views and also I'm here still posting links as well, almost 3 years on.
What's your prediction in the short term, for this saga?

S
Click to expand...

Thanks Solly, and for all your input as well, as we enter the fourth year of this sorry saga.

The simple answer in the short term I do not know. I just do not know. I am watching and listening and will let you know via the usual channels.

Should there be no movement by the February sittings, I may need to do a recon patrol, after the wet, in a near intact Spitfire Vb sitting in a shed on high ground near Daly River.

Until then I'm relying on intelligence from the natives, back here on the coast.

And that as you would realise has its drawbacks in term of reliability.

The only other rumour I have heard, is that there is talk of a major defection from one of the camps. It is just a rumour though. There are some unhappy people in low places.

My mate has moved on and never talks about investing, and is happy enough.

Many ex Storm investors are still devastated, distraught and broken, angry with the banks and Storm and their respective muppet advisers, and tiring of the delays and length of litigation.

gg
 
DocK said:
My experience is probably similar. We had sought financial advice several times before, each time at a cost, only to be pointed towards the limited range of products or investments that the planner concerned earnt commissions from. This applied both to bank and non-bank FPs. It did not seem possible to obtain an unbiased plan, and we were unaware of any FPs who were not affiliated with a select group of sponsors or the like.
Click to expand...
Your impression was correct. The nature of much of the industry at the time ensured that pretty much whomever you consulted would be making a recommendation to you based on those products which were going to bring the best commission to the salesperson, viz the financial adviser. Whether it was going to be best for you seemed often to be a secondary consideration.

I was blown away when the recent recommendations from the enquiry into financial planning dictated that the "Adviser should act in the best interests of the client"!
I'd have thought this did not need spelling out, but the very fact that it apparently does, speaks volumes.

Storm's strategy of investing in the ASX 200 as a whole seemed to make a lot more sense than simply picking a managed fund. As to the fees, yes we baulked at 7% upfront, but there were then no ongoing management fees as such, and every prior FP we had seen wanted 4% annually for doing very little ongoing work. We did our sums and worked out that in the long term it was actually cheaper to pay a big chunk up front than 4% year upon year.
Click to expand...
Nothing wrong with that reasoning in principle.

DocK said:
No, we didn't, because - now I hope you don't have weak bladder control - we thought direct investment in the sharemarket might be too risky! Bloody hilarious isn't it! I did not know that stockbrokers also advised on strategies or investments, but thought they simply acted upon their client's instructions.
Click to expand...
That impression is pretty much true, certainly as far as online brokers are concerned.
Full service stockbrokers (i.e. the ones you go to see in their office) do recommend what shares you should buy, but not all of them are qualified to offer financial planning advice, i.e.an overall consideration and assessment of your entire financial situation, tax position, years to retirement etc. This is what Storm, being as I understand it, financial planners, were supposed to do, and to then recommend a personal strategy specifically for your situation.

When I first started out I had the impression that stockbrokers were really smart people who knew all about how the market worked, who had access to lots of supa dupa research, and who would therefore be far more capable than I at choosing what companies to invest in.

It was only after a year (in an aggressively bull market) of my p/f of their recommendations mostly going down that I realised they are simply salespeople, doing what they're told by their head offices. e.g. if they have a major large client who wants to sell a big chunk of XYZ obviously the firm is going to want to look after that client, so they will put out a suitably worded research recommendation that suggests retail investors should buy this magnificent company at its current bargain price.

So the naive investor, still thinking the almighty stockbroker knows best, will accept this recommendation, and, um, get done, while the big client says, 'hey, thanks for that' .


As I knew I lacked the experience and knowledge to pick individual shares at that time, I did not consider a stockbroker to be an option for us. Back then we thought our best road to financial independence was to access some of the equity we had built up in our home and utilize the tax advantages available through negative gearing into a managed fund or similar. We were in our mid-forties then, had almost totally paid off our home and had been self-employed for about 7 years at that time. We had sunk most of our savings into our business, and had rolled our supers into a smsf and used it to purchase the factory that we run our business out of. The best, maybe the only, good decision we made was to refuse storm's suggestion of selling the factory in order to have more funds to put into the sharemarket. I still don't think we necessarily lacked all common sense, we knew many people following much the same system as us with other FP firms, we simply didn't know what we didn't know.
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And I expect you made the decision in a bull market which would have seemed to validate it.

Your comment about not knowing what you didn't know is fundamental to this whole debacle. You had in your favour, obviously, that you were younger than many, and that you did not succumb to the extraordinary suggestion of selling your factory.

No obligation to answer, of course, but when the proposition of using the equity in your home was discussed with Storm, did they at that stage explain the next step in their strategy of the shares bought with that loan subsequently being used as collateral for a margin loan?

Others on this thread have said they had never heard of such a thing as a margin loan.
They have said they did not ask to have it explained.
This is where so many appear to have become unstuck.
What I'm interested in is whether the entire strategy, including the margin loan, was clearly outlined in the beginning, and if so, how it was justified.


I do think some on this forum lose sight of the fact that this is a stock market forum and its members are not necessarily representative of the population at large.
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That's quite true.
What appears obvious to some re gearing, bubbles, impending crashes etc is not so obvious to the vast majority of the financially ignorant.
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What you needed to know about around this time was the sub prime debacle unfolding in the USA. This was discussed almost every day on much of the media, certainly ABC. It made pretty clear that, despite assurances by the 'dream on' , out of touch economists, the world was in for a shock.
This didn't require any financial understanding, just a willingness to listen to/watch the news and understand the global situation.

This is not a criticism. Many who should have known better were absolutely familiar with what was unfolding but still failed to predict the coming storm. I'm just attempting to correct your impression that some specific financial understanding was required to know that the clouds were gathering with exponential intensity.

I agree that it does not necessarily take a lot of time to learn the basics, having now done that myself to an extent, but it is a daunting prospect to many. And yes, we were gullible enough to believe that professionals could be counted on to do what they promised, and that endorsement by FPA and their bankers actually meant something. I used not to be the bitter, twisted and cynical soul that I now am:rolleyes:
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A reasonable measure of cynicism is very protective. Consider it a plus.:)
 

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