Perhaps remember that the 'system' did not fail everyone. It is quite wrong to extrapolate from the shonky behaviour of the Storm principals that the whole financial system is dysfunctional.There is every chance ROE that you're right and 'this may never happen'. However, what is very obvious is that the present system is grossly ineffective or the storm debacle would never have occurred.
Agree 100% Frank. I know of a guy who was caught defrauding investors in a failed movie, who became a financial adviser and was then caught misleading clients who then started up his own advice business and has now been banned for being an adviser for 5 years. He will find some other way to make a quick buck at the expense of others. No jail time, minimal financial penalties...absolutely no deterrent from offending again. There would be hundreds of people who have done similar.
ASIC have no teeth at all.
Thanks all
I've heard all of the above.
Gearing over the past 12 months would have been brave.
They are all over Australia I believe.
gg
I don't believe that they are for everyone as their methodology is very aggressive. I personally don't agree with it. Below are some bits of information I've taken from Storm seminars held.
Their actual investments are quite solid. Nothing o/seas, just Aussie shares/managed funds of which a fair portion are index tracking investments. But the main difference is the level of gearing. It is just debt on debt. The moment portfolios are re-valued upward they increase the debt accordingly.
My understanding is that Storm as a group brokered a deal with Macquarie so that their clients could extend further than the maximum 70% gearing ratio that applies to most others looking at margin lending. I also am of the view that they say the debt is never to be repaid (or at least it is not a large part of the financial plan). As the assets grow so to does the level of debt. As I undertstand it, Storm don't follow the rule of why you need to "retire" - or at least "retire" your money in retirement. They believe it is their to be used to create more wealth even in "old age".
When markets are going well - this doesn't seem a problem. But I think the way the market has been over the past 18 months it has highlighted a major flaw in the methodology. People need a certain comfort level at which they will sacrifice more wealth for a decent nights sleep and piece of mind. As you can see - I don't think that their actual "investment" advice (where the money was placed) would be a huge problem for them as they were fairly conservative but the "big picture plan" is a bit out there for some.
Duckman
It was actually 2008.From the first page of this thread in Oct-Nov 2005
Not so much hindsight at that early stage, gg. The quotes from both yourself and Duckman at that stage make clear the dangers of the Storm model.Wisdom is always easy in hindsight.
gg
Perhaps remember that the 'system' did not fail everyone. It is quite wrong to extrapolate from the shonky behaviour of the Storm principals that the whole financial system is dysfunctional.
So true.
This so-called ‘system’ which some on here consider to be seriously flawed and dysfunctional has, in fact, burnt only a small minority of investors overall. Hundreds of thousands of investors, possibly millions even, have had no problem with it.
And of the small minority burnt, it’s fair to say that it’s not the system alone that’s burnt them, but how they used the system.
Give two people the same kind of car – one will drive safely, the other will drive like crazy and end up getting hurt. All cars have the potential to harm us, yet we can still use them safely if we use them sensibly.
Same story with capitalism - the present ‘system’ in respect of investments, banks, wealth creation etc can be used to produce great profit, or much heartache, depending on how we use it.
There’s been much discussion on here about how we need changes to legislation so as to protect investors from being fleeced. Unfortunately though........
It’s not possible to stop unscrupulous people from operating on the edges of the law, or outside the law.
It’s not possible to remove all risk from investment.
It’s not possible to make people think for themselves and adopt a prudent and cautious approach to investing.
We don’t yet know what the eventual outcome of this Storm debacle will be.
But one thing certain is that irrespective of legislation, burnt investors will be as much a part of the future as they are a part of the past. As will successful investors.
Don't you really? Surely it's a very fundamental point in terms of where the blame falls?
Two provisos here:
1. In some families such a question could be seen to be intrusive and purely an enquiry as to whether you as the potential inheritor have been well provided for.
2. I'm not sure that too many family members are sufficiently well equipped to offer advice regarding financial matters.
I do understand, however, what has prompted your suggestion. Just think it's a tricky area.
I'm glad to know you were able to enjoy the work Christmas party, Mindstorm.
Getting on with life is probably difficult for some, but the only way to emotional resolution imo.
I wish you and other ex Storm clients the best for 2012, and thank you sincerely for sharing some of your experiences and feelings with us.
On the contrary, HQ, see your remarks below:Agree the system didn't fail everyone but then I never said that it did.
The 'general population" has not been fleeced by anyone.We need an honest and trustworthy financial system in this country and until we get one the general population needs to be aware that under our present system they can be fleeced by the very people we need to seek advice from.
Please stop blaming "the system" which has served the great majority of investors perfectly well.There is every chance ROE that you're right and 'this may never happen'. However, what is very obvious is that the present system is grossly ineffective or the storm debacle would never have occurred.
You have similarly agreed many times before but still you keep blaming "the system" as being the cause of your downfall.Agree wholeheartedly that we all need to be more vigilant when it comes to our own money.
12,000 investors is not even a blip on the overall market.Bunyip,
If you think that a 3 billion dollar loss by a small minority (if 12,000 or so investors can be considered such) isn't something to be concerned about, they must have put too much Sherry in your Christmas pudding!
Yeah, right. See my above comments to HQ.The system that was in place led to these losses. Therefore, it needs changing!
Oh dear, if Storm investors were simply victims of The System, how is it that other users of The System have not been fleeced?It should also be remembered that it wasn't how the Storm investors used the system, (they were just the victims of it)
If you actually believe this then you're in a perfect position to be taken advantage all over again.It is not the investors that need to adopt a prudent and cautious approach,
Hello Mindstorm,Hi Julia and all,
Trying once more to answer your post Julia, and hoping I can this time around.
Will try to do it in two posts this time.....
It's taken me a long time to come to terms with who filled in what forms, and who should/could/may be to blame.
I take full responsibility for signing some of the forms, and for being trusting/stupid enough to allow them to be completed after I had signed.
But surely the person who was going to lend me money should carry the greatest responsibility for accepting the content of the forms no matter who completed the form?
Should the banks not have had someone who had to verify what information those forms contained, to check that the information provided was correct, and to decide whether or not they were willing to accept the information provided in the forms?
MS
Don't you really? Surely it's a very fundamental point in terms of where the blame falls?
Two provisos here:
1. In some families such a question could be seen to be intrusive and purely an enquiry as to whether you as the potential inheritor have been well provided for.
2. I'm not sure that too many family members are sufficiently well equipped to offer advice regarding financial matters.
I do understand, however, what has prompted your suggestion. Just think it's a tricky area.
I'm glad to know you were able to enjoy the work Christmas party, Mindstorm.
Getting on with life is probably difficult for some, but the only way to emotional resolution imo.
I wish you and other ex Storm clients the best for 2012, and thank you sincerely for sharing some of your experiences and feelings with us.
Hello Mindstorm,
Simple answer to your final paragraph: Yes. I'd have thought so.
But my point was that throughout this thread there have been many assertions that the figures in the application forms were not those supplied by the clients. This is what I think absolutely needs clarification.
Given the obfuscating nature of the SOA put up here by Frank earlier, I'd not be surprised to learn that the application forms were similarly complex and the trusting investor could fairly easily be persuaded to "just sign here".
You'll never do it again, of course, but you will not have been the first to be so assured and you won't be the last.
Hope the coming year is better for you.
Hi Julia and all,
Trying once more to answer your post Julia, and hoping I can this time around.
Will try to do it in two posts this time.....
It's taken me a long time to come to terms with who filled in what forms, and who should/could/may be to blame.
I take full responsibility for signing some of the forms, and for being trusting/stupid enough to allow them to be completed after I had signed.
But surely the person who was going to lend me money should carry the greatest responsibility for accepting the content of the forms no matter who completed the form?
Should the banks not have had someone who had to verify what information those forms contained, to check that the information provided was correct, and to decide whether or not they were willing to accept the information provided in the forms?
MS
I don't think any of us have ever doubted that Storm investors quite properly answered the questions on the application forms. But there have been assertions along the line that some either had their answers altered amongst the application process or who allowed either Storm or the banks to complete the forms.Given that I completed the initial Storm forms so honestly
No need, MS. Your integrity is not in question.I should try to find that initial form given to me by our 'advisor' to show ASF readers how many trivial questions we had to answer so that storm could see how every last cent we had was spent.
This is where I become puzzled. When you received the documentation for a loan which was considerably more than you'd applied for (and for which you fulfilled the lending criteria presumably), did you just accept it, not question how you came to be given such an unexpected amount?The bank (s) in question still gave me/us the loans that we did not fulfil the bank (s)
requirements for.....
There is nothing 'smart' about me. I'm no more astute than the average person who has attempted to become financially literate.I wish that we were all half as smart as you appear to be....
MS
So true.
This so-called ‘system’ which some on here consider to be seriously flawed and dysfunctional has, in fact, burnt only a small minority of investors overall. Hundreds of thousands of investors, possibly millions even, have had no problem with it.
And of the small minority burnt, it’s fair to say that it’s not the system alone that’s burnt them, but how they used the system.
Give two people the same kind of car – one will drive safely, the other will drive like crazy and end up getting hurt. All cars have the potential to harm us, yet we can still use them safely if we use them sensibly.
Same story with capitalism - the present ‘system’ in respect of investments, banks, wealth creation etc can be used to produce great profit, or much heartache, depending on how we use it.
There’s been much discussion on here about how we need changes to legislation so as to protect investors from being fleeced. Unfortunately though........
It’s not possible to stop unscrupulous people from operating on the edges of the law, or outside the law.
It’s not possible to remove all risk from investment.
It’s not possible to make people think for themselves and adopt a prudent and cautious approach to investing.
We don’t yet know what the eventual outcome of this Storm debacle will be.
But one thing certain is that irrespective of legislation, burnt investors will be as much a part of the future as they are a part of the past. As will successful investors.
This is where I become puzzled. When you received the documentation for a loan which was considerably more than you'd applied for (and for which you fulfilled the lending criteria presumably), did you just accept it, not question how you came to be given such an unexpected amount?
There may be something I'm not understanding about the whole process here.
(Quoted from my BOQ website)
Mr. David Liddy, the former Managing Director and CEO of the Bank of Queensland, has proudly proclaimed, "We're the bank with OWNER-Managers. That's what sets us apart!"
"Praise from Caesar is praise indeed!"
If the performance of the Bank of Queensland's North Ward branch, Townsville in its past dealings with the failed financial advisory company, Storm Financial, is anything to go by, Mr. Liddy's words are certainly prophetic. That branch of the BOQ certainly did set itself apart!
Here are just some of the testimonials from within the BOQ itself about it's North Ward owner managers' past conduct:
"Basically none of the info provided and input on the applicant is accurate... I would suggest that things may unravel at a rate of knots from this point on..." [Lindsay Johnson BOQ Risk Assessment]
....................................
Upon recently stumbling across this web site I was pleasently surprised, although reading some of the recent postings on your site regarding Storm Financial I have found that most of your members seem to be ill informed. I have been an investor with Storm for the last 4 years and have found this company to be nothing less than fantastic. Anyone that finds themselves invested in the stock market in these economic times will be finding it difficult, some more than others. Whilst reading some of the comments made by members of this site it sickens me to think that you can be so ignorant to the facts in this matter. Throughout this ordeal we have been in constant contact with Storm with updates on ours and their postion. I'm sure if you asked Coloniel lending some of the tougher questions being thrown Storms way you would have a greater understading of the mess in which Storm finds themselves. As for Storm taking it's clients on a fully paid for overseas holiday to Africa, this is nothing but utter rubbish. Anyone who choose to go on this trip was self funded. Remember not everthing that the media writes is gosspel. We should all be aware of the gossip mongering that has been created throughout this controversay. I, as a client of Storm Financial will be with them all the way.
Here's to a better economic year ahead!
very easy to see how this has happened.
if you had high gearing (50-70%) from 2003 to 07, on the ASX200, you what have though your Investment advisors were the best in the world!
the big question is at what point do you start selling, if you are a long term investor, in the event of a market downturn.
maybe not 10%, as these could just be just a regular blip.
but surely after that, serious readjustment is advisable.
whats happened over the last 6 months is no regular blip, anyone with any financial knowledge knows this
if on low income, with small tax offset, high gearing would need to be monitored day to day
as for people losing their houses, one unfortunate fact I have learned is that one should not allow negative equity to occur, in other words, if a margin call is approaching, far safer to liquidate your investment for $0.
would be extremely interesting to see if any Storm investors had regular written reviews of their plans.
fundamental conflict of interest exists if planners get 7%
I doubt it will be back, for people interested at looking at the site, you can go to:
http://web.archive.org/web/20071028114029/http://www.stormfinancial.com.au/
... Some hype from the site:
"Our strength comes from providing quality services and advice, based on sound research, which integrate smoothly with your life goals and ambitions"
"The Storm processes and systems are tried and true. The outstanding results achieved over 30 years demonstrate a proven formula, consistently applied, based on a rock solid foundation"
"Everything that we do at Storm is based on seasoned research and carefully considered planning."
All sounds good.
ASIC have a long record of underperformance when it comes to protecting investors.
A number of questions I might ask of ASIC's involvement.
1. Why now. Blind Freddie knew this mob's algorithm was a recipe for disaster 12 months ago.
2. Where. Where will they find the documents, people to investigate properly, many like a mate of mine are too ashamed to admit their involvement.
3. How. The best predictor of future behaviour is past behaviour, ASIC are a joke.
4. When When most people have lost the lot, the bad guys have shifted money offshore and most folk have forgotten....about 2013 imho.
gg
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