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Storm Financial Group

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I find it to be rather fruitless to be continually raising the issue of risk levels. To me qualitative subjective interpretations of risk assessment are meaningless. All positions contain risk and all have the potential for failure or success. It is an impossibility to retrospectively conduct a quantitative risk assessment model of this strategy where no baseline has ever been established, no results published or peer reviewed.

The facts as presented to me by my Stormer mates about that the risks with this strategy were that they were; assessed, mitigated, transferred or avoided by the methodology and mechanisms that Storm had in place to monitor and preserve their investment. They held the belief that Storm possessed the required abilities to protect and grow their nest egg. That was their belief in the manner that the strategy was presented to them. These people are not financial experts, hold no formal qualifications in financial planning, economics or investing and sought the advice of qualified certified professionals. They held a more than reasonable expectation that their financial interests were being adequately managed.

I have been wondering lately if it ever could be proven that some parties obtained a benefit through deliberate or reckless deception at the expense of the Stormers, it would interesting to see whether this could ever be tested. Although I have not as yet seen mention of any criminal charges being laid.

I also look forward to the further proceedings in the Brisbane Federal Court tomorrow regarding the UMIS.

S
 
Frank,

I know you haven’t answered the questions I posed, and to be honest, I don’t expect you will. But I would like to ask you a few things about your comments to doobsy…


So are you trying to tell us that you DID NOT KNOW that your portfolio was losing value by the day until the whole margin call fiasco at the bitter end? You never received a statement from Colonial or Storm during 2008 that showed your portfolio value? That you never logged onto the internet to check out how your investment was going? That despite the almost daily front page talk of the GFC and the plunging stockmarket, you never once wondered what was happening to your money?

THAT YOU DIDN’T KNOW THIS LOW RISK STRATEGY WAS NOTHING OF THE SORT UNTIL YOUR SHARES WERE SOLD DOWN FROM UNDER YOU IN LATE 2008, WHEN YOU HAVE GONE FROM A MILLIONAIRE TO THE POOR HOUSE OVER A 12 MONTH PERIOD? To borrow one of your phrases “Com’ on’.




You have admitted previously that you understand how shares go up and down, so you are now claiming that you did not know that shares are volatile? That you had never lived through sharemarket crashes before, that you had never ever been affected by sharemarket volatility? And again, that almost from the day you invested, despite the continued talk and media mania of a plunging sharemarket which you were invested in, you couldn’t put two and two together and realise that shares, the shares you were invested in, can actually fall in value? And furthermore, you never even bothered to check?

You see, even if I indulge your claim that you had no way of knowing that the strategy was risky from the start, because Storm sold it so well, then you should have known pretty quickly once your geared up portfolio started dropping in value from late 2007 that this was not a low risk strategy at all, that this strategy which was losing you money wasn't actually protecting your capital but eroding it. And I am the one who has stuck my head in the sand?

What were you doing during 2008 when you woke up every morning to news that the Dow Jones was down another 2% over night, and you watched the news every night to hear about how many billions of dollars were lost in the sharemarket that day. Didn't you just once wonder what was happening to your portfolio during this time...just log onto the internet and check how it was going?

And yet you stuck it out to the bitter end. You stuck with something that you did not want to do until the bitter end. Why??? And you claim that you had no responsibility to check up on your own investments, that your losses were 100% the fault of Storm and the banks, when you could have pulled the trigger at any time and bailed out of the strategy which with each passing day was proving to be anything but low risk?

Heavens above.

Why???????
 

No Frank I do not expect you to do Storm's job but I do expect you to take an interest in where your $1M was put. I expect my clients to know where their money that I invest for them is. If I get hit by a bus they need to know.

When in business Frank did you use a bookkeeper or accountant? Did you take their expertise and their word as gospel or did you read their reports and do some checking to make sure things looked ok? Never ceases to amaze me how diligent people will be checking some things and yet hand over $1M and never ask another question.

As mentioned this was not a fall off a cliff moment, it was a slow moving train wreck. HQ - PLENTY of people were talking about the fact markets were running too hot so I will not have it said that there was only one message out there and that was "shares are great"

My clients see me at least twice a year. My understanding is that Storm also ran regular seminars and client one on one review meetings. These were opportunities to ask hard questions. Was this the herd mentality again that stopped Storm clients asking these questions in a group environment in case they were made to look silly in front of the crowd?


I agree with why you went and used a planner. What I don't agree with is why you felt comfortable borrowing to invest into an area that from your quote above you and the other average man knew nothing about. Invest your own money and fine you can outsource all you want, but borrow and you have stepped into a whole new realm of responsibility in knowing what was going on.


That is like saying a used car salesman that knows a certain model of a certain make has a history of being a dud shouldn't try to sell it to you. It might be fine but it might be a lemon. The responsibility to be prudent was on Storm - the advice should have been prudent. They should all take a fall for that. The banks provided the funding, it is not their job to advise you to be prudent with the money, that is your and your advisers responsibility. If I tell a client to borrow money to buy some speccy mining stock and it goes to mud is that the banks responsibility? Again you base all argument on the UMIS that is yet to be proven. If the banks and Storm are shown to be far enough apart then the bulk of the responsibility will fall solely on Storm.


I see banks lending money to teenagers to buy cars, I see banks providing $10,000 credit cards to people with part time jobs, I see banks lending money for people to set up restaurants in tourist towns that will probably fail in 2 years time. I don't have a problem with the banks lending money to people that can afford it. Plenty of Storm clients could afford it. Not all. As for them being gullible.....not so sure, I'm pretty sure that to date they have got most of their money back.


Really? Wow, nothing like using one of those sweeping generalisations that you seem to hate so much. I didn't gear any clients into the markets. I didn't have my retirees over exposed to growth assets let alone geared into them. I still have all my clients and they still have their money invested, producing income and the growth assets slowly coming back to more normal levels. Pretty sure out of the 50 odd planners I know in my area only one firm lost all of their clients money and went broke. I am sure some other planners were agressive as well and their clients will be down in value but they are still kicking. Gearing for the financial planning industry was a bit like the "would you like fries with that" for Maccas. An upsell to create more funds under management to charge fees on. It was widespread but there were plenty of ethical planners out there who did not promote the system and waltzed through the crisis pretty easily, me included. No sleepless nights here worrying about 50 clients with margin calls.


No I disagree, you put your money at risk. More risk than you wanted but you still wanted risk. If you didn't want risk you would have left it in the bank in term deposits. I think you deserve to take a loss, the same as EVERYONE ELSE. How big a loss the courts will decide I hope.


Great, see above. Not arguing alot of Stormies deserve some of their money back. I will however argue till blue in the face that they do NOT deserve to get 100% back let alone manage to get in front. My conservative clients had 10% share exposure. Markets are still down 30%, so they are down 3%, please enlighten me how you deserve to be in a better position that someone who was willing to miss out on "potential" upside to properly protect their capital.



Gee that was brave, try answering a question asked of you.
 
Forget about who is right and wrong for a moment. The basic concept is that people thought it was ok to blindly trust a professional to invest their life savings for them and they lost everything. There are two ways to avoid this in future. One is to have tighter control over the actions of people who give out investment advice and investment loans. The second way is to educate potential investors on the importance of fully understanding the risks involved before handing over their money in the first place.

Of the two above solutions, which is better? No matter how strict the regulations or how harsh the penalties, there will always be crooks trying to pull the wool over your eyes and take your money. So the best solution is to educate the people. However, why not have both solutions in place?

SJG1974, bunyip, doobsy, Julia and others have tried to point out how people could avoid getting mixed up in these situations to begin with. But any attempt to do so is met with accusations of being a bank sympathizer or such similar things. From what I've read, none of these people are saying that Storm and the banks are innocent. It's abundantly clear that Storm was guilty and the banks will be judged in court soon enough. So the only thing left to discuss is investor education. Franks message to the world is that it's perfectly acceptable to blindly trust others with your money and that if you get conned into losing everything then you should be entitled to get it all back. The message we should be sending is, don't ever allow yourself to get into a position where you need to take legal action to get your money back.

A few posts ago Frank claimed that the Storm scenario is a very complicated matter that can't be fully understood by the general public. But then he goes and compares the Storm scenario to a holiday on a cruise ship. Then when he was asked two very important questions for an investor to consider, his response was "the two questions you have posed are purely hypothetical and speculative. Therefore, they have no place in any discussion relating to our case." Clearly Frank has his own agenda here and he will always steer the conversation his way and will never stray from his predetermined course. Part of the problem is that Frank has used his real name. There is absolutely no way on earth Frank is ever going to say anything that could be used against him. So asking him to admit that it was unwise to trust others with your life savings is futile. Even if he now believed it he wouldn't say it.

I don't mean to pick on Frank, it's just that most of the discussions here are based on trying to make Frank understand what he seems to be misunderstanding. But the fact is that you'll never change his attitude, he simply won't allow it to happen. He can't allow it to happen.

The other problem with trying to pin Frank down is that there are some stormies that have shown great strength of character in admitting that they made a mistake. Any further effort to point out these mistakes is just rubbing salt into the wound. After all that has been said, if anyone still believes that blindly trusting someone else with your life savings is an acceptable approach then they are beyond our help and will no doubt be parted from more money in the future.

I said I'd forever stay out of this, but my reason for posting this is to make a suggestion. Maybe everyone can take a step back and consider what they hope to achieve here. It's easy to get very involved in these discussions, and I'm sure many people have poured many hours into considering the issue and responding to others. But don't forget your own life, if this discussion has gone as far as it can, maybe you have other things in life you could devote that energy towards. I stopped reading this thread and feel much better for it.

I don't want to discourage discussion, and if you are enjoying this then full steam ahead. Your input is appreciated by many I'm sure, but don't get swallowed up by a discussion that goes in circles and frustrates you.
 
Lone Wolf, that is probably the most logical and insightful post on this thread.
 

Having stood for five or so hours in Court today I am somewhat exhausted probably due to the fact that I am seventy and have a gammy hip that is severely aggravated by standing on it for too long. However, what can one do when one acquires a seat early on but elderly women haven’t?

I couldn’t agree with you more! Going over the same ground is wearisome to say the least. However, there are some on this forum that will never be satisfied with any explanation we present to them because they view what occurred in simple terms and see the issues as “black and white”. Therefore, I do not intend to field any more questions from posters that want to focus on why we invested in Storm. I have explained our reasons for doing so and if this doesn’t satisfy them, too bad!

I’ll just say this and this will definitely be my last words as to our reasons why!

Some have said that because we ran a business and I have a background and training in corporate management, I should have been investment savvy and therefore not have invested in Storm in the first place. Further, they have stated that we should also have done Storm’s job for them by monitoring our investments rather than rely on Storm alone. Their argument is that we had run businesses for years and if we hadn’t kept our eye on things then, we would have been courting disaster.

In presenting such an argument they miss one essential truth! We “managed” our businesses “hands-on” and reaped the profits. However, in the case of Storm, we were paying someone else to manage our affairs and expected, quite justifiably, I feel, that Storm would also adopted a hands-on-approach because that is what we were paying them for! Indeed, Storm’s SOA and the prospectus it published when it sought to become public confirmed its commitment in this regard.

Some have also argued that I should have been more astute than most where our investments were concerned particularly in view of my background. Again, because I was a professional in my field and have training in many areas including financial accountancy, I should have been doubly aware of the dangers inherent in Storm’s scheme. “How come I was then fooled into believing that Storm’s financial model was sound.” That’s exactly the point. If someone like me can be fooled, what hope did thousands of people have that had no background at all in such matters.

The fact of the matter is that Storm’s financial model was sold to us basically as a fail-safe financial model because we were investing on a broad front in the share market and “state of the art” monitoring systems were in place that would alert us when our shares prices fell to any large degree. This would then enable us to take any appropriate action that Storm deemed necessary. We were also told by Storm that any assets we had should be put to work.

It is easy now for people to say now that Storm were a bunch of shonks and we should have known better. They tend to forget that Storm at that time was a financial advisory firm of substance and there were no warnings in the market place stating otherwise. "Why did we take Storm’s advice?" Because we were paying them a princely sum of money for, what we thought, was the best financial advice possible. How could we know then that we were getting "monkeys" because we certainly were not paying "peanuts".

Others on this forum have suggested that we were free to leave Storm at any time so why didn’t we? Again, they are seeing everything in simple terms. For one we had paid Storm’s fees in advance and they were considerable. For another, extracting oneself from Storm at the end of 2008 would have been no easy task. When we all found out the true state of affairs, by then it was all too late. The damage had already been done and we found ourselves having to meet margin loan payouts that had become swollen to the point where they were maxed out any beyond because no margin calls had been made by the Banks when they should have been. In the end days, Storm investors’ positions were sacrificed for the greater good! Namely, the good of Storm and the Banks who sought to protect what they had, which was “a bloody good thing on their hands”, by gambling that the markets would come good. The investors were left in the dark because of this, being assured constantly that everything was under control. It wasn’t!

Let’s not also forget that Storm always boasted of their considerable resources so we had no reason whatsoever to believe that that firm could possibly collapse. As I have said many times, Hindsight is a wonderful thing!

Then there are some that say that educating would-be investors is the answer. No, it isn’t! Making sure that investors are protected by adequate and effective regulations and ensuring that financial advisers have the necessary training and qualifications to provide investors with appropriate advice is the only way that one can safeguard investors’ interest. Further, these financial advisers need to be policed properly to ensure that they are complying with the regulations that are place.

Frankly, it is ridiculous to suggest that any would-be investors need to be educated because that is a role that should be in part carried out by their advisers. How can they possibly understand any advice they receive if they are not informed by their advisers why such advice is being given and for what reasons. Further, if people want to educate investors in terms of the market, where does it stop? Should the medical profession be educating patients? Lawyers be educating their clients? Bankers be educating their customers and so on? That’s what you employ professional for, so you don’t have to sit down yourself and learn what they already know. In other words, let’s get real!

The issues in our case are simple enough. We, the victims of Storm and the Banks, maintain that we were wronged and ASIC, Worrells and the PJC support this notion. Therefore, the Banks and Storm have a "prima facie" case to answer.

The facts are straight forward enough:

We paid a financial advisory firm for financial advice and management of our investments. This firm had a duty of care to its clients which it did not fulfil. We are now suing the Banks because they combined with Storm to churn money out of us for their own ends, with total disregard to our financial well-being. Further, that when the GFC occurred, all parties involved did not take the appropriate action to protect our investment balances but rather sought to protect their own interests. As a consequence, we lost everything. That is the crux of the matter. Anything else is therefore totally irrelevant. If people on this forum want to think otherwise, that’s theirbchoice. For my part, I have better things to do with my time than continually try to justify my actions. Nor do I intend to.

Like you, Solly, I will drop in to this forum from time to time and answer any questions or comment on matters to do with our case that are relevant. However, I will not be responding to posters that have nothing new to say. There are those within our own ranks that require my support now and my focus will be upon them.

Solly! If your ‘Stormie’ mates need any support in the months ahead and have no where to go, put them in touch with me and I’ll include them in my Group. However, I’ll need to know that they have been recommended by you beforehand. Chou! Frank
 
Solly I appreciate what you've posted in post number 7001.

It sums up accurately how the storm financial plan was presented to us.

It's nice to read the truth for a change instead of another inaccurate assumption.
 
Lone Wolf any suggestion that the public should be financially educated with always have merit. What doesn't have any merit at all is any form of acceptance that registered financial planners and banks can somehow be excused for not having the financial interest of their customers at heart. When I pay for professional financial advice then that's what I expect and anything less than that is not acceptable.
 

Thanks Solly,

I would agree with Harleyquin, that this is a good summation of the decision making precepts that drove many Storm investors.

It is a dangerous place, investing one's hardearned.

gg
 
Frank Ainslie said:
Therefore, I do not intend to field any more questions from posters that want to focus on why we invested in Storm.
Click to expand...
I've lost count of the number of times you've said this, and then lo, off you go again with another copy and paste of all the same stuff. What's the point? Who do you think you're convincing? Other than yourself, I suspect no one.

I’ll just say this and this will definitely be my last words as to our reasons why!
Click to expand...
Again, you've said this many times before.
I can't fathom why you keep regurgitating the same stuff.

That's a completely irrational 'reason' to accept financial advice.
Why would you conclude that what is the most expensive is ipso facto the best?

Others on this forum have suggested that we were free to leave Storm at any time so why didn’t we? Again, they are seeing everything in simple terms. For one we had paid Storm’s fees in advance and they were considerable.
Click to expand...
So can you see now why they pushed you into paying that massive amount in advance?
It worked, didn't it? If you'd only paid an annual fee, you'd have felt more able to use your own judgment I'd have hoped.

Then there are some that say that educating would-be investors is the answer. No, it isn’t!
Click to expand...
If you'd taken the time to acquire some basic financial literacy you would have been in a position to see all the holes in the Storm strategy, so to suggest education of investors is not worthwhile is just silly.

However, there has been a wealth of free information available for years and years.
It has not overcome the apathy and inertia of people who can't be bothered spending a little time absorbing it, even if just to be in a position of knowing whether they are being ripped off or not.

Certainly. But however much you regulate an industry and police it for that matter, you will never eliminate shonks. It will always be up to the individual to avoid such people. Hence the above described need for personal financial literacy.

Why do you keep saying the same thing over and over? Your argument makes no sense. Instead, you should be saying

"How can they possibly understand any advice they receive if they do not have the basic financial literacy required to properly assess this advice?"
 
I'd agree Julia, the Stormies were led in to this by a very slick show.

Being not financially educated they were grist for the mill.

gg
 
Nice post Lone Wolf. I think you have nailed it, and Frank's post following this has underlined your points perfectly.

You can't force the blind to see, we have seen that. If people think that they can hand vast amounts of money over to a third party and take no notice or no real interest in what they are doing with it, then that's their problem I guess. Its odd how people don't believe they need to understand how their life savings are being invested, and yet these same people once its gone, spend so much time trying to understand how it was lost...its all a bit mixed up if you ask me.

Yes advisers need to act in the best interests of their clients, but at the same time investors need to act in their own best interests by understanding what is being done with their money. Common sense I would have thought, although this forum shows that sense isn't all that common.

Anyway, as you pointed out we just keep on going around and around debating the same points. The sad thing is that despite what some would have us believe, this whole mess could have been avoided for so many people if they had have shown the fruits of their years and years of hard work more respect, both by taking the time to research and understand just how their money was being invested in the beginning, and taking an interest in how their investment was performing as it gradually fell in value over the 12 months of 2008.

My head is pounding from banging it against a brick wall for so long, so I take your point about concentrating on other, more healthy pursuits than arguing with the deaf.
 
Sj storms clients did value their hard earned and also valued their retirement years by seeking professional financial advice to ensure that our savings were invested in the most cost effective way. That's what I expected from a financial planner. Nothing more nothing less.
 



I enclose a post above about a conversation of the deaf.

gg
 

More from: abc.net.au
 

Thanks Frank, I appreciate that, I will pass on your offer. Also I hear it was a rather packed day at the court. Unfortunately I couldn't attend due to my involvement in other matters. The reporting that CBA terminated David McCulloch's authority to sell some CBA products is an interesting event. I wonder what direction the proceedings will now take.

S
 

Julia

It's pretty had to get any sense out of a bloke who's completely out of his tree.

I burst out laughing when I read the latest gem about how the average man in the street couldn't be expected to know that an asset class like the share market has a history of ups and downs!

Then again, possibly it’s me who doesn’t have a clue when it comes to finance and investment – perhaps I can learn something from the sage advice and opinions expressed by certain parties on this thread.
Maybe as soon as Easter is over I’ll start making moves to 'respect my money' by shoving all of it plus a huge pile of borrowed money into the stock market, then hope like hell the market keeps going up. My debt-free home - I'll mortgage it to raise even more investment funds.
As for those investment books and websites that I like to read, why waste my time on such a fruitless endeavor. I’ve learnt on this thread that you don’t need any investment knowledge or education – that sort of stuff is the responsibility of the salesmen who sell investment schemes – they’re my most reliable source of knowledge if I ever want any information about investment.
But how about if they’re crooks – won’t I get conned? Hell no – I'll be able to rely on government legislation as my iron-clad guarantee that nobody can ever pull the wool over my eyes in investment matters.

Yep, I think I’ll get the show on the road by contacting the investment loans manager of my bank as soon as Easter is over. And with a bit of luck I can track down a firm of investment gurus, preferably one that charges many times the normal fees, just so I know that I’m getting quality service and advice.
I’ve done OK out of investment so far, but my past results will soon pale into insignificance compared to what I’ll achieve from here on by implementing a safe and conservative strategy of borrowing to the eyeballs to invest in the stock market.
 
Solly said:
More from: abc.net.au
Click to expand...

Hi Solly,

The reason, I believe, why Stewart Levitt went public on this was because ASIC was not going to take any action on this matter. This is just one more example of ASIC favoring the CBA above the other Banks involved. This follows ASIC's refusal to hold the CBA responsible for anything other than UMIS despite the fact that the CBA was the worst offender with regard to the additional charges that have been leveled against the Macquarie Bank and the BOQ.

The whole thing stinks!
 

Good Old Bunyip again . Thought you might go fishing over Easter? ( on this forum ).LOL
 
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