Storm Financial Group

[Julia]

Thank you, hodgie. Much appreciated reassurance. Even then, just six or seven months of theoretical stuff seems a bit inadequate but hopefully considerable training will be given before letting the newly 'qualified' loose on real clients.

How is it, though, that the organisation whose link I provided earlier claim someone can be RG146 compliant in just eight days?

 

[basilio]

And since you were one of the people who were caught by Storm Financial,

Bunyip.

Never said I was caught up in Storm. Never was and would never, ever have considered jumping in.
I would have thought the rest of my comments on Financial planners and the industry as a whole would have given some indication of my position.

I'll cut the chase. The superannuation industry represents the biggest swag of money in this country. It is teh cornerstone of finance investment, development and people's lives. It also represents the security of millions of people.

I believe these funds are not invested as well as they should be. I suggest that the driving forces of financial planners, commission salesman and spivs has allowed too many dodgy investments to be sold and ultimately fail. The winnersin this case are the salesmen and the crooks who develop the schemes. Chief amongst these schemes have been the agricultural programsm that have almost always fallen over and were generally a glorified tax dodge.

Secondly I believe the overall management of these funds is an excuse for rent seekers everywhere to gouge the clients - us. The practice of churning people in and out of funds, trailing commissions, commissions on entire funds all conspire to reduce the amount finally available to teh customer. This was the principal reason for industry funds to emerge as unionists realized their compulsory super was being hacked by the MLC's and AMPS of this world.

My belief is that it would be in Australia's interest as a nation and individual citizens interest to take action on both the investments and the management of these funds.

 

[Hodgie]

Thank you, hodgie. Much appreciated reassurance. Even then, just six or seven months of theoretical stuff seems a bit inadequate but hopefully considerable training will be given before letting the newly 'qualified' loose on real clients.

How is it, though, that the organisation whose link I provided earlier claim someone can be RG146 compliant in just eight days?

I said it took me 6-7 months, they give you 9-12 months. I had already studied finance and economics at universifty for 4 years so I spent minimal time studying. I only got the diploma because it was a work requirement to be RG146 compliant. But yeah I agree that even then it's not a whole lot of time being educated to be taking control of someones finances. The on the job training is far more important. Keep in mind that the average age of a financial planner in Australia is around 58, so its not like we are usually letting freshly educated students provide advice.

In response to the 8 day thing, im not familiar with the course offered by IBI because I used Kaplan so I cannot say for certain but they are all ASIC regulated courses so I would imagine that they would be much the same. The way I read it is that there are 8 workshops you have to show up to in person which would be amoungst completing all the other assessments and study. It's probaly just an optional choice of how the student wishes to complete the course, you can either do it in person or online. When I did mine it was all 100% online, I never saw or spoke to anyone from the learning institution so I don't know what goes on at those workshops.

 

[bunyip]

Bunyip.

Never said I was caught up in Storm. Never was and would never, ever have considered jumping in.

Well I'm pleased to hear that, Basilio – it must have been someone else I was thinking of.

I'll cut the chase. The superannuation industry represents the biggest swag of money in this country. It is teh cornerstone of finance investment, development and people's lives. It also represents the security of millions of people.

I believe these funds are not invested as well as they should be. I suggest that the driving forces of financial planners, commission salesman and spivs has allowed too many dodgy investments to be sold and ultimately fail. The winnersin this case are the salesmen and the crooks who develop the schemes. Chief amongst these schemes have been the agricultural programsm that have almost always fallen over and were generally a glorified tax dodge.

Secondly I believe the overall management of these funds is an excuse for rent seekers everywhere to gouge the clients - us.

I’m not disagreeing with your views that there are dodgy practices within the industry. I have never and will never argue against trying to make changes for the better.
But I will argue with the view that regulating the industry is all that’s needed to stop people getting ripped off or given inappropriate advice. There will still be investors who get caught if they believe they don’t need to think, don’t need to be cautious, don’t need to use a bit of judgment and common sense, that all they need to do is hand all the responsibility over to the professionals.

Basic literacy in financial and investment matters, and plain common sense, are just as important as rules and regulations when it comes to investing without tears.
Talking of common sense – I’ve seen the prospectus on a number of those agricultural investment schemes you mentioned, and for the life of me I can’t see why anyone would consider them a good investment. As with Storm, I believe modicum of common sense and clear thinking should have caused people to run a mile from those schemes.
If we take ostriches as an example – there wasn’t even a decent market or a reliable demand for ostrich products, and yet investors waded in and paid up to ninety thousand dollars for a breeding pair. That’s just crazy stuff, a good example of people not bothering to do some basic homework before jumping in.

 

[luutzu]

Well I'm pleased to hear that, Basilio – it must have been someone else I was thinking of.


I’m not disagreeing with your views that there are dodgy practices within the industry. I have never and will never argue against trying to make changes for the better.
But I will argue with the view that regulating the industry is all that’s needed to stop people getting ripped off or given inappropriate advice. There will still be investors who get caught if they believe they don’t need to think, don’t need to be cautious, don’t need to use a bit of judgment and common sense, that all they need to do is hand all the responsibility over to the professionals.

Basic literacy in financial and investment matters, and plain common sense, are just as important as rules and regulations when it comes to investing without tears.
Talking of common sense – I’ve seen the prospectus on a number of those agricultural investment schemes you mentioned, and for the life of me I can’t see why anyone would consider them a good investment. As with Storm, I believe modicum of common sense and clear thinking should have caused people to run a mile from those schemes.
If we take ostriches as an example – there wasn’t even a decent market or a reliable demand for ostrich products, and yet investors waded in and paid up to ninety thousand dollars for a breeding pair. That’s just crazy stuff, a good example of people not bothering to do some basic homework before jumping in.

I think the problem is that most people, understandably, assume the professional planners are actually professionals - they are regulated after all, there are Watchdogs etc. - so it's easy to assume that planners with no skill won't be licensed, or if dodgy, ASIC or the law will already lock them up.

Since we assume a professional knows what they're doing, who are we to question them... and if people do questions, it's a certainty the dodgy, smooth talking "pro" already have answers to all of the questions.

I mean, how many of us question a doctor's prescription?

If an investor could know enough about the risk (assuming it was told to them without sugar coating), know a lie or a blatantly false promise when they hear one, then the pro isn't doing their job and the investor won't be needing advice in the first place.

---

I think the Financial Planning Association should put across all its licensed planners certificate a warning: "We think this guy is OK, but that's only because he hasn't screwed anyone up and taken to court yet. Take advice at your own risk."

ASIC: We will only [try to ] go after bad eggs once they screwed enough people over. Else, we're only charging fees for licensing renewal.

 

[basilio]

Ok Bunyip we have a reasonable degree of agreement. I do agree that simply regulating the finance industry is not all that is required to stop people getting ripped off. Certainly people can be greedy or stupid.

But regulation in itself is useless if it isn't policed. From my perspective i have seen scores of obvious or dubious investments that are simply allowed to progress until they inevitably collapse taking millions of dollars in the process. It appears to me that perhaps the biggest legal entities in the country are also involved in many illegal practices or otherwise benefit from them. In that sense it is a real challenge for governments to attempt to stop the practices - even when they have clear notice.

A few examples.

1) In the 80's and 90's the insurance and superannuation industry was rife with unconscionable schemes that acted against the interests of customers. For example there were 10 year savings plans sold by insurance companies that had minimal payout for the first 3 years and only got into the black around year 8. If for any reason you stopped paying your premiums before Year 7 you effectively lost money. Insurance actuaries are very aware that for a range of reasons people have to stop paying premiums and banked on this.

2) Again in the 80's and later the relentless promotion of agricultural schemes by shonks and financial planners on commission was a bad joke. It led to really poor consequences in many farming areas, cost hundreds of millions in tax revenue and then, ultimately, led to thousands of investors losing their money. We still have hundreds of farms covered with inappropriate blue gum forests as a result of some of these schemes.

On a personal note in 2004 I came across a scheme called PIPS (People in Profit ). It was obviously a Ponzi scheme but what took my breath away was the creativity of the con and the way it had seduced some of my friends. It was very, very good..

I got a bit zealous and actively trawled the net for evidence to prove it's criminality. When I found it I put together a story and contacted ASIC and attempted to get them to take action on what was clearly a very effective scam.

Nothing happened.. The response was that "they couldn't do anything until it fell over" . PIPS did fall over in the end but it's collapse was as a result of private citizens taking action. The financial authorities took no action until it was over and then gave warnings - many months after they had been informed.

I had a simple question which was never answered. If ASIC is given information about a dubious investment/scheme why can't it contact the principals involved and check out the bone fides of the operation? Bit like an audit. Why do they have to wait until a very suspect or clearly criminal scheme collapses before they take action ? I have never had a sensible answer (and I did ask ..)

http://quatloos.com/people_in_profit_system_pips.htm
http://www.accountantforums.com/people-profit-system-pips-t129269.html

http://www.thinkfn.com/wikibolsa/PIPS_-_A_Modern_Day_Ponzi
(an excellent description of the PIPS scam before it collapsed)

 

[Hodgie]

If ASIC is given information about a dubious investment/scheme why can't it contact the principals involved and check out the bone fides of the operation? Bit like an audit. Why do they have to wait until a very suspect or clearly criminal scheme collapses before they take action ? I have never had a sensible answer (and I did ask ..)

The short answer to that is that they don't have enough funding and resources to investigate every tip they get about a scam. They will prioritose their investigations from warnings or tips they get from organisations within the industry itself, it is unlikely that a tipoff from the general public will be investigated thouroughly.

Think how many people from the general public would have complaints an issues with an organisation within the finance industry, if ASIC were to investigate every one of them they would get less accomplished than they currently do. Most of the complaints would simply be because an investor has lost money and the company has not even done anything illegal.

Also alot of the agribusiness schemes have been incentivised by the government, providing product rulings to give investors an added tax bonus. I'm not saying that those products were not managed poorly and that the only ones who benefited were the advisers getting commission im just saying that the government was essentially backing these products by enticing investors to get involved due to the tax releif they would get. For many of these products, every dollar invested is able to be claimed as a tax deduction due to the product ruling, in fact there are still some of these products around today. Those sort of things were not just happening in the 80s and 90s they are much more recent then that. The regulations set up are in fact doing the opposite of detering investors from going into these products where the planners are getting 10% commissions.

 

[basilio]

=Hodgie;830701]The short answer to that is that they don't have enough funding and resources to investigate every tip they get about a scam. They will prioritose their investigations from warnings or tips they get from organisations within the industry itself, it is unlikely that a tipoff from the general public will be investigated thouroughly.

I take your point ... maybe. I have to say that I offered my original tipoff on PIPS because it was such a convincing scam. I also took a lot of trouble to back up my observation with quite convincing facts. It was on a platter. Incidentally when that particular Ponzi scheme collapsed it was in fact one of the largest seen for many years.

There is a difference between a clearly obvious scam and a dodgy agricultural investment project. The first ones I suggest should be jumped on immediately. In that sense clearly named as scams and warnings given to all and sundry. ASIC declines to do this because of fear of being sued.

As far as the cost of this ? Frankly it wouldn't have to be a lot. Simply being prepared to name and shame scammers without having to laboriously investigate each one would be a start. This clearly happens now with 411 scams and romance scams.

I think you reinforced my comments on the nature of the agricultural schemes. As far as i can see most are just legitimized tax rorts which favour the wealthier sections of teh community -- who also happen to have a fair bit of pull with governments.

 

[Garpal Gumnut]

Hi All,

It's been along time between drinks!

Gumnut! It's not about educating financial advisers or would be investors. It's about putting in place a set of rules that financial advisers must follow. The penalties for not doing so must be severe enough to make them think twice before deceiving people. Of course, this is a pipe dream because the powers that be don't want to fix the problems in the financial sector Think about it for a moment. A whole new industry has grown up out of other people's misery. Lawyers, for instance, are having a field day because the abuse is growing rather than abating. Read THE AUSTRALIAN if you don’t believe me.

I am currently writing a book called, 'THEY PRACTISE TO DECEIVE' which is not so much about Storm Financial or us for that matter, but rather about what happened to us afterwards. The ‘aftermath’, so to speak!

In my book everyone gets a mention; Storm, the Banks, ASIC, the Judiciary, the lawyers, the Government, the Media etc. My book is aimed at the general public in Australia who need to be informed about the hidden dangers that exist in the financial sector, and the lack of protections that still exists today for the unwary.

We, the people that lost our money in Storm, will never get it back. So be it! However, if I can stop others from placing their trust in an industry that cannot be trusted, then the experience will have been worth it.

This Government and ASIC will never do anything about fixing the financial sector until people wake up to themselves and stop investing. I hope that my book will make them do just that.

What's that old saying, 'The truth will set you free!' Well it's time the people of Australia learnt about the weak-kneed approach this government and ASIC has to the wrongdoers. Band aid solutions to the problems that are inherent in the financial sector are not the answer.

Public perception is everything. For those in the financial sector, there's a STORM coming your way now. Let's see how you cope with it?

Every politician, media outlet, bank CEO, ASIC, social media platform, (this forum ) etc will be sent a copy.

Yes, this is 'payback' time. If I can cause the same misery to the financial sector, and the people that control this area, that they have caused to the people that placed their trust in Storm , I will die a happy man.

“Bitter and twisted? You betcha!” Since we invested using Storm, we have been lied to and deceived not only be Storm but by everyone else as well. If I had a sword, I would have dispatched a few of these miscreants long before now. Since I do not, a pen will have to suffice. I’m told it’s mightier than the sword anyway.

I would in no way agree with any of your conclusions or thoughts, Frank.

You may be able to raise a kerfuffle and get some vengeance for your losses, but I worry more about my children and grandchildren when they invest.

As Storm and the recent CBA and Macquarie scandals have illustrated, there is a dearth of intelligence and common sense amongst the Financial Advice sector. They are either too stupid or too driven by kickbacks to provide adequate advice to investors.

There are thousands more marks like you, Frank , out there to be plucked by unscrupulous Banks and Financial Advisers.

ASIC is a complete disgrace, driven by KPA's rather than justice, allowing criminal financial advisers and financial organisations to escape the legal consequences of their theft and collusion.

Our Government needs to hold a Royal Commission in to ASIC, the Banks and the Financial Advice industry to prosecute and jail those responsible for an unacceptable criminal erosion of wealth.

Beware of Financial Advisers in any form.

gg

 

[DeepState]

via Towers Watson

 

[Harleyquin]

when Storm collapsed i said then, that five years down the track we would see a spate of cancer, heart attack and stroke caused by this level of stress. i hoped it wouldnt happen to us but i was wrong. watching our loved ones pass away due to this disaster caused by this insideous industry has been horrific. i ve seen how this affected my beloved husband and watching him suffer healthwise until he died is something that i can never forgive storm asic and the banks for.

 

[Glen48]

when Storm collapsed i said then, that five years down the track we would see a spate of cancer, heart attack and stroke caused by this level of stress. i hoped it wouldnt happen to us but i was wrong. watching our loved ones pass away due to this disaster caused by this insideous industry has been horrific. i ve seen how this affected my beloved husband and watching him suffer healthwise until he died is something that i can never forgive storm asic and the banks for.

Sadly the Government has taken the side of big banks and water down the rules. So more heartache and drama to come.

 

[Defender]

when Storm collapsed i said then, that five years down the track we would see a spate of cancer, heart attack and stroke caused by this level of stress. i hoped it wouldnt happen to us but i was wrong. watching our loved ones pass away due to this disaster caused by this insideous industry has been horrific. i ve seen how this affected my beloved husband and watching him suffer healthwise until he died is something that i can never forgive storm asic and the banks for.

My condolences, Harleyquin. I'm very sorry to hear of your sadness.

 

[bunyip]

when Storm collapsed i said then, that five years down the track we would see a spate of cancer, heart attack and stroke caused by this level of stress. i hoped it wouldnt happen to us but i was wrong. watching our loved ones pass away due to this disaster caused by this insideous industry has been horrific. i ve seen how this affected my beloved husband and watching him suffer healthwise until he died is something that i can never forgive storm asic and the banks for.

Harleyquin

Losing someone close to you is always hard. I’m sorry to hear about your loss – but I’m not sure that it can be attributed to anyone or anything in particular.

My uncle recently died of cancer. My cousin in his fifties has had major heart surgery and more recently suffered a stroke. My wife and I have both had cancer. I have many friends who’ve succumbed to deadly illnesses.
None of the people mentioned above were Storm Financial clients.

 

[pilots]

My wife has survived cancer twice, we both looked at Storm, as we walked out of the flash office, the wife said to me our best investment would be for myself to get a job with Storm, it was going to cost us over $30,000 just to invest with them, HOW any one could invest with them tells me we have a lot of suckers out in the market place.

 

[Harleyquin]

I saw first hand what the stress did to my husband. I don't need anyone to tell me that it didn't affect him. He was never the same man after storm collapsed and we started hearing all the negativity. The old adage 'if it was too good to be true...' Was never mentioned by anyone prior to the crash, we certainly didn't think that 'it was too good to be true..,'. Yet this seems to be the first load od rubbish that has been thrown in our face. Why wasn't it considered to be too good to be true before 2009? If you sought financial advice you were told that you were doing something wise. We are not investors? We had no experience with investments of any kind so we considered that we were doing the right thing by seeking advice.

The ramifications of this financial disaster will be felt for a long time. My children know that storm/ banks were ultimately responsible for their dad's death, and he is one of so many.

 

[cynic]

I saw first hand what the stress did to my husband. I don't need anyone to tell me that it didn't affect him...

+1

I quite agree that any unduly stressful event (or circumstance) can certainly impact the healthy functioning of one's body (especially the immune system) leading to serious chronic and/or terminal diseases of the nature described.

Without wishing to sound callous, I hope you'll agree that the attribution of responsibility for the precipitation of said event is a separate matter.

You have my sincerest condolences for the loss of your spouse.

 

[Garpal Gumnut]

I still reckon there should have been a Royal Commission over Storm Financial.

Storm is the perfection of fancy suited Advisers , conning gullible citizens , in to losing money.

It is what they do.

They are up and running again in Townsville.

Gullible mugs, drive in to their cupolas, and their golden dunnies.

Avoid Financial Advisers at all costs.

gg

 

[doobsy]

I still reckon there should have been a Royal Commission over Storm Financial.

Storm is the perfection of fancy suited Advisers , conning gullible citizens , in to losing money.

It is what they do.

They are up and running again in Townsville.

Gullible mugs, drive in to their cupolas, and their golden dunnies.

Avoid Financial Advisers at all costs.

gg

Comments from the darkside since I have been quiet for a while.

GG lets rephrase what you said. What should be avoided is ANYONE be it financial adviser, stockbroker, realestate spruikers who tell you that they have a sure fire way to make above average returns with little or less risk because they are "in the know".

People get lucky, whether it be lotto, an RSL raffle, a penny mining stock that becomes the next BHP but they are not the norm. They are the stories salesman (not advisers) will tell you but they are not the norm.

You want to make money on shares here is the best advice I can give. Buy good quality companies that can grow the business and their earnings sustainably and hold them for a LONG time. It is that simple. If they can do it with little to no borrowings themselves even better.

True Financial Advisers are not in the business of making people rich. They are in the business of maximising what people get out of what they have. To prove a point I will give a synopsis of my last 2 new clients.

1. 67 yr old with good asset base, still working part time with some rental income as well. Because she got no advice she was not running a transitional pension from her super monies and therefore has been paying roughly $7,000 in tax every year that could have been avoided. Add to that the fact her super earnings could have been tax free also and the cost of no advice was closer to $10,000 pa.

She gets advice and for $1320 it is now set up correctly, she pays us $1650 pa to manage the whole shebang inclduing getting her the Comm Seniors Health Card and over the next few years assist with stopping work and making sure her cashflow is correct. We did a re-contribution as part of the set up and now her estate will pay around $22,000 less in tax when she passes away. If anyone says she is getting ripped off then good luck staying up to date with strategic and technical changes and doing it yourself.

2. Clients both in their 60s, one over pension age and both working part time. We re-structured the portfolios, moving monies between the super accounts and now they receive nearly the full age pension for the next 3 years while her super remains hidden from assessment. Cost to do so, $1,650 ongoing to help manage the ongoing situation. Benefit - roughly $450 / fortnight or $12,000 in extra Centrelink benefit meaning their asset base is well protected for as long as possible.

Again - no talk of how much we will make on their investments, no talk of how they will be millionaires one day. What we did was use strategy and our technical knowledge to improve their situation. We charge a fee for this and they get ongoing service to ensure the situation is maximised at all times.

I dunno, maybe I am wrong but I don't have a problem justifying my fees for the value I add.

If you could pay a doctor to monitor things on an ongoing basis and let you know what changes are needed rather than only seeing them in a reactive manner when something is wrong, wouldn't you expect your health to improve?

It all comes down to whether people are getting the service they are paying for.

The industry needs a massive shakeup to break the link between advice and product floggers in the institutions but true advisers do add value.

 

[Hodgie]

Comments from the darkside since I have been quiet for a while.

GG lets rephrase what you said. What should be avoided is ANYONE be it financial adviser, stockbroker, realestate spruikers who tell you that they have a sure fire way to make above average returns with little or less risk because they are "in the know".

People get lucky, whether it be lotto, an RSL raffle, a penny mining stock that becomes the next BHP but they are not the norm. They are the stories salesman (not advisers) will tell you but they are not the norm.

You want to make money on shares here is the best advice I can give. Buy good quality companies that can grow the business and their earnings sustainably and hold them for a LONG time. It is that simple. If they can do it with little to no borrowings themselves even better.

True Financial Advisers are not in the business of making people rich. They are in the business of maximising what people get out of what they have. To prove a point I will give a synopsis of my last 2 new clients.

1. 67 yr old with good asset base, still working part time with some rental income as well. Because she got no advice she was not running a transitional pension from her super monies and therefore has been paying roughly $7,000 in tax every year that could have been avoided. Add to that the fact her super earnings could have been tax free also and the cost of no advice was closer to $10,000 pa.

She gets advice and for $1320 it is now set up correctly, she pays us $1650 pa to manage the whole shebang inclduing getting her the Comm Seniors Health Card and over the next few years assist with stopping work and making sure her cashflow is correct. We did a re-contribution as part of the set up and now her estate will pay around $22,000 less in tax when she passes away. If anyone says she is getting ripped off then good luck staying up to date with strategic and technical changes and doing it yourself.

2. Clients both in their 60s, one over pension age and both working part time. We re-structured the portfolios, moving monies between the super accounts and now they receive nearly the full age pension for the next 3 years while her super remains hidden from assessment. Cost to do so, $1,650 ongoing to help manage the ongoing situation. Benefit - roughly $450 / fortnight or $12,000 in extra Centrelink benefit meaning their asset base is well protected for as long as possible.

Again - no talk of how much we will make on their investments, no talk of how they will be millionaires one day. What we did was use strategy and our technical knowledge to improve their situation. We charge a fee for this and they get ongoing service to ensure the situation is maximised at all times.

I dunno, maybe I am wrong but I don't have a problem justifying my fees for the value I add.

If you could pay a doctor to monitor things on an ongoing basis and let you know what changes are needed rather than only seeing them in a reactive manner when something is wrong, wouldn't you expect your health to improve?

It all comes down to whether people are getting the service they are paying for.

The industry needs a massive shakeup to break the link between advice and product floggers in the institutions but true advisers do add value.

Could not agree more. There is a massive difference between good financial planners and planners out there who will say or do anything to get you to invest as much money as possible into a certain product paying good commissions.

A financial planner is not supposed to be like a fund manager who promises above average returns. They should be putting a sound strategy in place based on current laws which will help the client maximise what they have for the amount of risk that client is willing to take. It should be more about the strategy than the products.

The people working for Storm may have had the title of financial planner but they were not. They were simply salesmen flogging off their products. To tarnish everyone working in that industry with the same brush is just not fair.

There are alot of people out there who have absolutely no idea what they are doing with their finances and need assistance. It's just unfortunate that there are people out there who take advantage of this.

The other thing is that you only hear about all the bad stuff, you are not going to hear in the media about all the financial planners out there who have greatly improved their clients retirement and set them up with a comfortable plan where they can sleep easy at night with no worries, but you will always hear about when things go wrong.