Storm Financial Group

[Mofra]

My take on the Storm model runs like this using a LVR of 80% (and I invite correction):

Nice run-down squark, but I'd have to make one further correction.

They would also receive upfront & trail on any life insurance products they would invariably recommend too, in addition to the investment advice - most upfronts are over 100% for the year one fee for the lump sum insurances and very handy on IP as well.

 

[swazee]

Alison Maynard from the Financial Ombudsman Service (FOS) has called the FPA to advise that there will be a Community Meeting in Townsville on Monday 23rd February to discuss Storm, and the recent floods. FOS will have all of its divisions represented, so this would be a good opportunity for clients to get more information – whether it’s about Storm’s financial advice, the banks’ lending practices and issues, or indeed about any flood claims they may have.
The Investors Action Group will also hold meetings later in the week in Rockhampton, Mackay and Cairns, and FOS will send representatives there.
Details will be on the FOS website: www.fos.org.au

FOS has also confirmed that Storm is still a member of FICS which still exists, and therefore clients can lodge complaints to FICS, through Worralls. The reason Worralls are involved is because clients are required to demonstrate that they have been through the internal dispute mechanism first, and as the voluntary administrator, Worralls provides this first step. They can also possibly assist with documentation.

 

[-Bevo-]

This article was in todays Townsville Bully.

http://www.townsvillebulletin.com.au/article/2009/02/16/39211_hpnews.html

Doesn't look good for the Cassimatises, 2 million dividend was part payment for 2007 public float.
However, the float was not supported by institutional investors and did not proceed.
According to the statement of Storm's other former chief financial officer Mark Barrett, when he asked Ms Davies (joint chief financial officer) how the company could pay the $2 million out of the $10 million dividend when the float did not proceed, she is said to have replied: `I don't know'.
The Cassimatises have denied `anything untoward' about the payment and accused the receivers of providing incorrect information to the court and being involved in improper conduct.

Banks, Black swans, receivers, ASIC it will all be there fault if poor EC goes to jail, at least there he'll have a roof over his head unlike some investors.

 

[Cosgrove Fenton]

Ian Turpey was flogging some sex improvement product turned out he didn't have a problem, I signed up on his say so then realise I was single and didn't have a girl friend and that was the problem.

Hang in there Glen48! Does it have a used by date?

 

[Cosgrove Fenton]

There is story by Mitch Gaynor in today's Sunday Mail that reports that former Redcliffe Storm Financial Adviser Ron Jelich "is ready to cop the consequences if found guilty of leading clients to financial devastation".
He states he is ready to sit in a court room, Senate inquiry, Royal Commission.

The story also reports that "Mr Jelich claims Mr Cassimatis has yet to fully answer several key twists to the sudden collapse of his company", also the article states the Mr Jelich had a breakdown over Xmas and spent time in hospital.

If you can get your hands on a copy of the Sunday Mail, the article is quite an interesting read.....

Of course Jelich is ready to cop the consquences if found guilty - search reveals he does not hold one stick of accreditation and is not listed as a proper authority holder for Storm, who signed the statment of advice? And why does he say Symonds Buchanan and Gibbs are his clients. What are ASIC doing to stop this sort of behaviour? I'm sure Roy would love to take him fishing if Greg
Norman doesn't want to play Golf with Ron...check out his website ronjelich.com

 

[Solly]

Of course Jelich is ready to cop the consquences if found guilty - search reveals he does not hold one stick of accreditation and is not listed as a proper authority holder for Storm, who signed the statment of advice? And why does he say Symonds Buchanan and Gibbs are his clients. What are ASIC doing to stop this sort of behaviour? I'm sure Roy would love to take him fishing if Greg
Norman doesn't want to play Golf with Ron...check out his website ronjelich.com

Thanks for that info, I believe that Messers, Webb, Jones' & O'Brien from Redcliffe all held either Certificates and/or Diplomas in Fin Planning.

Thanks for the link to the website, it states that Mr Jelich is:
"regional managing director of Storm Financial and also Storm's National Development Manager." To me these appear to be Managerial positions and not an Advisery postion. Yes, it would be interesting to know who signed the SoA.

 

[swazee]

Of course Jelich is ready to cop the consquences if found guilty - search reveals he does not hold one stick of accreditation and is not listed as a proper authority holder for Storm, who signed the statment of advice? And why does he say Symonds Buchanan and Gibbs are his clients. What are ASIC doing to stop this sort of behaviour? I'm sure Roy would love to take him fishing if Greg
Norman doesn't want to play Golf with Ron...check out his website ronjelich.com

He has had a long career in Financial Planning, and currently is a regional managing director of Storm Financial and also Storm's National Development Manager.

In these roles, he may not need to be authorised if he is not 'advising' clients. He may bring them into the business, but a sales rep does not need to be licensed!!

 

[sqwark7600]

On review of the last 400 or so posts I see many opinions about the outcome of a class action, funding, the amount of time it takes and the availability of money and assets for recovery. Yes it is not an easy path and does drag on but in parallel that shouldn’t stop you getting on with your life (if it would then don’t proceed as health precedes wealth). No win no fee is I understand the basis for class action specialists Slater and Gordon’s involvement at a 30% trail on settlement; for an insight into the utility of litigation funding; try

http://www.imf.com.au/cases.asp?ID=9&showlist=2

I would caution against making any assumptions about the outcome of legal action. There are numerous examples of the tricks that sleaze use to illegally siphon off money and assets as provision against their day of reckoning and also of illegal dealings and collusion that occurs between and amongst our large corporations. This action is a prime example; try

http://www.mauriceblackburn.com.au/news/press_releases_and_announcements/archive/qantas%20pleads%20guilty%20to%20price%20fixing%20.asp

I consider that our corporation’s law is very well developed and worth using.
Also, I understand a major step before launching an action is called discovery. It is carried out by both parties. Corporations law requires detailed records be kept for up to 10 years by companies such as Storm, CBA et al. and discovery should make those documents available to your legal team.
If I were a Storm client I would join the class action and wait at least until Slater and Gordon make their decision as to whether they proceed or not and at least through to discovery before writing off a class action on an assumption. Ignore the background noise and emotion of the present as it will not take long for reality to crystallise. In regard to strategy this is an excellent media story and throw in the floods and the mining layoffs (with sincere respect for all those poor souls involved including the fire victims) the reality is that it will give you much needed free coverage for your case esp. once the bushfire hype settles.
Imho I see the Storm operation as a backcountry scam based on a very old model, lead by an unsophisticated team all of whom believed their own advertising. Corollary: If they had no risk model, no exit strategy, minimal professional liability or management malpractice insurance and allegedly were taking money from the company illegally you would hardly expect that there was any probability they have even a straw of a defence case especially when their disillusioned team starts to spill the beans for fear of complicity indictments.
By the way the directors of the IMF case above spent 3 years in the slammer.
:sheep:

 

[pilots]

Will all the sales people that made big bucks have to pay any of it back, I did ask what the commission on a 1.8 Mil sale was but no answer.

 

[sqwark7600]

With respect the latest update-Some practical suggestions gleaned from many great posts by contributors to this site.

Step #1 Wind up all margin lending accounts, especially if your interest payment rate is greater than your interest accrual rate. If you have trouble with your bank use the services on the Banking and Financial Ombudsman Service~FOS. Their site is at:
http://www.fos.org.au/centric/home_page.jsp
Step #1a. Apply to have the loan set aside if you are of the opinion that your bank demonstrated inconsistencies in their actions. See Steve Borden’s post # 1048 and swazee’s post # 1102. Great contributions.

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

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

Step #4 If Step #2 results in an outcome you can live with I would liquidate everything that you can live without. I’d think of transferring any non-liquid investments eg. property syndicates or locked mutual funds into your super.
Step #5 Make your holistic health your number one priority. If your loved-one goes quiet or demonstrates a personality change, watch them like a hawk. Suicide is a real danger; stress is carcinogenic. There are plethora of free counselling services available.

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

Step #7 Identify and activate new potential income sources.

Step #8 If your house is under threat get a relative to buy you out at a reasonable price and rent from them, with the option to buy back in.

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

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

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

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

At each step seek advice as there are a multitude of organizations and agencies waiting to provide gratis help.
Can anyone add or insert a step or two. If you are a specialist please contribute and give some guidance or direction on your Step specialisation. I’ll edit as necessary.
:sheep:

 

[Steve Borden]

Will all the sales people that made big bucks have to pay any of it back, I did ask what the commission on a 1.8 Mil sale was but no answer.

Difficult to see how the salespeople/advisers would or could be made to pay the monies back, about the only monetary penalty would be fines from ASIC and they wouldn't go back to the investor. That also assumes they have any of it left.

The commission on a $1.8m margin would actually be based on the investment, which could have been in the order of $3m. It is unlikely that this was invested all in one go and there is growth, etc so it makes it hard to judge.

That said, a $3m investment would have incurred fees of around $200k, which the employee representative would receive 10% (in addition to the salary) and the 'holiday contribution' of from memory 0.07%. This latter component was to assist with payment of the adviser's expenses for the trip to South Africa (and perhaps the previous ones). The more you sold the less you needed to put in from your own resources, flog enough product and you and the family get a free trip.

 

[awg]

Carey or anyone else involved in this mess, is there any talk or evidence that perhaps the bank staff were getting some sort of kick back for approving these loans?

I've no idea if this is plausible but I'm just asking as this does go on in other industries and it just seems strange to me that the banks were so lax in the approval of these loans.

Good point

The retail staff at most banks have a "financial products sales target to achieve"

Their Union complains about this from time to time.

Not sure whether they get a bonus, or just cop the ar$e if they dont make quota.

I would consider it even more likely that the staff involved in that area (margin lending), would have "targets" in their KPIs, which may result in reduced vigilance by loan approval staff

 

[greebly24]

As a novice investor with a tiny portfolio, I was just wondering if an upfront fee of 7%, as Storm apparently charged, is reasonable? Seems like an unreasonable amount to me.

Just wondering because someone wrote how they lost $4M. Does that mean they paid an upfront fee of $280,000? Someone else lost $12M. Did they really actually happily pay $840,000 upfront to be "stormified".

Can a conspicuous display of wealth and a slick pitch really be that effective?

And in regards to the arguments about people being greedy as opposed to people simply wanting a comfortable retirement and maybe something for the grandkids, if you got $4M then give $280,000 to the grandkids and put the rest in something nice and safe and live happily ever after.

But an old quote I like is when a journalist asked Howard Hughes, then the richest man in the world (by a long shot), how much money does a man really need?

The answer, "Just a little bit more!"

 

[stung]

ASIC are sending two representatives around to my house tomorrow to talk with me about my experiences with Storm.

 

[GumbyLearner]

ASIC are sending two representatives around to my house tomorrow to talk with me about my experiences with Storm.

Make sure you have some prepared well-thought out questons for THEM too!

 

[sqwark7600]

ASIC are sending two representatives around to my house tomorrow to talk with me about my experiences with Storm.

Don't expect too much; remember they are public servants, don't work on commission, are not on an incentive bonus, don't have malpractice insurance, are well paid and their super is guaranteed by the Australian taxpayer.
I agree with GumbyL but giv'em both barrels!
Good luck.
PS. Have a trustworthy non-relative witness with you (they always do for good reason) and make sure you take full diary notes.
:sheep:

 

[swazee]

As a novice investor with a tiny portfolio, I was just wondering if an upfront fee of 7%, as Storm apparently charged, is reasonable? Seems like an unreasonable amount to me.

Just wondering because someone wrote how they lost $4M. Does that mean they paid an upfront fee of $280,000? Someone else lost $12M. Did they really actually happily pay $840,000 upfront to be "stormified".

Can a conspicuous display of wealth and a slick pitch really be that effective?

And in regards to the arguments about people being greedy as opposed to people simply wanting a comfortable retirement and maybe something for the grandkids, if you got $4M then give $280,000 to the grandkids and put the rest in something nice and safe and live happily ever after.

But an old quote I like is when a journalist asked Howard Hughes, then the richest man in the world (by a long shot), how much money does a man really need?

The answer, "Just a little bit more!"

Greebly, you are 100% correct. 7% is daylight robbery and when you consider the funds went into an Index funds (whch requires only passive management) then the fees are ridiculous. That is why Storm had to manufactor their own in-house products because there would not be one Index fund in Australia or the World for that matter, that would allow such high fees to be charged.

I remember that when I did my MBA Marketing subject, they talked about comparing a $10 cup of coffee that you might purchase from a boutique coffee shop vs a $3 cup bought from McDonalds. Why would someone opt for the $10...it could be the taste, but the underlying reasons are generally to do with status and that somehow drinking the $10 version elevates you into a different class. IMHO that it what happened to Storm Clients. They saw the flashy premises, full time chef, italian designer bathroom and thought, well he must be successful and I want in on the action. I can never understand why they did not link the high fees they were being charged and how he was able to afford his high standard of living.

If he was so sucessful at investing, why would he need clients. Thats right, he was there to help the average mum and dad.....the philanthropist in full stride, sharing his abundant knowledge...all for the small price of modest up-front fee and a little off the top every year.

I wish all the Storm clients the very best in whatever action you take. I have met a few Storm clients and they have taken the decision to move on....whilst keeping a foot in the class action /FOS door.

I think the Sqwarks? post is good advice.......

 

[swazee]

Don't expect too much; remember they are public servants, don't work on commission, are not on an incentive bonus, don't have malpractice insurance, are well paid and their super is guaranteed by the Australian taxpayer.
I agree with GumbyL but giv'em both barrels!
Good luck.
PS. Have a trustworthy non-relative witness with you (they always do for good reason) and make sure you take full diary notes.
:sheep:

Good advice. Also make sure you write out a chronological time line and if you have any written documents such as emails, letters from Storm, notes from your phone calls etc...this will be very helpful.

If they provided you with verbal advice only, try your best to remember what was said (or the context of same) because ASIC will be looking for a 'pattern' of behaviour across all Storm clients and this can be used as evidence if all 300 clients say the same thing. (i.e where there is smoke there is fire)

I know most clients could not get their funds out of Storm and I doubt Storm would of ever put this advice in writing, which legally they must do. I also doubt that the individual adviser kept reasonable file notes in these instances.

There are 2 things ASIC will be looking for:

1. Did Storm take enough due dilegence to 'understand your situation', your goals, objectives, time frame and most importantly your risk rolerance.

2. Was the subsequent advice provided by Storm 'reasonable based' on 1.

I still think that the maximum that can be claimed through FOS is approx. $150,000, however ASIC can send Emannual and Jules to jail if the breaches are under the Corp. Act are serious enough or they may be banned for a few years or perhaps permanently from acting as directors.

 

[sqwark7600]

There are 2 things ASIC will be looking for:

1. Did Storm take enough due dilegence to 'understand your situation', your goals, objectives, time frame and most importantly your risk rolerance.

2. Was the subsequent advice provided by Storm 'reasonable based' on 1.

Spot on swazee!
:sheep:

 

[Anastasia]

And in regards to the arguments about people being greedy as opposed to people simply wanting a comfortable retirement and maybe something for the grandkids, if you got $4M then give $280,000 to the grandkids and put the rest in something nice and safe and live happily ever after.

Quite often when someone states a $4 million dollar portfolio, you don't hear the other half of the story.....the value of the loans. We had a $1.4M portfolio but this was funded with a $800K margin loan and a $550K home loan.....so not really that much to give to the grandkids, and retire on happily. And I believe this is the pattern for many Storm investors.