There's been a bit of talk about the psychology of going with storm so I thought I'd explain how I found myself with them...
I first went to storm and did the education seminars around the time of semptember 11. I was actually in there a day or two after and can remember them running around madly organising clients to throw their money into the market. I then moved away, bought a second house (did really well!).
Had always written them off as too higher fees etc. Was always going to invest directly myself through a direct investment firm like neville ward or commsec direct and save myself commissions. I moved back to townsville in 2006 and only owed $55k on my $450K home at the age of 32. I had a bit of opportunity cost guilt at the rampant gains of the sharemarket over the last few years, and felt quite negative about my super situation as I had been in the military and had a preserved benifit that was locked away and I had to start my private sector super from scratch. I also had relations invested with DalleCourt (same sort of strategy, although perhaps not as aggressive) who had done well.
Coming from Townsville I of course knew people who were with them but had also heard friend of a freind bad reports. These were always vague and I pushed them aside as the usual fear when it comes to this sort of thing. Storm kept creeping back into my consciousness. I went to sydney and noticed that they had spread down there (logo on some big highrise in the city). A cabdriver in cairns waxing lyrical about how good they were, a youngish fellow on a fishing trip retired and living the good life etc.
Eventually I went back and decided that if I was going to gear then I wasn't going to do it alone as I had neither the time nor the stomach for it. I had heard that storm was the biggest single customer of commonwealth margin lending in australia and that they didn't even deal exclusivley with them. I took faith in this and that they had been around in townsville for quite a long time, and they had made a lot of people wealthy. The fact is in townsville a lot of people with money were with them and it gave them some sort of implied credability.
Also 7 percent up front didn't seem quite so bad when you were geared and could easilly hop over the fee step in a rising market (showed us graphs of other investors results) compared with the 4 percent a bank adviser wanted for parrot regurgitating what fund their investment arm said was a buy.
Anyway I can't kick myself forever over one bad decision. I consider myself fortunate in that I am still young, have a higher than average income, can still invest some money into the sharemarket and will be able to rebuild. I had to shut everything down myself (storm wanted me to stick around geared at over 90 percent). I certainly would have stop loss coverted to cash beforehand if I had known of my situation, but had placed my faith in them as I had paid lots of money for them to be my guide, and trusted that they had dealt with situation like this before. If I was a retiree then I would certainly look at bankruptcy. There are worse things. For all those who quote greed etc - I dont beleive I am greedy. The oldies I see in the waiting rooms there are not flashy or extravagent for the most part. They just saw a (formerly) successfull firm and thought they were doing the best thing for themselves.
Imagine now owing a huge sum before you are back to having nothing. Renting, paying off a margin loan with no asset before you can then save to buy a house. Now imagine if your'e 60. For storm to quote retiree's positions as selling their houses and living in caravan's as "not that bad" or blaming the market is just plain wrong. To be a storm client they made you fill out a risk profile and would only take you if you fell into the low risk category! Marriages will be broken not just now, but in decades to come as financial hardship eats away at peoples happiness.
I hope the advisers have trouble sleeping, not for peolpe like me, but the retirees.