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Storm Financial Planners braving an IPO

Discussion in 'Shares' started by Cherry Pro, 7th Nov, 2007.

  1. Cherry Pro

    Cherry Pro Active Member

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    Storm Financial | The Australian


    This interested me ! Any good stories out there on Storm ?
    I met with one of their financial planners about a year ago but decided not to go with their managed funds.

    Thanks.
     
  2. Liverpool St

    Liverpool St Well-Known Member

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    The Storm

    Cherry Pro,

    I bet you are glad about that!!!!!!!
     
  3. AsxBroker

    AsxBroker Well-Known Member

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  4. Cherry Pro

    Cherry Pro Active Member

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    Storm's demise

    Thanks for sharing Liverpool St and Dan. Am I glad that I steered clear of them !!

    Really sorry about all their investors who are obviously bleeding.

    At least with property, even if you were leveraged and if you bought overpriced at peak of market but can continue to hold for a good 8 - 10 years, it will even out.

    With shares, with this current tumbling of the ASX you can be decimated
    in the short term ..

    Amelia
     
  5. AsxBroker

    AsxBroker Well-Known Member

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  6. C3PO

    C3PO Well-Known Member

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    There was an interesting story about the Storm situation on the 7.30 report on ABC1 tonight.

    Here's a link:
    The 7.30 Report - ABC

    One point mentioned is that Storm has in recent years bought out a lot of financial planners down the coast.

    This raises an interesting ethical issue for planners who sell their business on to expanding corporates.

    To what extent does a planner who sells his business have an obligation to the client to give an opinion as to the quality/ethics of the operator who takes over the business?

    In this case, it seems that the Storm business plan of gearing clients up to 70%/30% would have been well known within the industry --- so how does a financial adviser in good conscience sell his customer's business over to such an operator.....?

    Personally I think that any planner who has sold their client on to Storm without warning them of the risks inherent in Storm's method of operating should be hanging their head in shame.
     
  7. AsxBroker

    AsxBroker Well-Known Member

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    Hi C3PO,

    Very interesting question, the new licensee takes on all the responsibility. I've heard cases were a buying licensee gets caught up in the advice that the selling licensee gave and the buying licensee is liable! Personally I think that buying books of clients from a business you don't know can be risky as you don't know the quality of their advice.

    What is a 60 year old doing gearing?

    70% gearing is very aggressive, whenever I speak to margin lending most of them say that financial planners generally gear 50% and stockbrokers to the maximum LVR.

    I think most planners who sold their businesses may have retired and if they were the only company buying the clients what else could they do?

    Cheers,

    Dan

    PS This is general information, before making a financial decision speak to your FPA registered Financial Planner.
     
  8. Liverpool St

    Liverpool St Well-Known Member

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    Excuse me. There are a lot of 60+ year old investors out there with a high income, not to mention baby boomer couples that intend to keep working. The trouble with the 60 year old Storm investor was that he was in receipt of a non taxable TPI Veterans Affairs pension of approx $1600 per fortnight. He was ineligible to work longer than 8 hours per week, so he had no income to offset against the loss and no investments other than his PPOR (or now ex-PPOR) which he borrowed against. A sad case


    Bob
     
  9. carlosreynolds

    carlosreynolds Active Member

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    Actually, his income when he began with Storm was made up of:

    $800 per fortnight TPI Pension (not means tested)
    $300 per fortnight Service Pension (assets/income tested)

    The advice from Storm actually made him ineligible to receive the Service pension.

    Also, the planners who sold their practices to Storm, sold them for scrip in what was to be the listed company. Generally, they stayed on and sold the Storm model to their existing clients - stormified them.

    No prizes for guessing what happens when you sell an asset, but don't receive any consideration for the business .....
     
  10. C3PO

    C3PO Well-Known Member

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    So when an adviser sells his business on to a company like Storm his ethical obligation to his pre-existing client base is part of the deal?

    ... and these people are giving other people financial advice??
     
    Last edited by a moderator: 19th Dec, 2008
  11. AsxBroker

    AsxBroker Well-Known Member

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    Hi Bob,

    My point is that a ttr is much safer than gearing. In general, anyone who is working age 60 or more should be doing a ttr. If someone is gearing and there are no taxation benefits, they are trying purely get a better return on the asset they've invested in over the interest rate which they are paying for the loan.

    Cheers,

    Dan

    PS This is general information, before making an investment decision speak to your FPA registered Financial Planner.
     
  12. C3PO

    C3PO Well-Known Member

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    At the very minimum issue a Statement of Advice informing the client that their business has been sold on, and advising/warning the client that the financial planner to whom their business has been sold may not have the same approach to risk management as the vendor advisor. At the very least, a quiet word in the client's ear.

    Otherwise what's the point of financially planning for someone if you are going to throw them to the sharks once you're out of the business?
     
  13. ActiveTrade

    ActiveTrade Well-Known Member

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    No doubt the SOA were water tight ... assume legal options would be limited to these investors ?
     
  14. AsxBroker

    AsxBroker Well-Known Member

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    It would be very interesting to read an SoA and see what their "reasonable basis" of advice was and whether this would stand up in court.

    I think a previous post referred to a group action?

    Time will tell.

    Cheers,

    Dan
     
  15. carlosreynolds

    carlosreynolds Active Member

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  16. AsxBroker

    AsxBroker Well-Known Member

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    Storm Swept Into Administration

    Storm Financial placed in voluntary administration

     
  17. AsxBroker

    AsxBroker Well-Known Member

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    Legal Storm Brewing

    Legal Storm brewing

     
  18. AsxBroker

    AsxBroker Well-Known Member

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    Storm Financial fires all staff

    Storm Financial fires all staff