Sorry about this article but i have to express my disgust at an article I’ve just read on a former Storm Financial adviser in today’s Sydney Morning Herald…I reluctantly place the link here but I don’t want to give any more publicity to this adviser. Overall the article, by Stuart Washington, is quite fair and appropriately cynical in parts but nevertheless I’d rather it wasn’t written at all.
As the article demonstrates, the one-trick pony that Storm Financial influenced their clients with was a double gearing strategy whereby clients, would borrow against their home and then use these funds to further gear with a margin loan into sharemarket investments. Storm apparently charged fees that would typically amount to around 7% of the invested amount…i.e. appallingly very high. This strategy made millions of dollars for Storm and lost $3billion of investor funds over 2008/09. On this system the financial adviser is of the opinion (in her book) that, “Academically, it was the perfect wealth system – use someone else’s money to make money, buy low and sell high”
On this, I just have a few comments to make…
- This adviser clearly has no idea what academics think of this ticking time bomb strategy…there’s nothing academically rigorous about it
- Clearly, this adviser has no understanding of the volatility and return history of sharemarkets
- It was only the perfect wealth system for the financial advisers who collected disgustingly high fees for this massively risky strategy
- Avoid any adviser who flippantly uses the term, “buy low, sell high
I’m disappointed that somehow this ignorance hasn’t stopped this financial adviser gaining publicity by appearing on various television shows including, Sunrise (Kochie should know better), The Circle, and The Project (usually the best current affairs show and run by comedians…go figure).
Finally, I cannot believe that her current passion is Financial Literacy and “lifting the sorry state of financial education in this country”…given the earlier quoted statement on the Storm system, this financial adviser should start educating herself and do this industry a favour and consider an exit…Yep, I am Fureyous that many of the best financial planners are not given the publicity that this person has undeservedly received.
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