westpoint and financial Planners

[Macca]

I think I am a bit with Nigel on this. There are a LOT of naive people out there as well as those who quite simply can't understand financial stuff.

If you are aware that you "aren"t very good at this sort of stuff" you look for someone who is qualified in the field for advice. I do the same with tradesmen, I am a hopeless handyman, so I get someone in who supposedly, is better at it than me.

They have read in the paper or have heard Paul Clitheroe or Koch say use a financial advisor, so off they go to a financial adviser and he/she puts them into something like this.

If the clients are retired or approaching retirement age then IMO it is very wrong to put a large percentage of their money into Mezzanine finance.

If they were young and looking for a high reward/risk investment fair enough, but there is no way people over 45 should be borrowing to invest in this I don't think.

But if that is what your government registered, professional financial adviser recommends then it would be hard NOT to take their advice wouldn't it? after all, you went there to get advice, why ignore it?

 

[see_change]

I think that some of you are missing the point. I am not talking about serious investors like many of the people on this forum. I am talking about the average person who may believe because of the information put out by ASIC that financial planners are the only people who can offer advice. Therefore for many people who go to a planner and they were then advised to invest in Westpoint because there money was safe they did so. Of course they should have done there own research. As a property researcher I find fee people research anything before theyu acquire property.

I agree with you nigel. Financial planners are being promoted as the people to give advice about financial investments, when as in this case, it would appear that many were giving advise that may not have been in their clients best interest.

I think ASIC are as much to blame in this situation by promoting their use, when obviously the standards / education of FP's isn't what it should be .

Obvioulsy for an individual's point of view the better educated they are about investing , the better, but the reality is that most people are ignorant about investing and will remain so . So if a group is being promoted as the answer to assist people who are in this situation , it should be insured that they know what they are doing , and if it turns out that they took a course of action that was in their own financial interest , rather than the best interest of their clients , then they should have all appropriate ( including criminal ) sanctions , taken against them. ( and not just against their inusrance companies ..)

See Change

 

[Dis]

In my field (medical) there is a concept of informed consent. The patient is informed about the condition, and the pros and cons of the treatment options are discussed. The patient is then allowed to make a decision as to what they want. Obviously how much information is provided varies with the type of treatment.

As a professional, its impossible to realistically inform clients (patients) of every single pro / con and the reasons behind every single decision. Its also not something most people want to know about. They do want to know about serious consequences and common risks (eg some people get stomach upset with this drug).

Financial planners should have similar obligations in their field. They can't know the business structure of every company they advocate. They should however be able to say you are investing in Mez Finance. You are getting a high rate but the risks are these. In a worst case scenario these would be the consequences.

If they are saying 'your money is safe' and nothing more, that is IMHO insufficinent. The hard thing is, that clients will often say that they weren't told of the risks if disaster happens. Interesting to know what they were really told.

 

[Ausprop]

I am sure some compulsory disclosures and new rules can be brought in.

 

[Ricardo29]

FSR was just that ausprop.
doesnt benefit the public one iota.

 

[FatBoy]

My old man left school at 14, busted his arse to raise 5 kids and set himself up for retirement. A "financial planner" sunk her teeth into him and as a result his retirement fund is now effectively zero...

His mate that advised him of the great returns was also stung for a huge amount of money but unlike my Dad he has substantial property investments to fall back on...

I tried to warn the old man about it but he was assured by this "financial planner" that his money was guaranteed. The real killer is that Dad's money had matured and he wanted to pull his money out just before they crashed to buy a cheap property in Brisbane. They convinced him that the project was "nearly" finished and they'd give him bonus interest of another 2% if he stayed in with them for another 6 months...

It was like watching a car crash and not being able to stop it...

My poor old man is losing sleep and feels ashamed and foolish that someone like him who owned a successful business could be ripped off by these clowns and lose everything... I pray every night that the stress doesn't kill him.

I seriously hope i never run into this "financial planner" or any Westpoint executives in the street...

 

[Ausprop]

my greatest sympathy fatboy - it would be a dreadful feeling and I am sure the shame must hurt as much as the financial loss. Out of interest has he contacted the planner for an explanation? did the planner conduct the necessary risk assessments?

Ricardo - my comments were tongue in cheek!

 

[alexlee]

Yes, Fatboy, my greatest sympathies indeed. This does show, though, that even people who have business experience fall for slick sales pitches too. I just went to a presentation in London last week were they were flogging off the plan units in Melbourne. I could see the gaps where they were deliberately telling the rosy side, but that's because I've read all the stuff about two-tier marketing, etc. (Personally, I don't think these guys were 2-tier marketers, but they certainly weren't telling the whole story). If I was just some normal guy I would have been much more likely to believe them.
Alex

 

[geoffw]

Legal blitz on financial planners

Australia-wide legal action will be launched against failed property group Westpoint Corporation and more than 75 financial planners.

National law firm Slater & Gordon today announced it would pursue hundreds of millions of dollars lost by investors in the mezzanine financing schemes associated with the failed company.

Slater & Gordon spokeswoman Joanne Rees said the firm had been approached by investors in all states and territories.

"We expect to begin litigation shortly against more than 75 financial planners on behalf of some 2,000 Westpoint investors," Ms Rees said in a statement.

She said the average client lost $100,000 in the failure of Westpoint, including recent retirees, elderly investors and couples with self-managed superannuation schemes.

The Federal Court this month ordered Westpoint be wound up and appointed Perth accountancy firm PPB as liquidators.

 

[FatBoy]

my greatest sympathy fatboy - it would be a dreadful feeling and I am sure the shame must hurt as much as the financial loss.

Thanks mate, he is devastated. He won't even talk about it, and feels as though he had jeopardised (sp ?) his and Mum's future by losing their life savings... I have serious concerns about him, he is an "old school" kind of person and the shame is really hurting him...

Out of interest has he contacted the planner for an explanation? did the planner conduct the necessary risk assessments?

It is believed she has fled overseas. Enough said...

 

[thefirstbruce]

I cannot imagine anything that would destroy a man more than losing his life's savings near or in retirement.

I watched a farmer die over 24 hrs, after selling his farm, investing the proceeds in a scam, losing it all, then drinking a litre of Paraquat. His family were left with nothing.

He presented to the hospital, after a rethink, complaining that he splashed some in his face when he tripped carrying a bucket of it. As I was doing lung function tests, he admitted to me that he had drunk a litre after losing the farm. I watched him go from being alert and functional when he was brought into ICU, through much pain, and eventually into a coma associated with [SIZE=-1]Multisystem Organ Failure, then death.

Even though this farmer had no one else to blame, I don't have much time for money hungry scum bags who deliberately put OPM at reckless risk.
[/SIZE]

 

[kissfan]

Hi Fatboy (hope to have one someday or a Heritage Softail)

Also sorry to hear of your dad's plight.

Was the investment some sort of mezzanine investing? Reading your post, I get the impression it was nothing to do with shares.

Keep an eye on your dad and just try to be as supportive as possible in this bad time for him.

Regards
Marty

 

[FatBoy]

thefirstbruce - Sad story mate, unfortunately the vultures of this world think nothing of making big dollars at someone elses expense. I find it hard to swallow reports of all the flash cars etc bought by certain people as the Westpoint crash became imminent... They knew it was coming, and even sucked the old man into staying on the sinking ship when he was ready to step off and move into property...

kissfan - Yeah mate, it was a mezzanine finance deal. When i heard what had happened i tried to convince him to bail out but the "break" fees were a huge deterrent and he stayed with them. I pointed out he could buy a cheapish house in Brisbane with a good return and he was looking at doing that but unfortunately never got the chance...

He can always sell the house and buy something smaller but it's sad to see someone come here at the age of 4 and achieve so much only to have it taken from him on the advice of some shonk who was supposedly university educated and "guaranteed" in writing his money was safe...

Dad's house is his castle, and now having to sell it will break not so much his heart, but his spirit... And it could not have happened at a worse time considering the current market in Sydney...

P.S - Dad got himself a Heritage Softail as his 50th Birthday present. It was the first thing to go...

 

[depreciator]

Fatboy,
Your dad needs to talk to someone before his shame starts to affect him. I've seen people take a hit like that and the shame soon starts to manifest itself physically. Talk to his GP and get a referral.

 

[Nigel Kibel]

westpoint and advisors

As mentioned the problem with Financial planners is that many people believe that they are recieving independant financial advice. If someone is recieving a large commision then they are probaby not working in your interest. The fact that so many financial planners pushed the Mezzanine finance product knowing that the commission was as high as ten percent says it all. Personally if a finacial planner is charging you a fee and not recieving a commission I would be comfortable with that.
Fatboy I am sorry that you father is going through this. Unlike people who buy property from marketing companies I am sure your father thought that he was recieving unbiased advice. This is the myth that ASIC have helped to create. There are some very good Financial planners. However many are finanace and insurance brokers who have obtained a certificate that does not really qualify them to offer the level of advice that many seem to do. This Westpoint mess is just the tip of the iceberg.

 

[Ricardo29]

nigel..
pls dont make mistake of lumping insurance brokers in same category.
we get paid the same commission across the board. every broker gets quoted same price, and same standard commission. and...most policies nowadays are standard across the industry.
there is no incentive to do anything apart from have clients best interests at heart.

 

[Nigel Kibel]

insurance brokers

Ricardo
It was not my intention to suggest that insurance brokers were the same. My point is that many financial planners do not have the knowledge base to be offering detailed financial advice. To sell insurance you need to be a financial planner, but it does not mean you necessarly have the knowledge to give full financial advise. I am also only talking generally, naturally there will always be exceptoins

 

[Ricardo29]

no prob...
i think the whole problem here is scheisters, sharks, and crooks.
its not necessarily the failings of the system in regards education, knowledge base and the like. u can be assued these advisors knew damn well enough about what they were advising into.
you cant stop crooks from being crooks.......and lets face it, thats what these people are.

 

[Nigel Kibel]

crooks

True

However it is the perception that financial planners are good becuase they are approved by ASIC.

 

[depreciator]

Anybody see the Alan Kohler story yesterday about the heads of Westpoint? They're all back in business - different company names. Still in property.