On Inside business this morning the chairman of ASIC was interviewed regarding the collapse of Westpoint. It seems that over $300,000,000 of investor funds have been lost in the Mezzanine finance division. The problem for Asic is that the community has been continually told that you can count on advice from financial planners. In fact it is illegal to give advise if your are not one. Even an accountant cannot give advice even though in most cases they are far better educated than the average financial planner.
It has been acknowledged that many of these planners were paid commissions of 10%. Clearly this advice was given based on how much commission the planners were making rather than how good the product was. I spoke to someone recently who told me that their planner told them that there money was safe. They have lost in excess of $300,000.
There are people who suggest that ASIC should control the property industry. That is clearly not the answer. If you are spending your own money then you should do your own research. If something looks to good to be true then it is.
Mezzanine finance is a top up that the developers cannot borrow from the bank. In other words a bank may lend a developer 65% of the project subject to presales and the need say an extra 10% raised by investors. It also means that if something goes wrong you are last in line to receive any repayments. This was always a high risk investment Financial planners do not normally recommend property because they do not much money from it. However with direct property investment, even if the market falls, the property still retains a large percentage of its previous value and no matter what market conditions are like today, in time the value will improve. If you invest in shares or a product like Mezzanine Finance and the company goes to the wall you will probably loose all your money.
Think carefully where you spend your money, do your own research, until you are comfortable that you are making the right decision. After all at the end of the day it is your money.
It has been acknowledged that many of these planners were paid commissions of 10%. Clearly this advice was given based on how much commission the planners were making rather than how good the product was. I spoke to someone recently who told me that their planner told them that there money was safe. They have lost in excess of $300,000.
There are people who suggest that ASIC should control the property industry. That is clearly not the answer. If you are spending your own money then you should do your own research. If something looks to good to be true then it is.
Mezzanine finance is a top up that the developers cannot borrow from the bank. In other words a bank may lend a developer 65% of the project subject to presales and the need say an extra 10% raised by investors. It also means that if something goes wrong you are last in line to receive any repayments. This was always a high risk investment Financial planners do not normally recommend property because they do not much money from it. However with direct property investment, even if the market falls, the property still retains a large percentage of its previous value and no matter what market conditions are like today, in time the value will improve. If you invest in shares or a product like Mezzanine Finance and the company goes to the wall you will probably loose all your money.
Think carefully where you spend your money, do your own research, until you are comfortable that you are making the right decision. After all at the end of the day it is your money.