Saturday's Courier Mail included a piece on the collapse of Storm Financial and the impact on their clients - Storm Financial's name a clue to what lay ahead. Scott Francis was quoted a number of times in the article:
Financial planner Scott Francis said the Storm plan of borrowing huge sums to invest in index funds relied on an ever-rising stock market.
Now that global markets have tanked, around 3000 of the company's clients have been left exposed.
About 10 per cent of these clients owe more than the value of their portfolios and are $20 million in the hole.
Mr Francis said that the company employed a "one-size-fits-all" strategy for investment, so that young workers and those nearing retirement would have the same plan regardless of their circumstances or goals.
"Investors sought advice on their financial situation and Storm Financial advised them to borrow heavily," Mr Francis said.
"It appears that it didn't seem to matter if they were retired, close to retirement or had little income.
"The answer was the same: get your hands on some debt, gear it up further using an aggressive margin loan facility and then wait for the share market to work its magic.
"What's wrong here?
"It's not the products, it's not even the structure of the investment.
"The problem is bad advice ... It seems to me that there was no way the average Storm Financial investor would be able to navigate a steep share market downturn."
Adding to the misery, Mr Francis criticised Storm for charging excessive entry fees of up to 6.6 per cent and then 1.14 per cent annually.
Please click on the following link to be taken to a copy of the article - Storm Financial's name a clue to what lay ahead.