Steve and Jenny’s Story
Steve and Jenny were victims of a cold caller who convinced them to buy off-the-plan property with a Self Managed Super Fund.
*Some details have been altered or omitted for legal and privacy reasons
Steve and Jenny were able to recover their losses with the help of Financial Rescue.
If your experience sounds like what Steve and Jenny went through, get in touch with our team for an obligation free discussion.
Steve and Jenny, from Ballarat, had just returned from visiting their eldest daughter, who had recently given birth to their first grandchild! Life was good, and they were looking forward to retiring in a few years to spend more time with the family.
One evening they received a cold call, from a Financial Advisor wanting to reach out to potential new clients in the area. As they were considering retiring soon, they agreed to an appointment to discuss their financial situation.
During the initial meeting, the Financial Advisor asked Steve and Jenny about their current financial situation. They were advised that if they combined the amounts they both currently had accumulated in their superannuation funds, they could buy their first investment property! They were told this would open up a world of opportunities with the returns they would be making.
This obviously raised their interest, so the Financial Advisor offered them an expenses paid for trip to Melbourne to inspect the development.
While in town, they did a site inspection of the property, and were invited to attend an investment education seminar. Here, “senior consultants” educated the audience about how banks and superannuation funds are taking advantage of everyday Australians, like Steve and Jenny. They offered “exclusive” advice on how to outsmart the system, and create their own wealth with a Self-Managed-Super-Fund (SMSF). The attendees were told about the benefits of buying property through an SMSF. They showed positive cash flow projections, making it seem like a guaranteed win. They were told there was a lot of interest in the development, and they would have to act quickly if they wanted to take advantage of this once in a lifetime opportunity.
These presentations appeared legitimate. The office was modern and smart, and the people seemed professional and friendly. Steve and Jenny trusted the projections and the financial advice team. Feeling like they didn’t have time or need to consult an independent advisor for a second opinion, they established an SMSF, through which they purchased an off-the-plan property. This transaction also included a further loan to fund what their superannuation balance couldn’t buy.
Fast forward two years… Steve noticed that there was quite a large difference in the amount being paid to him and Jenny from the investment, compared to the projections they were presented with at the seminar. The property was in-fact worth a lot less than what they paid. They were losing a lot of money, and struggling to keep up with the payments, which included unexpectedly high SMSF fees.
Not sure if they could trust another finance professional, they hesitantly reached out to a local Financial Advisor recommended by their friends. This new advisor noticed that instead of the property being a good investment, as they had expected, it was in fact losing money.
After finding this out, Steve and Jenny then contacted the original Financial Advisor about the error. The advisor denied any wrongdoing, and claimed their projections and advice were correct. At this point, Steve and Jenny had lost hundreds of thousands of dollars and were facing financial ruin. They certainly weren’t able to retire like they planned, to spend time with their new grandson.
Thinking they had no options, Steve and Jenny reached out to Financial Rescue. The team at Financial Rescue saw it was clear, the advice given to them was too high risk for their financial situation, and their goals weren’t considered. Their previous advice had them in a balanced super fund, and they had no intention of setting up an SMSF before the initial cold call. This new SMSF moved all of their life savings, into one property investment, with further debt. Leaving them at a much higher level of risk. Steve and Jenny never should have been offered this advice, as the recommendations were not in line with their personal circumstances. As a result, they lost a total of $200,000. Financial Rescue assisted them with their Australian Financial Complaints Authority (AFCA) case. They were able to recover their losses, and get back on track to retirement.
