Financial Adviser Alert: Murray Weatherstone

The loss of money in general for people investing in finance companies that have collapsed over the last 3 years pisses me off, especially when those people have been advised by supposed experts to invest in such rubbish.

When you know people who have been put in this situation - and I think most people do - then the vitriol that I feel starts to unsettle my stomach, make my heart tighten and leaves a bad taste in the mouth.

It gets bloody personal.

I have such a case to relay to you dear reader about a "financial adviser" and friend of mine who has lost a considerable sum of his or her life savings thanks to this persons advice.

I gave this person an opportunity to redeem himself before outing him but he wanted to hide behind the privacy act.

The advisers name is Murray Weatherston from Financial Focus (NZ) Ltd.

He advised my friend who is in his/her 70s to invest in dodgy companies (and they have always been dodgy) Hanover, St Lawerence, Dominion Finance and a couple of other finance companies.

All have gone bust.

We are talking about $50,000 per finance company and my friend has lost most of it.

He even advised him/her not to sell his/her Allied Farmers Ltd [ALF.NZX] shares when Hanover was subsumed into that company and the shares were trading at about 15c. He/She would have got back $20000.00 of his/her money then but the shareholding is now worth about $3500 and ALF is likely to go belly up before year end.

I warn anyone who is looking at investing money to do their own research and if they are looking for an adviser try and get a reputable reference from a friend and do your own checking on them.

Mr Weathersone should be avoided at all costs for his track record lacks credibility. My friend is not the only person that he has given similar advice.

You have been warned.


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c Share Investor 2010

Kevin's Blog

I like the the photo of Kevin Podmore on his blog but am confused as to why there is no mention that the company was going to collapse less than one month after this relatively upbeat commentary.

The blog is 2 months old.

Kevin and his directors would have known the company was facing difficulties but just like other finance companies that have collapsed, St Laurence continued to borrow money from investors.

But it’s also good to see that even in the current environment where lending hasn’t prospered investors have benefited overall from the diversified business model that St Laurence has. Losses from the lending business have been more than offset in other areas and as a consequence our profit is just $2.1 million less than last year. We think its not a bad result.

Investors have benefited overall from diversification?

Kevin, come on! you knew this wasn't truthful when you wrote it didn't you?

What allowed to to risk investors money by continuing to borrow their money while all along knowing they were not going to get it back?

Was it greed, embarrassment, shame, what?

Be honest Kevin Podmore, why didnt you give investors in St Laurence fair warning months ago that their money was at risk?

That warning should have been on your blog somewhere.

I couldn't find it.

c Share Investor 2008

NZ Herald Feature:

Finance companies in freefall

22 May

Posted by Kevin at 10:10 am

We have just released our year end results and investors will have noticed a few changes this year. As well as increased underlying earnings, the main difference is the increase in loan provisioning.

In simple terms, a loan provision is an expense set aside as an allowance for doubtful loans in cases where the amount owed may not be fully collectable and/or delayed. Under the new NZ IFRS accounting standards, ‘general’ provisioning (of a set percentage of the loan book) has now been replaced with ‘specific’ provisioning against individual loans that are impaired.

IFRS requires a discounted cash flow (DCF) methodology for provisioning, a more accurate measure I believe which requires companies to assess the level and timing of future payments (both principal and interest) and discount those payments into today’s dollars.

I’d like to emphasise though that provisioning is not a write-off of the loan; it is an allowance against a company’s future ability to collect that loan in its entirety. Provisioning impacts on the current year’s profit rather than delaying the impact to future years’ earnings, but it also means that the closer the loan gets to its collection date, there is a recovery of the discounted value of that money.

Higher levels of provisioning shouldn’t be a surprise given the tighter market conditions - the banks have included billions of dollars of provisions in their recently announced results. As turmoil in global markets and the slowing of the US economy plays out, and the New Zealand economy slows due to tighter monetary policy and credit conditions, we are seeing a change in the credit cycle and I think our approach with regards to provisioning will stand us in good stead going forward.

But it’s also good to see that even in the current environment where lending hasn’t prospered investors have benefited overall from the diversified business model that St Laurence has. Losses from the lending business have been more than offset in other areas and as a consequence our profit is just $2.1 million less than last year. We think its not a bad result.

Check out more of Kevin's Blog here