Professional Planner was unable to obtain a telephone interview with Mr Cassimatis. Below is his written response to questions from Kristen Paech, senior journalist at Professional Planner magazine.

What’s your view of what went wrong with Storm?

As with everybody else, Storm has been caught up in a black swan event whose magnitude is beyond anything that has happened before. Its speed is blistering and the depth will penetrate all of society.

Storm was on the front line in both the asset and credit market and given that Storms model encompassed both sides of this ledger as opposed to typical financial planning which just promoted products then we were bound to find difficulties earlier than most.

However, Storm would have weathered this – Storm’s system has proven over two decades of success that it would have weathered this, had it not been for the panic of the CBA.

You’ve said publicly that you believe the CBA is at fault. Why?

The CBA was integral to the Storm process of advice. They provided the bulk of the home property finance for clients, the bulk of the margin loans and the bulk of the clients’ investments in Colonial/CBA managed funds.

Storm had a strong relationship with the CBA built over many years and all records will show that this relationship was fruitful and problem-free to all parties – clients, Storm and the CBA.

However, the only time when Storm and the clients needed the CBA’s help, they let us all down and mounted a campaign to deflect any responsibility and accountability away from themselves, and their role in the client problem, onto Storm.

Can you tell me about how Storm’s business model operated?

The Storm model acknowledged the following:

1. Most people have insufficient assets to fund a reasonable lifestyle let alone a more desirable lifestyle
2. That most assets in the capitalist system commence life as a debt.
3. The traditional planning approach was to utilise products with the limited capital available to them and then have that capital consumed over time (ie. allocated pension type products) and hope that the capital did not run out before the person’s expiry.
4. Accordingly, if someone wants or needs a plan that does not diminish their limited capital and/or has the hope of higher capital whilst generating the return required, then the use of leverage is appropriate.
5. The need for balance between risk and return and levels of debt were paramount to the Storm model. An average overall debt level between 40 per cent and 60 per cent was the norm leaving the advice conservative as evidenced by the decades of success through large market movements and negative events.

Why didn’t you stop selling the product when the sharemarkets plunged?

Storm’s business was advice not product.

In hindsight, were clients too heavily geared?

No.

In hindsight, if we had known the global crisis would create the changes to the world so quickly we obviously would have acted differently – as would all businesses affected by the turmoil. The reality is the speed and depth was astonishing.

Please note that it took falls in the market worse than the All Ordinaries had ever seen for Storm clients’ gearing levels to be increased beyond acceptable levels
and even then only 20 per cent of geared clients were at those higher levels.

The problems arose for these affected clients when the CBA failed them in the margin call process.

In hindsight, we wouldn’t have trusted the CBA.

Do you think the advice your advisers provided was appropriate?

Yes.

Did your clients really understand the risks?

Yes.

What none of us understands is why the CBA failed, abandoned and destroyed us (Storm and clients) even after Storm plead with them for assistance and posed a viable, sensible solution to avoid the bloodshed that has occurred.

To what extent have you personally and financially been affected by this?

Completely.

Storm as a firm, the Cassimatis family, Storm advisers and key staff were all invested in the same way as clients were. Hence, our investments are wiped out and houses at risk.

We intend to keep fighting to find a solution for affected clients and to regain our business and personal reputation which the CBA has set out deliberately to undermine.

What do you want to say to the clients who have lost their homes and are facing financial ruin?

We are bleeding for our clients and understand totally their plight. Because of this understanding we are in the front line fighting for everyone.

We hope the CBA does not force people out of their homes. We hope the CBA will come back to the table to discuss a solution for affected clients and we again plead with them (as we have through many pieces of correspondence to Ralph Norris) to work with us to find a solution.