The Value of Advice: A Case study

Good financial advice can be as much about steering clear of disasters as it is about meeting goals.

Marina and Rick Carr aged in their 50's, don't consider themselves risk takers, so they were attracted by the ads
they saw in the newspapers for a new 'low-risk' investment in debentures.

"Earn up to 9.75% pa with certainty" the add exclaimed.  Marina had just received a $100,000 inheritance and
thought the investment would be ideal.

But when she told her financial adviser, John Scully of KSG Financial Planners to go ahead and make the
investment, he strongly advised against it. 

 "I was very sceptical of the company" he says.  "They were lending money to property developers who couldn't
obtain finance easily elsewhere.

Just over two years later, the company crashed and almost 9,000 investors lost around $200 million.  Most of the
investors were older and retired or close to retirement, looking for a safe place for their savings.

"The Company's clever marketing campaign and dubious promises of safe returns misled many people" says John.

Marina acknowledges that without John's advice,her inheritance would be gone.  "When the company collapsed, we
realised how much we could have lost. John saved us a great deal of money and heartache.

Instead of investing in speculative property developments, John invested Marina's inheritance in blue chip Australian
share based superannuating and allocated pension portfolio.  During the time Marina would have been invested in the
failed investment company, her portfolio delivered very attractive returns.