Like others I was advised by an IFA to put my money into the LM First Mortgage Income Fund with the assurance that it was as safe as a bank account. I remember vividly the conversation that I had with the IFA, telling them that I needed something simple, safe and secure. I still have saved e-mail conversations subsequent to the investment being placed, asking the IFA if the LM FMIF was still a safe place to leave my money.
I consider myself less unfortunate than some, given that my capital was acquired by way of inheritance. I couldn’t imagine how I would be feeling if it was hard-earned life savings. On the other hand, it was a particularly large amount – more than AUD750,000, money that was supposed to secure my future and that of spouse and my children.
Since 2009 when the fund was frozen I’ve been living in hope that I would see a reasonable chunk back, but the receiver’s announcement on 4 Dec that the fund has now depreciated to between 0.13 to 0.19 has finally put an end to that.
It’s easy now to look back and be stunned by one’s naivete, but the reality is that there are many people like me – with little aptitude or interest in the process of investing, who rely on professionals for help. The way I looked at it at the time was that if your tooth hurts, you don’t read up on the internet and self-medicate – you see a dentist and follow their advice.
For what it’s worth, my experience illustrates that financial advisors are are often as ill-informed as their clients, and that it is essential that anyone with a substantial amount at stake become properly informed and to never, ever, take advice at face value.