Couple's $2.8m double disaster

[Marc]

You would think that the couple in question generating that sum of money had enough grey matter to always consider external advice with a grain of salt. The article states they already lost a sizeable sum of money then blindly take the advice of an external party and invest another wad of cash.

The couple, working in Singapore at the time and feeling "fragile" after the finance company losses, repeatedly told McPhail they preferred conservative investments so they could return to New Zealand, buy a house and retire.

They told him in a July 2007 email: "We really are at our wits end regarding who to get sound financial advice from."

In response, McPhail said he was confident they would come to trust and value his advice. He flew to Singapore and urged them to put more money into Zeroshift after their initial $30,000 investment three years earlier.

The initial investment was on advice from their former Taupo adviser Angela Devaney - McPhail's then business partner.

The couple had also invested $1.5m in failed finance companies Bridgecorp, Capital+Merchant and St Lawrence on Devaney's advice. Devaney told them McPhail was a close friend of the Zeroshift inventor's family.

McPhail had done due diligence on Zeroshift and its contracts with "extremely high-profile" clients, she said.

Devaney declined to comment for this story.

The couple eventually put $1.3m in total into Zeroshift. After the company folded, they clawed back just $84,776 of their investment.

Story here: http://www.stuff.co.nz/business/mone...ouble-disaster

[halfempty]

Knowing them personally they are in the situation of having too many Phd's and no street smarts.
So they trusted the adviser and did what they were told.

Nothing in the new FMA administration will protect people against this.

[Marc]

Knowing them personally they are in the situation of having too many Phd's and no street smarts.
So they trusted the adviser and did what they were told.

Nothing in the new FMA administration will protect people against this.

Maybe if you have a Phd you need to be burned twice before you learn your lesson.

[NovInvestor]

The couple failed to check if their adviser took the subway/bus, or drove their Rolce Royce/Lambo to work.


If the couple have read Rich Dad Poor Dad I'm sure the outcome would have been different.

[grip]

Lest people here get too smug, it's worth remembering plenty of savvy investors have been scammed before, sometimes repeatedly.
Just look at Madoff's list of clients: http://s.wsj.net/public/resources/do..._20081215.html

Often victims think they are 'too clever' to fall for a scam, and end up taking undue risks.

[NovInvestor]

Lest people here get too smug, it's worth remembering plenty of savvy investors have been scammed before, sometimes repeatedly.
Just look at Madoff's list of clients: http://s.wsj.net/public/resources/do..._20081215.html

Often victims think they are 'too clever' to fall for a scam, and end up taking undue risks.

Yeah when you trust someone with your finances and you loose control, that's when things will go wrong.

[halfempty]

Lest people here get too smug, it's worth remembering plenty of savvy investors have been scammed before, sometimes repeatedly.
Just look at Madoff's list of clients: http://s.wsj.net/public/resources/do..._20081215.html

Often victims think they are 'too clever' to fall for a scam, and end up taking undue risks.

Fair call but in reality these people were not scammed.

They invested they money in a bad investment vehicle, then they did it again.

[Shalodge]

Exactly ... Too many people expect investment advisors to produce certainties when in reality there are none. It is possible that they made their millions through risky investments that have come off and became desensitised to risk. As I recall investing in the property market was considered risk free before 2007 when it was obviously not.