Scam Alert (Again): The Investment Traps Hiding in Plain Sight, And What You Can Do About It

This week, ASIC once again stepped in to clamp down on a dodgy financial investment scheme. Unfortunately, as is so often the case, the action came too late for many investors with around $500 million set to be lost collectively.

If you're thinking, “How does this keep happening?”, you're not alone.

These aren’t shady backroom operators. Many of these schemes are advertised in reputable newspapers, are registered with ASIC, and come with well-designed brochures and a promise of 8–10% returns. On the surface, they seem completely legitimate.

But I can tell you, from decades of experience, that just because something is registered doesn’t mean it’s safe, or smart.

The Whitsundays resort story (yes, this really happened)

I recently came across a case where an operator was raising money from investors to redevelop a resort island in the Whitsundays. Here’s what was going on behind the scenes:

  • He borrowed a truckload of money to acquire the land.

  • He then raised capital from investors to fund the construction and operation.

  • The business model depended entirely on the asset appreciating massively in value.

But interest rates went up. Operating costs ballooned. There was no actual income to support the debt. And rather than pulling back, they kept raising more investor money to service the loans.

It was, quite literally, using new investor cash to fund yesterday’s interest, while selling a dream that the property would be worth $100 million “one day.”

Sound familiar?

The problem is bigger than scams

Some of these are not even technically scams. They are registered managed investment schemes, with glossy brochures and a “legal” framework, but they are so debt-laden or poorly structured that the risks are sky-high.

Others are outright scams, hiding in plain sight, using complex structures or vague mandates like “Australian infrastructure assets” that sound safe until you realise they don’t actually own anything.

And often, these schemes are heavily marketed in regional areas, where entire communities talk them up and buy in. I’ve seen cases where 1 in 3 households in a regional town were affected.

What investors usually get wrong

Here’s what I’ve seen too many times:

  • People investing their entire superannuation into one “opportunity.”

  • Relying on high headline returns without understanding the level of risk.

  • Not seeking independent, professional advice before clicking “invest.”

If you wouldn’t go to the casino and put your entire super on red, why would you take the same approach with an unlisted, illiquid, poorly researched investment?

And yes, some of these are advertised in the Australian Financial Review. But just because it’s in the paper doesn’t mean it’s been vetted for quality. ASIC registers schemes based on compliance, not commercial viability.

What we’re doing about it at Financial Wellness Hub

Many of our clients and their networks are professionals: lawyers, accountants, and business owners. We know that from time to time, you’re asked, “Hey, what do you reckon about this investment I’ve been looking at?”

Until now, there wasn’t an easy way to provide a second opinion. So we’ve created a new service.

Investment Assessment Sessions Now Available

If you’re considering investing into a private scheme, trust, or managed investment (listed or unlisted), we now offer one-off consultations where you can bring us the documents, the PDS, or whatever info you’ve received.

Here’s what we’ll do:

  • Cross-reference the product with independent research databases used by financial advisers.

  • Check whether the manager has been rated (and why they may have not been).

  • Provide a broad assessment of the risks, complexity, and viability.

  • Help you spot red flags and understand what questions to ask before committing.

We don’t judge anyone for taking an interest in their finances. In fact, we think it’s a great thing. But some schemes are so opaque or high-risk that even experienced professionals get caught out.

Let’s prevent that from happening.

Final word: Don’t assume - verify

A little bit of information can be dangerous. Especially when it’s dressed up with fancy branding and promises of high returns.

If you’re not 100% sure where your money is going, or if you’re a professional being asked for input on something outside your expertise, please refer them to us.

Book a complimentary 20-minute session, or speak to us about a formal review. It might be the most valuable check-up you ever do for yourself or someone you care about.

By Brett Tarlington

Next
Next

Is Being Called a Tight Arse by a Client Actually a Good Thing?