A BALLARAT financial expert says people investing in risky non-bank lenders need to gain professional advice before investing their money.
Private finance consultant and principal at Shadforth Financial Group Mark Spencer said it was crucial that people got professional advice before they invested their money.
Thousands of people are owed $660 million collectively after Banksia Securities went into receivership on Thursday evening.
A number of investors used financial advisors who advised them to invest in Bankisa, but Mr Spencer said it was all too common for people to invest without doing proper research.
Mr Spencer said he had never advised his clients to invest in Banksia.
“It’s crucial that people seek advice and talk to an actual qualified financial planner who can do the research and advise them on the best decisions,” he said.
“You have to ask yourself what the value is of gaining proper advice. It is all about the research in making the right choice.”
A number of those who have lost substantial amounts have money have reported all their investments had been invested in Banksia.
Mr Spencer said not diversifying money over a range of investments broke the golden rule of financial investment.
“One of the main rules to lower the risk is to follow the old adage and not have all your eggs in the one basket,” he said.
A statement from receivers McGrathNicol late yesterday said debenture holders would be told of their financial position in the next five weeks.
It is not expected that all the funds will be recovered, but a “meaningful return” is expected by the receivers.
“It is our objective to start to make an initial return of capital to Debenture Holders within eight weeks,” Nicol McGrath said in a statement.