Sometimes, as a financial adviser, our job is to stop you from bowling a financial gutter ball.
A new client walked into our office with a TPD payout. He was itching to make some serious money moves with this windfall. When you’re holding that kind of cash, the traditional “slow and steady” approach can feel unsexy.
He excitedly shared that he’d found what looked like the chance of a lifetime – a crypto bro from the Gold Coast promising 70% returns year on year through a “special crypto structure”.
He wanted to put over a third of his TPD payout – a massive chunk of his financial future – into this scheme.
The crypto trader had given him an information memorandum that looked professional enough.
But when I dug into the details, massive red flags started appearing everywhere.
It was a classic black box investment scheme.
What is a Black Box Investment?
Before I explain what we found, let me break down what a “black box investment” actually means:
You can’t see inside the operations – The specific investments, trading strategies, or decision-making processes are hidden from investors
Limited transparency – You might know the general strategy (like “crypto trading”) but not the actual details of what’s happening with your money
Murky fee structures – Fees and costs may be buried or not clearly disclosed
No regulatory oversight – Often structured to avoid ASIC registration requirements
The key danger: You’re essentially saying “here’s my money, do whatever you want with it” without knowing what they’re actually buying, how much risk they’re taking, what fees they’re charging, or whether they’re even investing it at all.
The Red Flags Started Flying
Here’s what this “opportunity” actually was:
Because they were raising no more than $2 million across 20 investors, this structure had zero requirement to be registered by ASIC. That meant:
- No external oversight whatsoever
- No responsible entity keeping an eye on things
- No mandatory audits
- No trustee protection
- No restrictions on what fees they could charge
- No limits on how they could change the fund rules
- No insurance protection
It was literally a black box. They could do whatever they wanted with investors’ money, and there was no regulatory body watching.
Our Due Diligence Process
When I explained this to my client, I could see the wheels turning. But the promise of 70% returns was still clouding his judgment.
So we arranged a meeting – my client, myself, and the crypto trader via video call. Time to ask some pointed questions:
- Where’s the proof these crypto accounts actually exist?
- Can you show us verified account values?
- How many units are in this trust structure?
- What happens with liquidity if investors want out?
- Where are the assets actually held?
- Is there cold storage for the crypto assets?
- What insurance protection exists?
The answers were either vague or non-existent. The crypto trader got defensive when pressed for specifics. Classic warning signs.
The Question That Changed Everything
But here’s the question that really cut through the noise:
“If you put a third of your TPD payout into this and you lost it, how would that make you and your wife feel?”
Suddenly, we weren’t talking about abstract percentages and returns. We were talking about real money that represented real security for his family’s future – money he’d received because of a life-changing injury.
The crypto trader could literally take the money, transfer it to a different entity, and there would be no recourse for investors. No insurance, no regulatory protection, no guarantees.
The Smarter Path Forward
After a long conversation, my client decided against the crypto scheme. Instead, we helped him:
- Allocate a small portion to crypto assets through proper, regulated channels
- Focus the bulk of his money on quality blue-chip businesses
- Build a diversified portfolio that matched his actual risk tolerance
- Create a wealth plan that didn’t require gambling a third of his payout
When Good Advice Means Saying No
Sometimes our most valuable service as financial advisers isn’t what we put you into – it’s what we keep you out of.
Anyone can recommend an investment. The real skill is in asking the hard questions:
- What are the actual risks here?
- What happens if this goes wrong?
- Is this too good to be true?
- How does this fit with your bigger financial picture?
- What regulatory protections exist?
The crypto trader was promising 70% returns because that’s what sells. But sustainable wealth isn’t built on get-rich-quick schemes promoted by smooth talkers with no oversight.
The Warning Signs to Watch For
If you ever find yourself considering an investment opportunity, watch out for these red flags:
- Promises of unusually high returns – If it sounds too good to be true, it probably is
- Lack of regulatory oversight – Legitimate investments have proper regulatory frameworks
- Pressure to invest quickly – Good opportunities don’t disappear overnight
- Vague answers to specific questions – Professional investment managers can explain exactly what they do
- No insurance or investor protection – Your money should have some level of protection
- Defensive responses to due diligence – Legitimate operators welcome scrutiny
The Bottom Line
My client still got exposure to crypto – just in a sensible way that didn’t risk his family’s financial security. He invested in quality businesses that have stood the test of time.
Sometimes the best financial advice is helping someone avoid an expensive mistake.
The crypto trader probably moved on to the next mark. But my client? He’s building wealth the right way – steadily, safely, and without the stress of wondering if his money will be there tomorrow.
If it’s too good to be true, it probably is. And when it’s your family’s financial future at stake, you don’t want to find out you’ve bowled a gutter ball.
Any questions or concerns?
If you’re ready to take the first step, it all starts with having a conversation about your financial goals.
Stay Beautiful!
John Manserra
Certified Financial Planner®, Director
Apex Advice – Geelong Financial Advisers for professionals and tradies who want to organise, grow and spend their money with confidence.
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Note: The information contained in this update has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs.
You should seek advice before making any decision regarding any information, strategies or products mentioned to consider whether that is appropriate to your own objectives, financial situation and needs.