losing money advice please

westy69 · 23 January 2008 at 4:08PM

Hi folks 1st post so take it easy on me please, ok so 1stly not pointing the finger just looking for opinions, i saw an IFA invested £100k 4 ways evenly
balanced distribution fund
global property
distribution fund
select property
12 months down the line 10% down most of it on the 2 property funds,to pull out now would cost me 15K total i really cant afford to do that but saying that i cant afford to lose any more either, now these are 5 year investments which i accept and things may change (fingers crossed for the better) IFA advises leave it in, i have transferred the property to cash funds for now (did this last week) just to try and minimise losses for now (intrest will be negligable) will go back in if values start to rise

any advice please?

thanks in advance :beer:

purch · 23 January 2008 at 4:48PM

balanced distribution fund
global property
distribution fund
select property

What did his/her 'fact find' decide was your risk profile ?

The Distribution type funds and Property funds would to me ( a mere spectator in the wonderful world of Financial 'Advice :rolleyes: ' ) seem to be very different in their level of risk

If you the investor is uncomfortable with the investment then you have done the right thing by moving the money out of the Property Funds, if your IFA thinks you should be comfortable when you are not then he/she doen't understand his/her cleint very well

Distribution Funds should be at the lower end of the risk spectrum, but often aren't unfortunately. I don't really understand the initial investment spread, and I think that a better one could have been found that better suited your risk profile

westy69 · 23 January 2008 at 7:39PM

well risk profile i felt that the FA knew my feelings considering when he arrived that i was thinking of ING he quickly dismissed this and explained low interest once taxed inflation etc and that the funds were a very low risk with potentially fantastic returns - and yes i know i am naive - you live and learn eh.... i am tending to agree with what you say about the spread, i suppose my options now are stick with it, pull out or see another FA for their opinion....

King_Weasel · 23 January 2008 at 8:35PM

Regardless of your risk profile, westy, it strikes me odd as a mere amateur that your 4 funds comprise 2 distribution funds and 2 property funds. Hardly a diversified portfolio.I would certainly look out for another financial adviser.

The warnings have been around for over a year now that the property boom was over, so I am especially surprised that you were advised to put half your money into this area. For what it is worth, I think you did well to pull out of property and stand the loss. Even ING savings is better than that!

For more risky investments the obvious area is equities, but whether this is the best time to jump in is not something I would advise you on.

Are any of these investments in ISAs, I wonder? Shouldn't you be planning to use your allowance each year?

westy69 · 23 January 2008 at 9:40PM

not ISA's but portfolio and Investment bonds....

Pobby · 23 January 2008 at 10:14PM

I made it clear that that my risk profile was low.I was advised around 30% cash ISAs,60% to be split into different diverse distribution funds and the rest into equities.Seem ed like a fairly risk adverse plan.

dunstonh · 23 January 2008 at 11:37PM

The 4 funds chosen

balanced distribution fund - medium risk
global property - medium/high risk
distribution fund - low/medium risk
select property - sounds like Standard Life's property fund which is actually a higher risk property fund than most.

The overall spread is medium to medium/high risk.

Its probably a bit late to transfer the property now as the worst has been done and some are now suggesting that we could see growth on property funds during 2008 and that they are looking value (depends on fund really and a few unknowns).

The spread seems a bit amateur and a bit fashion investing and old school mixed into one. Distribution funds and balanced managed are popular with old school advisers and picking two higher risk property funds that had almost certainly done well in the years before suggests "oh they have done well and everyone in the media thinks they are great so lets have some" mentality. Fair enough for a £1k or £2k but not half the investment.

westy69 · 23 January 2008 at 11:53PM

would it be a good idea to maybe consult another adviser or am i a bit stuck now? and yes it is the standard life fund

thanks BTW

dunstonh · 24 January 2008 at 12:08AM

Its hard to make a judgement on another adviser based on limited information but you can tell a lot from the funds recommended.

The following are generalisations and there can be exceptions but they can be considered warning bells.

Using a cautious managed, balanced managed, defensive managed or distribution fund is old school investing and only really suitable for small investments. A 100k should be looking at 8-15 funds and there should be some logic to the funds chosen. These types of funds are jack of all trades, master of none funds. Lazy investing but popular with tied agents (more than IFAs) as they dont have the remit to invest in diverse portfolios. IFAs that have come from a tied background (which is probably the majority over time) generally do two things. They continue to act like tied agents with low quality recommendations in simple and quick products or they improve their skills and knowledge and become proper advisers. From 2009 the FSA has proposed an increased level of qualifications for IFAs (but not the salesforces) to try and weed out these low skilled advisers.

Using these jack of all trades funds isnt bad for small investments where you dont intend to keep much of an eye on them (i.e. smaller pension funds). However, in your case I see it as lazy.

Half the money is in these jack of all trades funds. 25% in bricks and mortar low risk property you could expect on a cautious portfolio of that time. However, yours isnt a cautious property fund but a higher risk one. 25% in a specialist fund is crazy. Specialist should account for probably 5% on a cautious portfolio. Maybe 5x£1000 in contrasting specialist funds. Specialist funds (in general as there are a couple of exceptions) are higher risk.

I think you have good grounds for complaint. You wont get anywhere on the lack of investment strategy or the fact that jack of all trades funds were used but I would totally focus on the fact that the portfolio is not cautious yet that is what you were wanted. Before you do that though, I would check your recommendation report and verify what risk profile you are documented on there as. Everything you say suggests you want it to be cautious or low/medium. This spread is medium to medium/high.

Based on the limited info available, I think the recommendation sucks and you should not use this person again.

westy69 · 24 January 2008 at 10:07AM

from the reccomendation letter

Attitude to investment risk

We then moved on to talk about your attitude to investment risk and which funds the investment bonds would invest in. During our meeting you confirmed yourself to be a cautious to balanced risk investor meaning that you were happy to invest in assets outside of traditional bank and building society accounts, and were prepared for the value of some of your investments to fluctuate. Given that this is the start of your investment portfolio my recommendation was to use asset classes that had lower volatility than direct equity holdings and reduced the risk exposure by creating a rounded portfolio including distribution funds (which would invest in equities, bonds and commercial UK property) and global property. When added to your cash holdings this will provide a balanced exposure to different assets without placing a large proportion of your capital under the exposure of the stock ma

westy69 · 24 January 2008 at 10:09AM

and with regards to the property funds

Thus we believe the exposure of the fund is of a higher risk nature than traditional property funds, but not as great as a general managed fund investing in shares.

i need to have a long hard think about my next step....

losing money advice please

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