Bank advised my dad to put all redundancy into shares, bad advice?

paul5046

Hi,

I only found out recently but when my dad retired his bank advised him to put it all in shares. I think thats terrible advice and want to make a claim against them. How do i go about it, has anyone done a similair thing themselves?

LittleVoice

Whether it really was bad advice at the time (whenever that was) depends on what other funds he had elsewhere.

If your dad took the advice, what has happened to the management of his portfolio in the meantime?

And it isn't for you to make a claim against the bank, it's not your money.

paul5046

LittleVoice wrote: »

Whether it really was bad advice at the time (whenever that was) depends on what other funds he had elsewhere.

If your dad took the advice, what has happened to the management of his portfolio in the meantime?

And it isn't for you to make a claim against the bank, it's not your money.

Obviously my dad will be making the claim. Anyone any advice on the best way to go about it.

innovate

I think you/your dad are probably on to a lost cause because your dad is very likely to have signed something that says he understands the risks associated with investing in shares. Unless he has something in writing from the bank claiming guaranteed appreciation, your dad won't have any legal recourse to recover any loss his investment made.

May be one of the FSAs that hang about on the forums can comment on the precise legal position of advice received from banks.

Reaper

Was it a sit down interview where they did a written fact find?

If so they should have asked him whether he wanted high risk/high return, low risk/low return or whatever and recorded it.

It all depends on what he asked for. If he asked for low risk and they put it in shares then you may have a case.

pumpndump

If you want to take out a case against the bank, go talk to a lawyer. That's the best advice you're going to off this forum.

dunstonh

I doubt the bank put it all in shares. Financial advisers are not authorised to deal with shares. That is the remit of stockbrokers. You dont find them in the branches much nowadays.

Bank tied advisers have a different remit to IFAs in that they do not recommend the investment funds or build a portfolio. The ascertain the risk profile of the individual and present the funds that are available to select that match that risk profile. Your father would then pick the fund. If there is only one fund then that choice isnt required as its a default option.

Most banks tend to use balanced managed or cautious managed funds which involve investing in a range of areas and not all in the stockmarket.

You cannot complain because the value of an investment goes down. The only potential to complain about is if the risk profile of the product and investment doesnt match the customer/client. You have not mentioned the product, funds or risk profile of your father. Until you do then there is nothing to really comment on.

paul5046

dunstonh wrote: »

The only potential to complain about is if the risk profile of the product and investment doesnt match the customer/client. You have not mentioned the product, funds or risk profile of your father. Until you do then there is nothing to really comment on.

That would be my gripe. Who decides what is medium risk though. In my opinion if someone came into a bank with 50k redundancy and said my attitude to risk was medium, i'd say 15k cash, 10k fixed interest investment and 25k in shares like a UK managed fund. Would you agree (obviously these are ball park figures)

How do i start the ball rolling if this is the line i want to go down, can we get a risk analysis off the bank.

LongTermLurker

The most obvious thing that springs to mind is that it happened when he was made redundant. The important things that would determine whether it was a reasonable choice would be things such as whether he had another job lined up, whether he had ongoing debts such as a mortgage, whether he had sufficient savings/income to act as a buffer until his income returned etc, along with his stated timescales and attitude to risk.

LittleVoice

Perhaps your father could try getting hold of the documents which they hold on the advice-giving situation. He could ask for this under data protection legislation, couldn't he?

kazwookie

Shares go up and DOWN, always have and always will.