urgent advice needed

donnalove

hi my sister and i are in need of some urgent advice.

Our dad passed away 2 weeks ago and we are going through his paperwork.

We have had i letter back from legal and general in which our dad had £100,000 invested.
we have been given a much lower figure of £83,000 at time of death and even lower for probate value which is £81,000:eek:

Now we know he was getting £416 a month in payout from this.

We are very confused about the policy as we don't understand why my dad was sold this as it was a 10 year ( according to what we have read) bond and he was nearly 71 at time he took this out!!!

Now the way our dad told us was that he was getting interest every month and a lump sum every year which we are now reading is income from his capitol and also has been charged £42.51 (figure changes monthly) on each withdrawl.
He also paid the advisor who took this policy out over £7000:eek:

So in short he has just been getting monthly money out of the bond, being charged for taking this and getting no interest!!!!

it doesnt really make sense to us as my dad was caucious*spelling* with his money wrote every penny he spent down in a book( and would have wanted to make money not give it away) and this policy just sems to have taken all his money and gave nothing in return!!!! which we know is exactly what he didnt want!! as he was fuming when our auntie passed away in may and she had taken money out of her house £13000 ( roughly 20 years ago) and we had to pay back on sale of the house £60000 !!!:eek:

we are thinking he has been missold a policy i mean why would a 70 year old be advise to take a 10 year !!!!

Hope this makes sense
any info would be great
thanks
donnalove

Lokolo

Ok.

So £416, *12 (months in a year), *10 (since he had it)

Means he withdrew £49,920.

You are saying he invested £100k and its now worth £81k.

And you say he didn't get interest?

---

Although someone with better experience will come along, personally I think hes had a good deal.

jem16

donnalove wrote: »

Now we know he was getting £416 a month in payout from this.

Need a bit more info here - how long had your dad been getting this monthly income? Did he also get a lump sum yearly and if so how much?

We are very confused about the policy as we don't understand why my dad was sold this as it was a 10 year ( according to what we have read) bond and he was nearly 71 at time he took this out!!!

Now the way our dad told us was that he was getting interest every month and a lump sum every year which we are now reading is income from his capitol and also has been charged £42.51 (figure changes monthly) on each withdrawl.
He also paid the advisor who took this policy out over £7000:eek:

From the sound of it your dad had an investment bond.

Where did he get this investment bond from? Was the adviser an IFA or a financial adviser from a bank? I'd hazard a guess at bank tied adviser as the commission taken is the maximum paid on an investment bond. IFAs usually have a maximum of 3% not 7%.

So in short he has just been getting monthly money out of the bond, being charged for taking this and getting no interest!!!!

An investment bond doesn't pay interest. It's a stockmarket investment and will go up and down.

We need to know how much he has been paid out to see how much it has gone up or down.

we are thinking he has been missold a policy i mean why would a 70 year old be advise to take a 10 year !!!!

If it was from a bank it would be typical advice for someone who said they wanted an income and may or may not have been missold - more info is needed.

When exactly did your dad take out this investment bond?
Was he advised to use an ISA first or not?
What documentation was provided - i.e. suitability letter outling his needs and risk profile?

donnalove

Thanks for quick replies

the investment was taking out in july 2008 he was 70 at the time(71 in august 2008)

lokolo sorry if i didnt point it out properly he was 70 at time he took policy he had just turned 72 when he passed away he had the policy for roughly 13 months

ok now gem he was getting £416 a month from what we can see and we cant find any evidence of a yearly payout either( which he told us he would be getting roughly £1800)

the investment is with legal & general and was done through the alliance and leicester adviser.

from what we know that he told us the 416 was coming from interest *NOT* his money we are sure if he thought it was stock controlled he wouldn't have took it he didnt have a clue about stocks and shares

£4103 is what he has been paid out so far the forms are not what we can understand we dont deal in things like this and neither would our dad have.

no idea about his risk profile etc...

we are very perplexed by all this as he wanted an income we know that to pay rent but he also wanted his capitol to grow and as we understand from what he told us he would have thought the monthly payments were from interest paid, which in addition he has been charged for very confusing cos looking at it he would have been better keeping it under his mattress and taking out the £416 a month he would have saved £42 a month paying them and the £7200 he paid the adviser.

very confused

jem16

donnalove wrote: »

Thanks for quick replies

the investment was taking out in july 2008 he was 70 at the time(71 in august 2008)

OK. Timing was unfortunate as the market pretty much crashed then. However it has recovered a lot over the last 6 months.

ok now gem he was getting £416 a month from what we can see and we cant find any evidence of a yearly payout either( which he told us he would be getting roughly £1800)

An investment bond allows a tax-free withdrawal of 5% each year - this comes from the capital though. 5% of £100k is £5000 which equates to £416pm. There is not usually a yearly payout as well as monthly payouts so perhaps your dad got confused.

the investment is with legal & general and was done through the alliance and leicester adviser.

As I suspected - a tied adviser from a bank and not an IFA.

from what we know that he told us the 416 was coming from interest *NOT* his money we are sure if he thought it was stock controlled he wouldn't have took it he didnt have a clue about stocks and shares

You will need to find the documentation from A&L to see what has been documented about this investment. It is definitely not savings. As you were not at the meeting with the bank and your dad ( I assume ) you cannot tell what has been discussed.

It is likely that it will have been well documented by the A&L adviser.

£4103 is what he has been paid out so far the forms are not what we can understand we dont deal in things like this and neither would our dad have.

It looks like he has though. He was probably told that it would provide an income and his capital would grow. However it will probably state quite clearly that his investment may go down on the documentation he was given.

no idea about his risk profile etc...

This would be very important. You can't complain about investments going down. You could complain that the investment wasn't in line with his risk profile. You may also have grounds for complaint if his ISA allowance was not utilised first.

A lot depends on the discussion and documentation whether or not you have grounds for complaint.

we are very perplexed by all this as he wanted an income we know that to pay rent but he also wanted his capitol to grow

That would tie in with the use of an investment bond.

and as we understand from what he told us he would have thought the monthly payments were from interest paid, which in addition he has been charged for very confusing cos looking at it he would have been better keeping it under his mattress and taking out the £416 a month he would have saved £42 a month paying them and the £7200 he paid the adviser.

He didn't pay the adviser anything - L&G paid it to the adviser as commission for selling the product. The full £100k would have been invested. However if he had seen an IFA rather than a tied adviser he would have had more invested as the IFA would have taken less commission and rebated part of it back to your dad's investment.

The £42pm is charges applied by L&G on the bond.

Perhaps seeing an IFA now might be a good idea to see if you have grounds for complaint or not?

opinions4u

donnalove wrote: »

hi my sister and i are in need of some urgent advice.

Our dad passed away 2 weeks ago and we are going through his paperwork.

Losing a parent is very, very hard. It's one of those things that you always know is likely to happen one day, but you never quite expect or believe when it does happen.

Try to remember that this is an emotional and stressful time for all the family. While difficult, taking a step back for breath will help you to try and deal with his financial affairs with a little more clarity.

Why is the situation urgent? There is little you will be able to do until probate has been organised.

We have had i letter back from legal and general in which our dad had £100,000 invested.
we have been given a much lower figure of £83,000 at time of death and even lower for probate value which is £81,000

Investments can rise and fall in value. The last 18 months has been a tough period for investors where they have seen falls in values.

Now we know he was getting £416 a month in payout from this.

Which equates to £5,000 a year (5% of the capital invested). It may be that this was an investment designed to provide an income in a very tax efficient way.

We are very confused about the policy as we don't understand why my dad was sold this as it was a 10 year ( according to what we have read) bond and he was nearly 71 at time he took this out!!!

Tax efficiency most likely. There are many different options for investors but it is not unusual for a 71 year old to take out an investment that gives a guarantee on income while at the same time allowing capital to fall and rise with movements in investment markets.

it doesnt really make sense to us as my dad was caucious*spelling* with his money wrote every penny he spent down in a book( and would have wanted to make money not give it away) and this policy just sems to have taken all his money and gave nothing in return!!!! which we know is exactly what he didnt want!!

The policy has not taken all of his money. The investments have fallen in value, but not by 100%.

You will need to ask A&L, as the sellers, why the thought this investment was appropriate. The may be unwilling to discuss it until probate has been arranged.

Here's a question you need to ask yourselves: if the value of the investment was now £120k would you be complaining? It does sound like the type of investment that could also rise as markets recover.

we are thinking he has been missold a policy i mean why would a 70 year old be advise to take a 10 year !!!!

He may have been but probably hasn't been. It's perfectly reasonable to ask the question though.

How about the adviser recommended a product guaranteeing income for a period of time taking him in to his 80s, minimising his income tax liability?

donnalove

thanks for the replies
sorry i addressed as urgent but to us it doesnt tie in with what he told us and we just really need to know if we need to go and see someone and explain our concerns before we deal with legal and general and get the policy released. ( which we do know can still take some time).
yes i understand investments in stocks and shares go up and down, what is puzzling us is it doesnt tie in with what he told us.

we really think he didnt understand that the money was coming out of his own money and that the 5% was being paid in *interest* as that is how he told us he said his original money was safe.

yes it looks like he has gone in stocks or whatever but we dont think he knew this i know that sounds strange
we were expecting the forms that we needed for probate from them to say at least his origanal £100,000 less a couple of grand surrender fee's. we were all under the impression he was gaining income from his interest, we have even spoke with my dads very close friend and he confirmed what we say that he had it invested and was living off a monthly income but from the interest

this isnt about the investment going down or up its about the actual policy itself not being as he thought also but to lose 17 grand in just over a year and only seeing roughly 5 grand wheres the other 12 gone very flumoxed by it all

yes minimising his tax liability would have been an option

jem16

donnalove wrote: »

thanks for the replies
sorry i addressed as urgent but to us it doesnt tie in with what he told us and we just really need to know if we need to go and see someone and explain our concerns before we deal with legal and general and get the policy released.

The best person to see would be an IFA.

we really think he didnt understand that the money was coming out of his own money and that the 5% was being paid in *interest* as that is how he told us he said his original money was safe.

It may be that he didn't understand what he was getting into. However we don't know enough about his circumstances to say whether it was the right choice or not. There can be many reasons an investment bond was chosen and it may have been the correct choice.

However the bank's advisers are usually lower skilled and do not have the authority to portfolio plan so it may be that something else would have been more suitable

this isnt about the investment going down or up its about the actual policy itself not being as he thought also

That may be the important part.

but to lose 17 grand in just over a year and only seeing roughly 5 grand wheres the other 12 gone very flumoxed by it all

It's only a 10% loss which is not bad.


You need to look out all the documentation that your father received. Take it all to see an IFA ( make sure it's an INDEPENDENT financial adviser, not a bank's adviser). He would be able to see if there are any grounds for missale.

He would also be able to see if it's possible for the investment to be transferred to you and your sister if no grounds for complaint. That way you could allow the investment to grow now that the markets are recovering.

yes minimising his tax liability would have been an option

This could be one big reason why it was an appropriate investment.

Was your father a taxpayer? Was there Inheritance tax issues? An investment bond is placed outside the estate so it could have also minimised IHT.

donnalove

thanks jem

yes he was a taxpayer but there isn't going to be any IHT to pay.
We are not sure about keeping the investment as 35,000 is meant for our mother, although she has said she doesn't want it and too be honest we are not a risk taking family as such and i would rather find a interest savings account to invest the money even if u only get 2% the return is better than this.
We are coming to the conclusion he didnt understand fully what he was being told and to be honest we think the adviser might have taken advantage of this which saddens us as whats happenned is exactly what he didnt want to happen and he has lost his money.
as u say we don't know what was said in the room but we know what he has told us and was under the impression the money he was getting ev month was from interest not his capitol
Also the 10 year thing has us flummoxed 5 years i could understand but not 10 he would have wanted easy access incase he wanted to spend some as in the last couple of months he was thinking of taking some out. His death was sudden and unexpected and very much a shock.

just for the record we were going to leave probate a while at least untill we had cleared his house, but we apparently need it for the car finance company so they can take his car back as we have no where to store it thats why we had to get a figure from his investment for the forms.

thanks for your advice we are going to find a IFA and see what they say.

much appriciated xx

donnalove

jem16 wrote: »

He didn't pay the adviser anything - L&G paid it to the adviser as commission for selling the product. The full £100k would have been invested. However if he had seen an IFA rather than a tied adviser he would have had more invested as the IFA would have taken less commission and rebated part of it back to your dad's investment.

The £42pm is charges applied by L&G on the bond.

Sorry going back to your first post we have found paperwork and it does say you have paid £7200 to FA who sold the policy so we understand that he has paid them?

jem16

donnalove wrote: »

thanks jem

yes he was a taxpayer but there isn't going to be any IHT to pay.
We are not sure about keeping the investment as 35,000 is meant for our mother, although she has said she doesn't want it and too be honest we are not a risk taking family as such and i would rather find a interest savings account to invest the money even if u only get 2% the return is better than this.

I didn't really mean keep it forever or even the whole of the 10 years. I meant keep it until it recovers so that you don't make a loss.

Also the 10 year thing has us flummoxed 5 years i could understand but not 10 he would have wanted easy access incase he wanted to spend some as in the last couple of months he was thinking of taking some out. His death was sudden and unexpected and very much a shock.

With most investment bonds you can withdraw after 5 years without penalty. It doesn't necessarily have to be for the full 10 years.

thanks for your advice we are going to find a IFA and see what they say.

It may be worth asking if the documentation could be looked at. However there may be no grounds for complaint.

Sorry going back to your first post we have found paperwork and it does say you have paid £7200 to FA who sold the policy so we understand that he has paid them?

The £7200 is a commission payment. It usually says "we have paid £7200 to the FA who sold the policy".

Do you know from the paperwork exactly how much was initially invested into the bond?