Bad trust fund management

lvader

Hi,

My kids have inheretence money held in a trust fund which is managed by a lawyer, his inept financial decisions have led to their money going down in value over the last 10 years or so by some 20%. Not only did he make bad and expensive initial choices he has also moved the money to alternative funds which have proved even worse and added extra costs which have further eroded the money. Is there anything I can do about it?

dunstonh

Is there anything I can do about it?

It is unusual to see a lawyer give financial advice nowadays. Most dropped the authorisations when Lautro ended and the PIA took over. The last of them tended to stop when the FSA came in (and costs went up significantly). I cant see many going on beyond 2012 either when the revised RDR qualification limits and financial solvency requirements come in.

Anyway, losing money is not grounds for complaint unless there is some fraud or mismanagement involved (not acting within rules rather than making bad decisions). It may be worth finding out if he is authorised to be a discretionary investment manager.

Was the trust investing in shares, investment trusts or unit trust/oeics or within an investment bond?

lvader

In 2006 he transferd the funds into jpm premier equity growth fund, I believe it was invested in a Fidelity fund prior to this (mainly US equities).
I had a look at the JPM fund and it has an initial fee of 4.25% and a 1.5% annual fee. The eldest daughter became 18 in 2008 and took her money, that being the case why transfer taking a further 4.25% when there was only 2 years left to invest? I'm worried that by the time my other 2 kids become 18 there won't be any money left.

dunstonh

One assumes that there wasnt just one fund? That is poor investing unless its a fund of funds or self balancing fund.

I had a look at the JPM fund and it has an initial fee of 4.25% and a 1.5% annual fee.

Did he take the 4.25% though? Those clients with servicing arrangements with IFAs (for example) would not typically pay initial charges on fund switches.

The eldest daughter became 18 in 2008 and took her money

Seeing as the markets dropped between 40-60% in 2008, that may explain the scale of the loss. She missed out on the 50% recovery in 2009.

that being the case why transfer taking a further 4.25% when there was only 2 years left to invest?

Check that 4.25% was actually taken. Just because a fund has a retail charge of that amount doesnt mean it was taken.

Normally, as someone gets closer to maturity or end point, you would look to reduce the risk of the investments. That is one of the things a servicing adviser would give. You should raise that point.