Guaranteed Investment Plan

jojaye

Views would be appreciated on the following circumstances; An elderly Lady of 82 has a visit from a well known High St Bank's personnal Financial Advisor. She has £70,000 in her current Account and he suggests that she should invest it in the above type plan. The charges are 1.75%, and the advice costs were £1820.00. The Bank have written to her recently asking for a meeting to discuss her investments-clearly not happy with the current situation. whilst 'Best Practice' appears to have been complied with, should this plan, which includes a combination of Stock Market linked Investments and fixed Interest Securities, have ever been offered to a Lady of this age. She is of reasonable sound mind, rather thrifty and widowed. Furthermore, they sold an identical plan to her when she was 79, this time the investment was £30,000. On both occasions they came to her, not her to them.

Lokolo

I don't think the investments were chosen too badly, assuming she wanted to tie up the money for a long period. Although you might be able to say that investments were misold due to the age of the investor.

However, they're sales, they're there to sell stuff. If she wanted to invest any money, she could have gone to an IFA and got a better deal.

dunstonh

should this plan, which includes a combination of Stock Market linked Investments and fixed Interest Securities, have ever been offered to a Lady of this age.

Whilst age is certainly a consideration of any advice you give, there is no line in the sand where someone should stop investing. There are plenty of good reasons to stay investing into your 80s and 90s.

She is of reasonable sound mind, rather thrifty and widowed.

So, she seems to meet the criteria to have investments on the basis of understanding.

Furthermore, they sold an identical plan to her when she was 79, this time the investment was £30,000. On both occasions they came to her, not her to them.

Home visits have always been available.

The bank is never going to give her best advice and best product but they dont have to. Just best advice from their available product range. Age is important to consider but you havent given any reason suggesting any wrong doing. Especially if its a guaranteed plan (although is it really a guaranteed plan and not a protected plan?)

jojaye

Thanks everyone. I have tried to remain on the 'fence' and be honest about her and the plan sold. I am her POA and at present sorting out her 'Portfolio'. To many Lay persons out there, facing financial Advisors can be daunting, especially when you are on your own. I wrote into a National Newspaper's financial section asking where i should help her invest new Capitol, and having explained her circumstances they were quite clear that such amounts should only be invested for a short time with cash deposits the most suitable option, particularly National Savings. This plan has a Guaranteed valuation date, and a money back guaranteed date, gauranteeing the return of your original investment, ie. 5 years time. The point of 'short time' is of course very obvious, so I am surprised that this plan was rolled out in front of her.

dunstonh

I wrote into a National Newspaper's financial section asking where i should help her invest new Capitol, and having explained her circumstances they were quite clear that such amounts should only be invested for a short time with cash deposits the most suitable option, particularly National Savings.

Media advice is often basic and generic. Its not uncommon for it to be wrong either. Generically, if you talk short term then you avoid investments. However, that doesnt mean that investments are wrong for the person once their objectives are known. The answer you were given is straight out of the basic training manual for newbie advisers. However, in the real world, the answers are usually different.

This plan has a Guaranteed valuation date, and a money back guaranteed date, gauranteeing the return of your original investment, ie. 5 years time. The point of 'short time' is of course very obvious, so I am surprised that this plan was rolled out in front of her.

I dont see the issue. It has a capital guarantee, so limited risk is being taken. If she has sufficient reserves in cash then they havent left her short of money. So, why do you think it is wrong? (not saying the advice is right either. Just that nothing you have said so far indicates a problem).

jojaye

Did anyone read 'Money Mail' 15.9.10 about an elderly investor with co-op Bank. Advisor recommended 3 funds within an Aviva bond. took the mans £60,000 and in 4 years he lost £11,000. there was some switching into more defensive gilt and fixed interest funds but they performed less well. An enquiry by 'Money Mail' to Co-op Bank resulted in Co-op Bank returning the £60,000 plus £11,000 interest. Anyone understand why Bank capitulated?. could it be he was 83?

dunstonh

Did anyone read 'Money Mail' 15.9.10 about an elderly investor with co-op Bank. Advisor recommended 3 funds within an Aviva bond.

Totally different product type and unrelated to that mentioned on this thread.

Anyone understand why Bank capitulated?

Probably as they didnt utilise the ISA allowance first and then use unit trust/OEICs. That would almost certainly have been better advice than going straight into an investment bond with the lot. IFAs put in complaints about tied sales reps doing this all the time and they are very often upheld as they dont have a leg to stand on.

could it be he was 83?

You tell us. We havent seen the factfind, needs analysis, suitability report or complaint reasons and response reasons. Just the final outcome.

LongTermLurker

When you say "guaranteed", just read carefully and be certain it's not just "protected" like dunstanh says - take care that there isn't a clause that says something like "if the (benchmark / FTSE100?) drops by more than 50% then your investment will drop proportionately".

That type of product protects you against certain stock market movements, but doesn't fully guarantee the initial sum invested.

jojaye

Not for one minute was i suggesting that the plan sold was related to my former thread, only a sale to an elderly person. Sure we do not know the details, but they capitulated to a phone call from a Newspaper rather than a complaint to the Ombudsman.

dunstonh

jojaye wrote: »

Not for one minute was i suggesting that the plan sold was related to my former thread, only a sale to an elderly person. Sure we do not know the details, but they capitulated to a phone call from a Newspaper rather than a complaint to the Ombudsman.

If there was no ISA and OEIC comparison then they dont have a leg to stand on. Even if the complaint is about a totally unrelated thing, the complaints handler for the CIS needs to look at the suitability of the sale. So, you can end up with an uphold decision on an issue you knew nothing about but not on the issue you complained about. In this case you clearly have the potential for the wrong tax wrappers being used. However, you can also have inappropriate risk profile as it sounds like it started higher risk and then moved to lower risk. Also, CIS agents are tied reps and most tied companies often dont allow their agents to give switching advice. So a rule breach there is probable.

Sometimes big firms will decide to take a hit when the media are concerned even when there is little or no wrong doing. That is actually quite frustrating as you end up with complaints that you think should be upheld being rejected and complaints with no wrong doing being upheld.

jojaye

Dunstonh, thanks for that last bit of info-its waiting time for me and her before we meet to discuss their views in early Oct. Will let you know what they say.