MSE News: Banks 'give poor investment advice'

This is the discussion thread for the following MSE News Story:

"Many high street banks and building societies are offering poor investment advice, says consumer group Which? ..."


  • KTF
    KTF Posts: 4,820 Forumite
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    Amazing! What next, the results of a study that finds the Pope is Catholic?
  • qpop
    qpop Posts: 555 Forumite
    I heard as well that bears still use wooded areas to attend to their natural digestive needs.
    I am an IFA, but nothing I say on this forum constitutes financial advice. Always draw your own conclusions and always do your own research.
  • System
    System Posts: 178,102 Community Admin
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    Where have these "Researchers" from the consumer group Which? been, high street banks, etc. have not been that good at giving investment advice for many years now. Hence, this is old news.
  • financial_illiterate
    To be fair, it is old news to those that know it. When I first started to 'save', I didn't have a clue and when I told my bank I had filled my cash ISA, they immediately suggested a S&S ISA through them.

    I was lucky/clever enough to tell them to go away, but they must catch some people unaware.
  • oldfella
    oldfella Posts: 1,534 Forumite
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    how about changing "many banks" to "all banks"
  • Mikeyorks
    Mikeyorks Posts: 10,369 Forumite
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    And :
    Our investigation shows that the high street isn't the best place to go for investment advice

    ............. removing 'best'.
    If you want to test the depth of the water .........don't use both feet !
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
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    It tested six independent financial advisers and found that four gave good advice to researchers.
    I find this more worrying than the news about the banks. At least you might expect bad advice from a bank!
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    As usual, the article isn't really clear. And I cancelled my Which? subscription in 1992 when they compromised their impartiality by selling their own credit card.

    Poor advice: Is this the wrong product being recommended from the range available, or the right product being recommended but poorly explained?

    Make it clear please MSE.
  • dunstonh
    dunstonh Posts: 116,596 Forumite
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    edited 17 November 2011 at 10:04AM
    I find this more worrying than the news about the banks. At least you might expect bad advice from a bank!

    6 is not a good enough sample. Plus, Which? were using their own standards as what was right or wrong and not necessarily regulatory standards. So, it is possible that the actual failings in Which? eyes are not regulatory failings. Commission advisers, often dont disclose the commission until illustration stage and some advisers wont get that far in the process under their presentation style if they feel the person isnt going to proceed. Fee based advisers are basically much more upfront about it so its easier to say they are better.

    Until we know what the failings are, it is really hard to comment other than that we all know the banks work under a sales process and use sales style methods and if under pressure, they may bend rules or do things wrong.

    for example, they say:
    "The researchers posed as customers who were over age 60 and inexperienced investors.
    Despite this investor profile, most of the bank advisers recommended complicated and expensive investment products.

    That isnt an adviser failing. That is the limitation of buying an investment product from a bank.

    Here is a list of what they marked advisers on:
    **To give good advice, advisers had to:
    Disclose their status as tied advisers to the researcher and make it clear whose products they could recommend
    Disclose coverage of the FSCS
    Carry out a thorough fact find
    Clearly establish the researcher’s attitude to investment risk and recommend based on this
    Discuss tax, in terms of the researcher’s current tax status and the tax position of the product(s) that they were recommending
    Fully explain the product(s) being recommended, including all of the risks
    Explain all the fees and charges of the product(s) and how these might affect their recommendations.

    Disclose coverage of the FSCS is possibly one which they could fall down on as you tend to cover that late in the process (often at signature point, so they may not got that far). Banks are more likely to recommend structured products than IFAs. IFAs more likely to go unit linked. So, FSCS is less an issue with unit linked whereas with structured products it is an important disclosure.

    Carry out a thorough factfind could be open to interpretation. An experienced adviser can complete most of a factfind without the person even knowing that factfind questions are being asked (conversation style). So, it may only be a few missing bits which actually appear obvious to completing a factfind. The FSA has no rules on what should be in a factfind. So, who is to interpret what is a thorough factfind and what is not.

    The actual Which? press release did state that the advice from the IFAs was more reassuring. MSE edited that out of the article it posted here.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
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    I definitely agree about the sample size, dunstonh. But even so for 2 out of 6 to fail is a poor indication.

    Would have been interesting to see where Which? said they fell down on and what the advisor's response to that would be.
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