Guidance on investments with Lloyds

DavRos_2

Hi

An elderly relative (late 80s lives in annex adjoining the house) has banked with lloyds all her life - and she asked me for some general advice. I wasnt at all familiar with her financial situation and she has in the past been advised by Lloyds. What appears to be the case is that she has:

£150k+ in an OEIC/shares ISA with Scottish Widows
£30k in easy access savings account paying 2% with lloyds
£15k in current account with Lloyds
£5k in cash ISA with lloyds

What struck me was that she has all her savings in Lloyds/Scottish Widows so well over the £85k protection limit.

Also that she had been advised to put so much in OEIC/corporate bonds/shares ISAs as it appears her capital has been fluctuating (generally down). She invested this whilst in her 80s so am struggling to see how it would be good advice to ask her to put so much in a scheme where capital is not protected.

Anyhow we have booked an appointment next week to go through this with me in support.

Do others think this advice is strange ? And what would others advise.

My instinct is to get her into good savings accounts where capital is not at risk and to split it across 3 different institutions (it seems you can can get 3%+ if you keep an eye on the rates being offered), plus make sure she uses all the ISA allowance each year

Any thoughts/commented would be appreciated ?

David

Masomnia

'What struck me was that she has all her savings in Lloyds/Scottish Widows so well over the £85k protection limit.'

The limit only applies to savings, not investments. Her savings are covered.

Other than that, it's a bit hard to say without knowing where the money is invested. Although she may get better value for money elsewhere., but if she trusts Lloyds etc...

opinions4u

I'd be reluctant to start messing with an elderly relative's finances.

Others in the family might accuse you of all sorts when she dies.

That said:

1) If she's of sound mind you need to understand if she's prepared to move from LTSB or not. Another bank may confuse her significantly.

2) If she wants to stay with LTSB, support her in finding the best home for her money from their range, but also help her to keep it in a good paying account, as most of their accounts have 12 month bonuses.

3) Make sure you don't do anything with cash ISA that could impact her stocks and shares ISA.

4) Get her agreement to shift money from the current account to a better savings account (even if it's only the 2% one).

Just because somebody's old doesn't mean that capital should be protected. My biggest concern for her would be if she owns a property. There's a high chance of an IHT bill on the horizon. I'd be talking to an IFA about the best ways to mitigate this.

dunstonh

What struck me was that she has all her savings in Lloyds/Scottish Widows so well over the £85k protection limit.

I dont make it above £85k.

I make it 50k she has on deposit. So, below the deposits protection level. Investments are not included in that.

Also that she had been advised to put so much in OEIC/corporate bonds/shares ISAs as it appears her capital has been fluctuating (generally down). She invested this whilst in her 80s so am struggling to see how it would be good advice to ask her to put so much in a scheme where capital is not protected.

Age is a consideration but its one of a few. The only reason she would see her value lower now if she was invested in corp bonds is that she has been drawing an income from the investments. If her demand for income is greater than that payable on savings accounts, then utilising some investment options may well be the best choice providing that she is in a position to understand the issues. With income, there is no risk free option (even cash is not risk free as if you are drawing more than the interest, your cash balance goes down at an ever increasing rate).

As for the rest, we dont know what she wants from the money. Going into cash could be the best option but could be a bad option. If you dont understand the issues yourself, you could end up making a good situation bad. It if is wrong, then you could make a bad situation good but at the moment its hard to tell if there is anything wrong (lack of info mainly)

Eco_Miser

Is the 15K in current account, actually spread over three accounts with Vantage, and £1000 a month passing through them?, If so, it's earning 3%, if not why isn't it?

As for capital preservation, I'd be more concerned in getting a steady, preferably increasing, income, than worrying about the market valuation of investments that I'm never going to cash in.

Theyarv1

As dunstonh suggests, the shares will effectively be in her name and aren't relevant to the protection scheme.

This is a very tough one. Banks generally will do what's best for them which is invariably bad for the customers. There is a lot of evidence these are some of the worst routes to market due to them often having the highest costs. As mentioned though, change is never fun, especially when it could be confusing and misunderstood.
I would personally say she should find an IFA and pay upfront for advice (ie no commissions) so she gets what is most suitable for her. Given her age it's standard practice to have less money in equity and more in guaranteed income than she currently appears to have due to short term fluctuations.
good luck

pqrdef

DavRos wrote: »

£150k+ in an OEIC/shares ISA with Scottish Widows

£150K+ in an ISA doesn't seem too bad. They've been going 13 years now I think, but the contribution limit was only £7K a year for a long time.

And if you take the money out, whatever interest you get on it will then be taxed.