is this mis-selling?

Newly_retired

To keep it as brief as possible, when we retired and got our lump sums, DH decided ( amongst other things) to use my IFA to get some investment advice.
( I had already got some investments via this IFA, his were first time)
The IFA advised a 5yr guaranteed investment with Prudential ( not yet reached 5 yrs so we are not looking at that yet)
and an ISA.
DH invested the full allowance for that tax year ( I can't recall the exact amount in 2007, it might have been £7000?) half in a cash ISA and half in S&S ISA.
Now on the latest report that £3500 sum is down by £1500 and DH is furious with the IFA.
He did not explain things to him, he did not assess his risk profile, he just assumed that DH had the same knowledge and attitude to risk as me. He saw us both together.
Does he have a case for mis-selling?
As you can imagine, my name is mud, for allowing him to be "conned by this trickster"

Aegis

Newly_retired wrote: »

To keep it as brief as possible, when we retired and got our lump sums, DH decided ( amongst other things) to use my IFA to get some investment advice.
( I had already got some investments via this IFA, his were first time)
The IFA advised a 5yr guaranteed investment with Prudential ( not yet reached 5 yrs so we are not looking at that yet)
and an ISA.
DH invested the full allowance for that tax year ( I can't recall the exact amount in 2007, it might have been £7000?) half in a cash ISA and half in S&S ISA.
Now on the latest report that £3500 sum is down by £1500 and DH is furious with the IFA.
He did not explain things to him, he did not assess his risk profile, he just assumed that DH had the same knowledge and attitude to risk as me. He saw us both together.
Does he have a case for mis-selling?
As you can imagine, my name is mud, for allowing him to be "conned by this trickster"

The investment performance in itself is not grounds for complaint, though that level of loss is appallingly high. Out of interest, what investment was it? I assume that if you hold it for the full term you are guaranteed to get your money back, if so then the current value matters less but is still not great!

The risk profiling might be grounds for complaint, unless your husband agreed to be considered either the same risk profile as you or to have his assets invested as through they were part of your portfolio. If he did neither and the IFA simply didn't bother to assess him for his attitude to risk, then you may well have a valid complaint and might want to consider raising it formally with the IFA.

opinions4u

Now on the latest report that £3500 sum is down by £1500

What fund is it in?

Why was that fund selected (this should be on a suitability report)?

What date was it worth £3,500?

What date was it worth £2,000?

Please confirm the exact amounts.

dunstonh

That level of loss seems too high for any of Pru's offerings. Is there are regular withdrawal being taken? That may explain the loss on top of returns that have been seen since 2007.

Newly_retired

Thanks for replies so far.
I understand that one cannot complain about the performance of funds.
Was it a reasonable assumption of the IFA that DH has the same attitude to risk as I have or is this the cause for complaint?
Many thanks for your opinions.
Sorry I did not make some of the details clear. Here is a more detailed account.

After paying off the mortgage jointly and DH's car loan, under the IFA's advice DHand I spread the rest of our lump sums across NS& I index linked certificates, Prudential and Sterling S&S ISA and cash ISA.
The Prudential fund is not under discussion as it has not yet reached its 5 yr capital guarantee period.
The S & S ISA is under the Sterling umbrella ( same as I have been with for a longer period ).
My ISA is in the same funds as his, as follows:
Fidelity European
Fidelity Wealthbuilder
Invesco Perpetual High Income
Jupiter Income
The income from the last two funds is re-invested in them
Apart from that we have not added to the funds since Oct 2007.
Of course there are charges taken and we planned for at least 5 yrs.
I do not have DH's exact figures, he just said he is £1500 down on his initial Sterling investment which was in Sept 2007
Here are my figures for the same period.

In Sept 2007 I invested a lump sum of £4000 so I reckon DH's must have been the same (?)
I then consolidated various previous ISAs giving me a total across these funds of £13195.88 on Oct 2007
5 April 2008 value £12102.81
Oct 2008 £10373.74
April 2009 £9217.19
Oct 2009 £10946.52
Apr 2010 £12079.15
Oct 2010 £12036.67
5 Apr 2011 £12989.26
5 Oct 2011 £11303.22
Of course we are aware that 2008 was a bad year so our timing was unfortunate to say the least. We were happy to see that loss improving and it was nearly back to where we started in April 2011, so the latest figures are disappointing.
I presume it makes sense to keep the money invested otherwise we consolidate our losses, but are these funds no longer suitable?

As I have other savings and investments I was prepared to take a higher risk with my ISA( but still fairly cautious ) than any other savings or investments.
I now realise DH expected the advice was to invest in funds which would at least keep pace with inflation and hopefully a bit more.
He did not expect losses and probably did not realise the effect of charges.
I do take some responsibility for not educating him properly!!!

dunstonh

Was it a reasonable assumption of the IFA that DH has the same attitude to risk as I have or is this the cause for complaint?

Depends. Most people have joint finances or have one party who makes key financial decisions. So the dominant financial partner may set the goals and the other goes with it. Others control their own finances (i.e. having their own bank accounts rather than joint) and they will normally have their own views on risk as it is their own money.

Some use the ISA allowance of the spouse with virtually no input from the spouse. Nothing at all wrong with that.

My ISA is in the same funds as his, as follows:
Fidelity European
Fidelity Wealthbuilder
Invesco Perpetual High Income
Jupiter Income
The income from the last two funds is re-invested in them
Apart from that we have not added to the funds since Oct 2007.
Of course there are charges taken and we planned for at least 5 yrs.
I do not have DH's exact figures, he just said he is £1500 down on his initial Sterling investment which was in Sept 2007
Here are my figures for the same period.

The new information, including values, now makes more sense. You are £1500 down on a £13195 value on 2007. A drop of just 11.3%. Not much at all when you think that the markets feel 43% over the credit crunch and recession and whilst recovered some of it since, they suffered 20% fall in August.

If you cannot handle a small 11.3% drop then you shouldnt be investing but using cash instead. Although that will be at risk of inflation and dropping in real terms. Investments are long term. You are just 4 years in since 2007. Typically you are looking at 8 years plus and an economic cycle takes about 10 years now. So, unless you invest for that sort of period, you are not going to get a whole cycle.

Anything can be mis-sold. However, it would be hard for someone to show a mis-sale here when the portfolio includes NS&I index linked certs, a guaranteed investment contract (Pru) and then a very small amount of unit linked funds, the majority of which were in place prior to the advice given.

The risk is also weighted over all your holdings, including cash savings. So, someone with £95k cash but puts £1000 into five different high risk funds would not necessarily be considered high risk investing because the interest on the £95k in one year can cover the £5k investment potential losses. (not that you would do that but purely as an example). Doing it the other way around with £95k invested in high risk and just £5k in cash would be near impossible to justify. The averaging of risk is always going to stay high.

Newly_retired

Whereas I am OK with my paper loss as I have plenty of other savings and investments, thanks to an inheritance and also to being a saver rather than a spender, DH is not.
It is his issue I am concerned about, not mine.
His attitude to risk was not assessed, but assumed to be the same as mine which it isn't.
He has virtually no other savings apart from a cash ISA.

jem16

Newly_retired wrote: »

His attitude to risk was not assessed, but assumed to be the same as mine which it isn't.
He has virtually no other savings apart from a cash ISA.

I'm not entirely clear if you made this investment as a couple or whether you both made it clear to the IFA that your husband was a totally separate entity?

Earlier you said;

Newly_retired wrote: »

After paying off the mortgage jointly and DH's car loan, under the IFA's advice DHand I spread the rest of our lump sums across NS& I index linked certificates, Prudential and Sterling S&S ISA and cash ISA.

Who has exactly what here?

Obviously the ISAs are in individual names as they have to be, but in whose name/s are the NS&I certificates and the Prudential guaranteed investment?

System

Didn't the IFA produce an itemised sheet (I cannot remember the correct term for the name of this document) showing what was discussed / agreed and didn't your DH sign it ?

Newly_retired

We don't have any joint accounts, apart from the mortgage which is paid off. All our finances are separate.
I had previous investments , using this IFA, including a S&S ISA in the funds already named above.
I only used my figures for my ISA as, after this meeting in Sept 2007, we were both advised to put money , amongst other things, into a S&S ISA and he advised the same funds as I was already using. I do not have any complaints, as I have a better understanding of the volatility of investments and the long term nature of them.
DH is unhappy.
When we got our lump sums, we used my IFA again, but this was the first time he had met my musband or given him any advice.

jem16

Newly_retired wrote: »

We don't have any joint accounts, apart from the mortgage which is paid off. All our finances are separate.

You haven't really answered the question though.

Who holds the NS&I certificates and the Prudential guaranteed fund?

When we got our lump sums, we used my IFA again, but this was the first time he had met my musband or given him any advice.

Again - did you make it clear to the IFA that your husband was to be advised separately?

If it was totally separate advice then both you and your husband would have each received a Suitability Report which detailed the advice given and the reasons why. If you received one Suitability report with the reasons why then it would seem the IFA was under the impression that your affiars were being treated jointly.

This is important to working out whether your husband has a claim or not.