Innvesting nest egg of an 80 year old novice

southernbelle2

I have a friend whose relative invested her nestegg of approximately £80,000 in equities. The sum was invested for 5 years when she was 80 years old and has now been returned minus about a third of its value. My friend entrusted her relative because he is an IFA; she had no experience in investing and no knowledge of it. All she was told was that the investment would be tied up for 5 years and returned to her with an increase. Even as this was being arranged 5 years ago he refused to discuss this with any other family members because he is the 'expert'.
He made several thousand pounds in commisssion at that time. I think that he should be held resonsible for the loss as he had assured her the money would be safe. What do others think?

amiehall

Does your friend wish to take legal action against her relative? If not, any further advice about what is right and wrong is irrelevant....

Obviously I don't know what was actually said but if the IFA has invested money with a simple assurance the money was safe rather than clearly explaining potential risks and rewards this is clearly not right. It is potentially misselling. If your friend doesn't want to do anything about it though, that doesn't matter...

Lokolo

100% equities for an 80 year old?

dunstonh

I'm also trying to work out how they lost a third of the value (unless there have been withdrawals). Despite the events of the last 5 years, it should be breakeven or suprlus, even with a high equity count, unless money has been withdrawn or the investments were speculative.

What were the investments as that is going to be key in any potential complaint?
Have their been withdrawals? (if so, then obviously these would impact).

Age and experience are key considerations. It doesnt mean that the person should not invest but you would expect a much smaller ratio of the persons overall holdings to be invested and a cautious spread as well. (i.e. if the person had say £200,000 in cash and invested £80,000 of it then it leaves £120k in cash and able to handle short term movements). If they had £90k and they invested £80k then this would be very hard to justify.

gadgetmind

Lokolo wrote: »

100% equities for an 80 year old?

Hard to believe, isn't it? Very, very hard to believe.

atush

I also don't beleive an IFA (with all the rules and regs that apply) was involved here. Perhaps the relative was a FA with a bank or something?

Yes, they should be held responsible for such advice, but unless the 80 yr old will press a claim/complaint I don't see what anyone here can advise.

TDPIX

Probably a silly question, but was anything put in writing? Did the 'IFA' say in writing this was a low risk investment? Did they say in writing there'd be a positive return?

southernbelle2

He is most definitely a registered IFA and did put all the money into equities - the £80,000 was the total amount. She has been given back only about £52,000. I was looking for views on the morality of the situation as I am sure she will not want to sue him...

It is complicated because he now says his wife (at the time - no longer) invested the money that he said HE would so it is not his fault, although she is not an IFA.

xylophone

It doesn't matter much what anyone says if the victim won't seek redress.

dunstonh

I was looking for views on the morality of the situation as I am sure she will not want to sue him...

We need more info. She wouldnt sue him either. She would use the FSA regulated complaints process.

It is complicated because he now says his wife (at the time - no longer) invested the money that he said HE would so it is not his fault, although she is not an IFA.

It doesnt matter if his next door neighbours dog invested it. The adviser carries the liability for transactions put through the business.

srcandas

Looks a little odd as Dunston says if the money was positioned in the FTSE (down 20%). If all the divi's covered the costs there is still £12000 gone down the plug hole.

So on the moral side I guess there are two different possibilities:

Are we looking a negligence or fraud?

If the first I guess there is a shared responsibility. Giving money to an idiot to invest is not a smart strategy.

If the latter - well I'd rather not think about that within a family :eek:

But OP all the best with it. Very difficult situation. But I guess you can only do what is best for an 80+ year old from here. Doubt they want the stress of a fight which without contracts might not work out morally

:beer: