Bad Financial Advice - Seeking Compensation

dunstonh

I have to say that this episode has dented my confidence in financial advisors in general. It appears that a few searches on google would have returned better advice in this instance.

You are being critical of a financial adviser that you have never met and don't know what was said or documents provided. You don't understand the product in question (thats nothing to be ashamed of) and the investment period was cut short.

Regardless of the outcome, at this stage you don't have the information to make any judgment of the 30,000 advisers out there based on one you have never met.

As for the product, my gut feeling now is that it is an investment bond. Unit Trusts typically have no surrender penalty and dont pay 8% commission (nor do investment bonds for that matter but they are the closest to that figure on indemnity basis). With it being Zurich, it could be an old Allied Dunbar plan or it could be one of the other companies Zurich have eaten up over the years, such as Eagle Star.

However, the comments on interest suggests it isnt a stockmarket investment at all. Maybe its a 5 year fixed term deposit???? Or maybe it's a GEB with an initial interest payment during the qualifying period (but I dont think Zuich issued any of those but one of their legacy companies might have).

Chrismaths

Look, it's very simple actually. You can not complain about investment performance - well you can, but you are wasting your breath and the Ombudsman's time. You can't complain specifically about the money made by a financial advisor on a product you are sold as you have to sign up to that with whatever product you are sold. If you don't read what you sign, that's your problem, and a lesson to be learned.

What you can compain about is the "suitability" of the product sold to you. If your gf went to the advisor and said "I don't want to tie up my money for more than 3 years", and he sold her something that had a lock in longer than that, then you have a case. However, I suspect this wasn't the case. You need to look at the letter he will have sent your gf explaining his recommendations.

I think it likely that your gf walked in and said "I want to invest this £25k and get a better return than on savings accounts, but I don't want any risk" - ie the typical (sadly deluded) client. If she didn't specify she wanted the money in 3 years, but maybe to "buy a house when I'm older" - then a 5 year term looks reasonable.

In terms of getting compensation, the fact he sold her a cr*p product that made him a wodge of money is not justification for a complaint. It's a good reason to get a decent financial advisor (they do exist, admittedly rare, but they do exist), and treat them as someone who can help you learn, rather than someone who knows The Answer(tm). It's also a good reason to read what you sign in future, and if there is a large amount of money being made by an advisor (greater the 3% is a sure fire sign they are recommending something because of the commission, not because it's the best) to be very, very careful.

EdInvestor

dunstonh wrote: »

As for the product, my gut feeling now is that it is an investment bond.

If so, it's another excellent example of why these products are so bad.

The indicators do seem to be there, I agree:

Lump sum
High commission
Penalties for withdrawal before 5 years
Unit linked
Interest payments (actually the withdrawals of capital allowed, but to inexperienced people they look like interest being paid from a bank account)
Confusion about tax
Serious underperformance (because of the upfront charges and taxes)

dunstonh

If so, it's another excellent example of why these products are so bad.

No its not. The exact same investment funds are available on investment bonds as they are on unit trusts and ISAs. If you have invesco perpetual income fund in a bond you will get the same perfomance as if you had it in an unit trust. The only difference is the tax & charges which may be lower or higher depending on your circumstances and how you bought it.

Lump sum
High commission
Penalties for withdrawal before 5 years
Unit linked
Interest payments (actually the withdrawals of capital allowed, but to inexperienced people they look like interest being paid from a bank account)
Confusion about tax
Serious underperformance (because of the upfront charges and taxes)

Why do you continue to post this misinformation when its been proven so many times to be wrong?

No doubt you would tell a higher rate taxpayer with an investment bond with lower AMCs than the unit trusts that it was wrong as well

jamesd

brucedavid21, please do let us know what the actual product is when you can. Most of the discussion is speculative and about other things until we know that. Nice side discussion but not really useful for you two.

brucedavid21

I posted this thread jsut wondering what the process for making a claim expecting a short response from someone. I didn't have the paperwork out at the time so it was very vague.

As the discussions have now turned into a more interesting debate about bad/good advice, commision and financial advisors in general, it has become far more interesting to everyone. I will get out all the paperwork and post a good summary of the investment so that a discussion based on the facts can take place.