Heres one for all you IFAs out there to comment on: Couple lose life savings

BananaRepublic

Pincher wrote: »

In the movie 300, the Ephors denied King Leonidas his request, using the Carneia as the excuse, but secretly taking a backhander from the Persian agent; and still charged Leonidas a lefty fee.

It's so true, history repeats itself, all the time.

If only all the evil people are ugly and puss ridden, so you can tell straightaway.

Just goes to say that the old saying, do not trust the Ephors, is a good one.

Oddly enough, my experience with trades is that the more polished and salesmanlike, the worse the trade, the more straightforward and 'normal', the better. Research has shown that clever people often under-estimate their relative ability, whilst stupid people tend to over-estimate their skills.

"If only all the evil people are ugly and puss ridden, so you can tell straightaway"

Is that why politicians as a group are so ugly? :rotfl:

jimjames

BananaRepublic wrote: »

What have savings and investments got do with the Savings & Investment thread? :rotfl:

Please clarify.
?

Check the number of threads and posts by the OP bashing ifas and you might get an idea of their agenda

atush

bigfreddiel wrote: »

In the ST Money section today Ali Hussain reports on David and Sheila Solomon who took the advice of Paul Herd of MFS Partnership to invest £350k

You need to read the full article in the Sunday Time, in a nutshell they were advised to invest in unregulated Isle of Man based investment even tho' the Solomons asked for low risk investments, their advisor steered them towards this high risk option.

The end result was they lost the lot, bar £3k.

The FOS ruled that MFS Partnership owes the £500k, but MFS cannot afford to pay, and in the ombudsman can only award a maximum of £150k per individual.

One might say the customer, the Solomons did not understand the advice.

But the advisor told them to ignore the warning they received direct from investment company. In fact when Mr Solomon said he was relying on the advisor for his professional expertise, His advisor was i a postion to to assess all of Mr Solomon's circumstances and objectives and provide suitable advice....."

Even tho' the investments bombed, the advisor still kept taking his advisor fee!

So how does one handle this situation?

I think this is whey many people avoid FA/IFAs.

Cheers
fj

I think they were lucky to get back 300K. out of 350 (which would be a reduction normal to any regulated investment in a market downturn).

Your idiotic campaign against IFAs has really taken a turn for the worse. AS here you have pulled up a situation where the silly couple concerned were saved from ruin by the regulators.

bowlhead99

atush wrote: »

I think they were lucky to get back 300K. out of 350 (which would be a reduction normal to any regulated investment in a market downturn).

The issue is that they haven't got the £300k back.
(perhaps not obvious from OP's precis)

They got £90k back from the losses on the real estate funds from the first advisory firm. For the second ~£280k of investments put into the high risk fund that lost everything, the FOS recommended £500k to get them to the value they would have reached with more suitable investments in the market conditions prevailing.

However, FOS can't actually enforce £500k, only up to £150k per person, and the rest is merely a request or recommendation.

As the amounts were not evenly held between the couple (being in personal sipps), it's possible that in such a situation the "up to £150k per person" might not actually equate to a full £300k.

And what the advisor's new partnership are saying (and Herd is presumably one of the partners responsible for saying it) is we're not actually insured for our partner being a complete tool and we can't afford £300k let alone £500k. We can give you £30k now but if we tried to give you £300k at the moment, we'd be out of business.

And if you drive them out of business you won't get your £300k back, you would merely have recourse to FSCS for an advisor going out of business owing you money, and FSCS would pay a lot less than £300k, even if you did qualify under their rules.

grey_gym_sock

BananaRepublic wrote: »

They may well have shown poor judgement, but as I indicated earlier, many clients of an IFA are not investment savvy, and may even have poor judgement. Isn't that the reason for consulting an IFA?

yes, but there is a difference between trusting the 'experts', and choosing to trust one 'expert' when you know their advice is directly contradicted by other 'experts'.

many people feel completely lost in investing, even if they are perfectly competent in other fields. (i'm not at all surprised that this couple had £350k in the first place.) consulting an expert can make sense. but if you see the 'experts' disagreeing, and you know you're not an expert in the field, what do you do? not blindly pick which 'expert' to believe. you might seek yet another opinion. or seek opinions on which 'experts' are more expert. or you might try and educate yourself a bit more about the topic. or you could follow the course of action which will do least harm if it turns out to be wrong - which would obviously not mean keeping the investment which 1 'expert' says is too high-risk, but the other says is OK.

investing is still a bit scary even when you do know about it, in the sense that we have no idea what returns we'll actually get over the next decade (or however long) by investing in shares (or any asset class). you can manage the risk to some extent by choosing a suitable mix of asset classes and diversifying, but there is still a lot of uncertainty left, which you just have to live with. but i suspect some people are so keen to make the uncertainties go away that they are liable to place trust in 'experts' who over-promise. so i'm not surprised that 'bad apple' IFAs can find customers/victims.

Keep_pedalling

grey_gym_sock wrote: »

yes, but there is a difference between trusting the 'experts', and choosing to trust one 'expert' when you know their advice is directly contradicted by other 'experts'.

many people feel completely lost in investing, even if they are perfectly competent in other fields. (i'm not at all surprised that this couple had £350k in the first place.) consulting an expert can make sense. but if you see the 'experts' disagreeing, and you know you're not an expert in the field, what do you do? not blindly pick which 'expert' to believe. you might seek yet another opinion. or seek opinions on which 'experts' are more expert. or you might try and educate yourself a bit more about the topic. or you could follow the course of action which will do least harm if it turns out to be wrong - which would obviously not mean keeping the investment which 1 'expert' says is too high-risk, but the other says is OK.

investing is still a bit scary even when you do know about it, in the sense that we have no idea what returns we'll actually get over the next decade (or however long) by investing in shares (or any asset class). you can manage the risk to some extent by choosing a suitable mix of asset classes and diversifying, but there is still a lot of uncertainty left, which you just have to live with. but i suspect some people are so keen to make the uncertainties go away that they are liable to place trust in 'experts' who over-promise. so i'm not surprised that 'bad apple' IFAs can find customers/victims.

If they really had a low tolerance to risk why did they go with the advice of Mr V Risky who had already lost them a big lump of cash from a previous adventure. Perhaps as they got their money back the first time round, they thought they had nothing to lose if their next high risk venture went pear shape, because the new company would compensate them as well.

This is a cautionary tale, but it seems both IFA and client have both been pretty stupid so perhaps they deserve each other.

BananaRepublic

grey_gym_sock wrote: »

yes, but there is a difference between trusting the 'experts', and choosing to trust one 'expert' when you know their advice is directly contradicted by other 'experts'.

many people feel completely lost in investing, even if they are perfectly competent in other fields. (i'm not at all surprised that this couple had £350k in the first place.) consulting an expert can make sense. but if you see the 'experts' disagreeing, and you know you're not an expert in the field, what do you do? not blindly pick which 'expert' to believe. you might seek yet another opinion. or seek opinions on which 'experts' are more expert. or you might try and educate yourself a bit more about the topic. or you could follow the course of action which will do least harm if it turns out to be wrong - which would obviously not mean keeping the investment which 1 'expert' says is too high-risk, but the other says is OK.

investing is still a bit scary even when you do know about it, in the sense that we have no idea what returns we'll actually get over the next decade (or however long) by investing in shares (or any asset class). you can manage the risk to some extent by choosing a suitable mix of asset classes and diversifying, but there is still a lot of uncertainty left, which you just have to live with. but i suspect some people are so keen to make the uncertainties go away that they are liable to place trust in 'experts' who over-promise. so i'm not surprised that 'bad apple' IFAs can find customers/victims.

I think it was a choice between Herd, and his employer. In my experience many people trust someone on the basis of a personal relationship, whereby charm and perceived sincerity convince the customer that the salesperson is honest, and genuine.

Look at Blair, how many of us were taken in by his smooth charms? And look at TV adverts, many people choose to eat one brand of processed Italian style food on the basis of claims by puppets. :rotfl:

I agree they were stupid, but I suspect such stupidity is quite common.

enthusiasticsaver

Having recently had a bad experience with an IFA where we paid £700 for advice based on misinformation I would think twice about using one in the future. On the occasion above however it does sound like the investors ignored warnings. I am sure there are good IFAs out there but it is like choosing plumbers, builders, electricians etc and there will always be good and bad ones. Incidentally the one we had wasn't dodgy I don't think, but he was slapdash but when you are dealing with people's life savings I don't think that is acceptable. Luckily we did not follow his advice anyway.

xylophone

and still charged Leonidas a lefty fee.

Reds under the bed?

If only all the evil people are ugly and puss ridden, so you can tell straightaway"

Cat scratch fever?:eek:

BananaRepublic

jimjames wrote: »

Check the number of threads and posts by the OP bashing ifas and you might get an idea of their agenda

I cannot comment on the other cases, having not seen them, but in thise case I'd say the thread was worthy of discussion.