IFA made a mistake.

silvercar

My husband and I have had the same IFA for a number of years. Generally we have been happy however a mistake has come to light.

We both have pensions and our IFA looks after our investments. We complete an attitude to risk assessment every other year. It looks like at the last assessment 2 years ago the wrong values and therefore investments were assigned to our pension pots ie my OHs risky attitude was assigned to my pot and my averagey attitude to his pot. His pension therefore grew by less than he is happy with; mine did relatively well. If we had equal sized pension pots this wouldn't have mattered in the scheme of things, but as his pension pot is twice the size of mine, there is less growth than we should have had.

We are both mid 50s and have built up sizeable pensions over the years, so there is a big impact here.

Our IFA is looking into how this happened etc but I am wondering if the IFA is obliged to compensate us for his mistake.

cfw1994

One would certainly hope so: sounds like an “open and shut” case: guilty as charged!!
If they are effectively allowed to ‘ignore’ the risk ratings they took from you, then what possible risk could they be liable for?

but I have no real idea in strict legal terms.....do let us know, and good luck!

Keep_pedalling

They should compensate your husband for his financial loss, if not he can complain to the regulator. Not sure if that can be offset by the gain you made however.

Our IFA once made a clerical error that cost us a small financial loss. We never noticed it but as soon as he discovered the error he informed us and put us back where we should have been without any fuss.

Dox

silvercar wrote: »

We both have pensions and our IFA looks after our investments. We complete an attitude to risk assessment every other year. It looks like at the last assessment 2 years ago the wrong values and therefore investments were assigned to our pension pots ie my OHs risky attitude was assigned to my pot and my averagey attitude to his pot. His pension therefore grew by less than he is happy with; mine did relatively well.

Why didn't you notice?

silvercar

Dox wrote: »

Why didn't you notice?

Because our IFA acts for us. We trust that he is doing what he is meant to do. So when I get a statement that says that x% of my portfolio is invested in Y etc I presume that he is making those decisions based on the agreed risk assessment. I file my paperwork and OH keeps his.

It was only when we had our meeting that we compared notes saw a difference in the portfolio mix that we all looked again and tracked it back to discover the mistake.

Malthusian

Keep_pedalling wrote: »

Not sure if that can be offset by the gain you made however.

I think this could go either way depending on the whim of the ombudsman. All married couples' finances are effectively joint whether they show each other their statements or not. However, silvercar's husband can argue that they keep their finances separate and he can't just ask his wife to hand over some of her money (especially as this would involve drawing taxable income or using up PCLS).

If I was the OP then personally, if the IFA offered compensation for the net loss (i.e. husband's loss minus OP's gain) I would accept it, unless I wasn't happy with the IFA for other reasons.

The IFA is IMO bang to rights and should pay up before this gets to the stage of a complaint. Mistakes happen. This is part of the reason you pay an IFA.

MK62

I'm not sure of the regulations, but I think it would be fair to put you into the position you would have been in as a couple had the mistake not happened.

I don't think it would be unreasonable to offset your outperformance due to the mistake against your husband's underperformance due to the same mistake.

The ombudsman may well take a different view, and tbh, if it went to a complaint, it's his/her view which matters.

silvercar

I'm at the stage of waiting to see what the IFA says. He's looking at it and hasn't yet admitted that we are out of pocket.

Audaxer

silvercar wrote: »

I'm at the stage of waiting to see what the IFA says. He's looking at it and hasn't yet admitted that we are out of pocket.

If the more risky investments were put in your portfolio and vice versa and your husband's pot was twice the size, I think you should be able to work out the exact net amount you have lost due to the error. That being the case I don't see how the IFA can dispute it.

If the IFA reimburses you for the net loss and you keep using him, I would check your portfolios very closely in future in case any other errors are made.

silvercar

Audaxer wrote: »

If the more risky investments were put in your portfolio and vice versa and your husband's pot was twice the size, I think you should be able to work out the exact net amount you have lost due to the error. That being the case I don't see how the IFA can dispute it.

If the IFA reimburses you for the net loss and you keep using him, I would check your portfolios very closely in future in case any other errors are made.

I agree, but it remains to be seen if the IFA agrees. (his response may well determine whether we continue to use him. Anyone can make a mistake, it is how they deal with it that is important.)

Working out the exact loss will be difficult as my husband can't add more than a certain amount each year to his pension.

Audaxer

silvercar wrote: »

Working out the exact loss will be difficult as my husband can't add more than a certain amount each year to his pension.

I wouldn't trust the IFA to calculate the loss, or if he does I'd want to check the figures closely as to how much was paid into each pension, the value of each investment fund at the time of the error, and how much was invested in each fund etc. Hopefully you'll be able to work out or check your loss has been calculated correctly. Good luck.