LF Woodford Equity Income Fund

Aged

Received a letter from my pension provider today detailing how much I'll get back. I'm already drawing down. I've lost over £16,000 which I find pretty devastating. I have paid for FA advice all the way down the line, so how has this happened?

[Deleted User]

"How has this happened"? So no one has told you, that investments go up and down and your capital is at risk?

bowlhead99

Aged said:

Received a letter from my pension provider today detailing how much I'll get back. I'm already drawing down. I've lost over £16,000 which I find pretty devastating. I have paid for FA advice all the way down the line, so how has this happened?

When your independent financial adviser recommended the fund, presumably they also recommended a broad portfolio of other specialist funds to go alongside it, and those funds will have performed a lot better, so that although you are apparently down £16k on Woodford, you will have made over £16k on others, no?

If you've been paying for independent financial advice all the way along, presumably you have already asked that independent financial adviser why he did not conclude at least a year ago that the fund may no longer be suitable for you? Were you actually paying him for continuing ongoing advice and portfolio review?

Also, how is the pension provider able to detail how much you will get back? Only an interim distribution has been announced (which was paid to your pension dund at the end of January). Depending on which share class you hold, a further 15-20p per share (or feasibly more, but unlikely; more likely less) remains, according to the latest valuation, to be recovered over the coming years, maybe.

Aged

I was hoping that Dunston would answer my question ...

dunstonh

Aged said:

I was hoping that Dunston would answer my question ...

Not a lot I can say.    Our fund research and due diligence supplier told us to stop investing in Woodford back in 2017 due to the high level of illiquid assets.   I personally, never recommended it for anyone but did have one investor in it who went against my advice initially but I persuaded them out.      I initially avoided it because I have never been a fan of fund manager boutique advice firms where a high profile fund manager goes and sets up for themselves.   It seems to end up in failure more often than success.   So, I got lucky by not using it initially.   And it was luck.   Woodford could have had the success that Train had for all I knew at the time.   However, the 2017 research report was not luck. That was careful analysis and due diligence.   However, even when that report was made, I doubt anyone ever thought it would fail as it did.

As mentioned higher up, if you did hold Woodford, then it would only have filled some or all of your UK equity allocation.  So, it should only have made up a portion of your overall investing.   Probably no more than 25% with models with a home bias and as little as 4% with those without.   The losses of the fund are within the expected range of what the fund was capable of losing.  It just lost it for a reason that was unexpected rather than expected.

As one of the major IFA research companies was telling advisers not to use it, you should be asking your adviser why they  or their research company didnt do the same.   If I was in a situation where my chosen research company hadn't given me the full data, I would be seriously considering looking at alternatives as I would be feel let down and would question their ability to do the job correctly.

Aged

bowlhead99 said:
When your independent financial adviser recommended the fund, presumably they also recommended a broad portfolio of other specialist funds to go alongside it, and those funds will have performed a lot better, so that although you are apparently down £16k on Woodford, you will have made over £16k on others, no?

Maybe I'm over-simplifying things (I'm more used to dealing with savings than investments) but no, overall, the sum invested 4 years ago has decreased in value. As I said, I have been drawing down only a very, very modest amount. 

bowlhead99 said:
If you've been paying for independent financial advice all the way along, presumably you have already asked that independent financial adviser why he did not conclude at least a year ago that the fund may no longer be suitable for you? Were you actually paying him for continuing ongoing advice and portfolio review?

Yes, I have been paying for ongoing advice. No, I haven't asked my adviser why the warnings weren't at least flagged up to me - I thought that's what I was paying them for ie to look after my investments? I'm trying to get my head around the situation before I speak to them.

bowlhead99 said:
Also, how is the pension provider able to detail how much you will get back? Only an interim distribution has been announced (which was paid to your pension dund at the end of January). Depending on which share class you hold, a further 15-20p per share (or feasibly more, but unlikely; more likely less) remains, according to the latest valuation, to be recovered over the coming years, maybe.
I based my calculations on what they informed me has been paid back, plus what still remains in the fund. So I'm not going to get the majority of that back either?

Aged

dunstonh said:

Aged said:

I was hoping that Dunston would answer my question ...

Not a lot I can say.    Our fund research and due diligence supplier told us to stop investing in Woodford back in 2017 due to the high level of illiquid assets.   I personally, never recommended it for anyone but did have one investor in it who went against my advice initially but I persuaded them out.      I initially avoided it because I have never been a fan of fund manager boutique advice firms where a high profile fund manager goes and sets up for themselves.   It seems to end up in failure more often than success.   So, I got lucky by not using it initially.   And it was luck.   Woodford could have had the success that Train had for all I knew at the time.   However, the 2017 research report was not luck. That was careful analysis and due diligence.   However, even when that report was made, I doubt anyone ever thought it would fail as it did.

As mentioned higher up, if you did hold Woodford, then it would only have filled some or all of your UK equity allocation.  So, it should only have made up a portion of your overall investing.   Probably no more than 25% with models with a home bias and as little as 4% with those without.   The losses of the fund are within the expected range of what the fund was capable of losing.  It just lost it for a reason that was unexpected rather than expected.

As one of the major IFA research companies was telling advisers not to use it, you should be asking your adviser why they  or their research company didnt do the same.   If I was in a situation where my chosen research company hadn't given me the full data, I would be seriously considering looking at alternatives as I would be feel let down and would question their ability to do the job correctly.

Thanks to Dunston for replying. On reflection, I feel aggrieved that my IFA has let this situation arise. If I were an IFA looking after someone's pension assets, I would have at least drawn it to my client's attention when the red flag was raised so that a discussion could take place about whether to hold on and take the risk or not. 

AnotherJoe

If that amount of loss is devastating then you must have had a very high% in WEIF and that's another reason to criticise your IFA.