Bad financial advice

csgohan4

this happens in alot of professions from lawyers to doctors. They are often encouraged to do so from no win no fee incentivising this behaviour. 

The old saying, if it's not written, it didn't happen rings so true now a days

I too have grown cynical of people and only trust one self. Look at all the missold threads through the year on I/O when they knew what they were doing at the time, but clearly having it on. 

Thrugelmir

Doesn't require a crystal ball to predict pension transfers becoming a contentious issue in the years to come.  Human nature being what it is. Only going to takes on Black Swan event to trigger the pain. . 

durali

Thank you for your replies.

This is what happened.

We took financial advice from the Financial Services arm of our bank.

We were advised by the adviser to take out/invest in certain PEPs and Unit Trusts.

One of these investments, under their advice was Henderson Unit Trust. This was on 31 May 2000. At some point my ex husband read about a potential crash in the technology market. The financial adviser told him not to be concerned. We were not expert by any stretch so went along with is advice.

Subsequently there was the crash.

I/we do understand that there are ups and downs in the market. I think this however was different as he sought advice.

I/we are not trying it on.

eskbanker

durali said:

I/we do understand that there are ups and downs in the market. I think this however was different as he sought advice.

It's something of a moot point as you're way out of time even if there was bad advice, but just to be clear, the role of the financial adviser isn't to predict (or to validate or challenge predictions of) market movements!  What did you tell the FA your investment objectives and timescales were?

Aretnap

durali said:

Thank you for your replies.

This is what happened.

We took financial advice from the Financial Services arm of our bank.

We were advised by the adviser to take out/invest in certain PEPs and Unit Trusts.

One of these investments, under their advice was Henderson Unit Trust. This was on 31 May 2000. At some point my ex husband read about a potential crash in the technology market. The financial adviser told him not to be concerned. We were not expert by any stretch so went along with is advice.

Subsequently there was the crash.

I/we do understand that there are ups and downs in the market. I think this however was different as he sought advice.

I/we are not trying it on.

Two points stand out from that.

First of all, the advisor cannot, and should not be expected to, predict market ups and downs, or even crashes. Predicting these things is, for all practical purposes, impossible. Yes, I'm sure you read a newspaper article about how some people were predicting a crash in the technology market. I'm sure that at the same time there will have been many other articles in newspapers about how the technology market was going to keep going up and up. They were all little better than guesswork - tomorrow's fish and chip paper. The adviser's job is to ignore this noise, think of the long term, and ensure that your portfolio as a whole is suitable for your aims and your risk profile. If you think that his job was to tell you which sectors of the market were going to go up and which were going to go down, I'm afraid you misunderstood his role on a fairly fundamental level.

And secondly, the technology fund was one of several funds he advised your husband to invest in. Presumably they were not all technology funds - there will have been some different equities funds, perhaps some bond and property funds, to give him exposure to a wide range of assets. The aim being to make sure that it doesn't matter too much if one of the many areas he's invested in loses money - gains in other sectors will cancel out any losses, especially over the longer term. What's important is whether the portfolio *as a whole* suited his needs and risk profile, not whether one particular fund gained or lost money. Assuming that it did, he was quite right to tell your husband not to worry about what he was reading in the newspapers and to hold on to what he had.

How has the portfolio as a whole performed over the last 20 years? I'm willing to bet that it made money - assuming he didn't sell every fund just after it had fallen in value.

I'm afraid so far nothing you've said sounds like grounds for a valid complaint, even if you were in time.

durali

dunstonh thank you for your detailed reply and I'm sorry for the depression you suffered as a result of a client.

durali

I don't expect or understand any adviser would or could predict market ups and downs What I would expect is that someone experienced and trained in this field would be able to listen to the concerns and accordingly act on genuine concerns of someone with no knowledge of a financial nature.

At that time if there were financial press and other experts warning of such a thing happening.

thegentleway

durali said:

I don't expect or understand any adviser would or could predict market ups and downs What I would expect is that someone experienced and trained in this field would be able to listen to the concerns and accordingly act on genuine concerns of someone with no knowledge of a financial nature.

At that time if there were financial press warning of such a thing happening.

There’s always financial press warnings. Nobody can predict crashes. Hence you need your investments to match your appetite for risk, i.e. you can stomach what a downturn would do to your investments.

dunstonh

I don't expect or understand any adviser would it could predict market ups and downs What I would expect is that someone experienced and trained in this field would be able to listen to the concerns and accordingly act on genuine concerns of someone with no knowledge of a financial nature.

Crashes are always coming.   if you didnt invest because of reports of a crash coming, you would never invest.   

The best advice is to close your eyes to it and just come out the other side.    However, the key is to be invested within your risk profile.   When the crash comes (which it inevitably will), the loss should be within your loss tolerance.       If the overall portfolio spread (including your cash savings) was above your loss tolerance then you would have grounds for complaint.

For me, the two biggest issues on your complaint are 

1 - Timebar.   Despite what the solicitors (although I don't think they are solicitors but a CMC), the bank could apply the timebar if they choose to.  They don't always with investment class.

2 - Your complaint doesn't appear to be about the original sale but a conversation you had later on.      There is almost certainly no evidence going to exist that documents that conversation.   Banks do not provide ongoing servicing with investments.  its transactional only. i.e. point of sale.     

3 - Whist one fund may go down more than others, it is the overall portfolio spread that matters.    Every portfolio will have funds that are above and below your risk profile.  It is what they average out to that matters.   That bit is unknown with yours by us but you do mention multiple funds.

durali

Thanks again. I'd need to look again at the other funds. I think one was Aberdeen and one Jupiter.

What do you mean by CMC