Bad Advice. Can I do anything?

bobdisk

I was advised by my companies Financial Adviser to put my saving from low interest cash ISA and savings accounts into an investment ISA, (£90,331) and investment savings (£29,400) called Aviva Wrap, running Fairstone Passive 4 Powered by Vanguard. Its been there for almost one year now since October 2021, and the investment has lost £4,124, down to £25,276 and the ISA has lost £13,672, down to £76659. I can see that all both will do is carry on losing money, so I want to close both, turning the investment ISA into a cash ISA, and the investment into an ordinary savings account. The adviser (and my bank) says its a long term thing, so leave it as it is, but I am afraid by the time it might start to gain, there will not be much left. I dont know if there is some way of recovering some of this loss, or is it simply gone?

Nebulous2

It's certainly gone if you sell. Then you could possibly add another 10% loss on top for inflation over the next year if you are in cash. 

There isn't an easy way out I'm afraid. 

Didn't the adviser discuss the long-term nature of what you were doing, your attitude to risk, and the possibility of fluctuating prices, before you bought? 

Albermarle

Markets go up and down and you have just been unlucky with your timing by investing before a downturn. 

 I can see that all both will do is carry on losing money, 
Unless you can see into the future, you can not possibly know that this will be the case. It might go down further, and it might not. In the long term it will recover, the only question is how long will it take. Selling after making a loss is almost always a bad decision, but is common amongst inexperienced investors.

To gain any compensation, you would have to prove that the advice given to you was unsuitable for you at that time. Presume the advisor asked you many questions about what you were trying to achieve and what your risk tolerance was?

  I dont know if there is some way of recovering some of this loss, ? Yes leave it where it is .

grimsalve

It's only a "paper loss" at the moment.

jimexbox

Personally if I didn't need the money, I'd leave well alone. Its a big hit if you cash in now, especially as eventually the markets will recover. Its only a question of how long. 

Beddie

bobdisk said:

I was advised by my companies Financial Adviser to put my saving from low interest cash ISA and savings accounts into an investment ISA, (£90,331) and investment savings (£29,400) called Aviva Wrap, running Fairstone Passive 4 Powered by Vanguard. Its been there for almost one year now since October 2021, and the investment has lost £4,124, down to £25,276 and the ISA has lost £13,672, down to £76659. I can see that all both will do is carry on losing money, so I want to close both, turning the investment ISA into a cash ISA, and the investment into an ordinary savings account. The adviser (and my bank) says its a long term thing, so leave it as it is, but I am afraid by the time it might start to gain, there will not be much left. I dont know if there is some way of recovering some of this loss, or is it simply gone?

Sorry to hear you've had a bad experience. If this is the first time you have ever invested then it can come as a shock to see losses. It was terrible timing, but we can only say that with hindsight as it would not have been known at the time. 

I've been there myself in the past and the best suggestion is what others have already said - leave it. You didn't invest for a year, you invested for long term - hopefully the adviser covered that. If you cannot cope with the stress of it, then investing isn't for you and you should put it is in a saving account instead. But that will cost you money.

If you think you were badly advised then you can make a complaint. But this will only work if you were sold a product that did not meet your objectives or risk profile. You cannot complain that it went down. So, read through the reports you were given and if they accurately reflect your position then I don't think a complaint would be the right thing to do.

bobdisk

I accepted that it could go down somewhat as well as up, but it was not supposed to lose as much as it has, over this short time, without going up at all.  I do not know what is considered "long term"  It is a "medium risk" type of account. It seems as though its all concentrated on one investor, Vanguard. I do not think that is a good thing.  I do not fully understand how these investments work. If I had done nothing, I would have still had that amount, even if it has not earned much interest. I was told that it is not a good thing to have that sort of amount sitting there , it should be made to work. But it has backfired. I am thinking I might close it all and suffer that loss, at least I would not loose any more.  

Rollinghome

Nebulous2 said:

It's certainly gone if you sell. Then you could possibly add another 10% loss on top for inflation over the next year if you are in cash. 

There isn't an easy way out I'm afraid. 

Didn't the adviser discuss the long-term nature of what you were doing, your attitude to risk, and the possibility of fluctuating prices, before you bought? 

Just to be clear. The value of the investment will also have lost a further 10% in real terms too.  It's often very misleadingly suggested on this board that real-terms loss due to inflation magically doesn't apply to equity investments. It does.

To the OP.  That is the nature of investment versus cash savings. The return on investments can never be predicted. All we know is that, historically, equity investments have provided a better return than cash savings over the longer term.  Whether your investments are suitable for you depends on your very specific circumstances, details of which you may not want to put on a public message board.

From the scant details you have given, the advice seems fine, but no one can tell you where your investments will go from here, or when.

jimexbox

bobdisk said:

I accepted that it could go down somewhat as well as up, but it was not supposed to lose as much as it has, over this short time, without going up at all.  I do not know what is considered "long term"  It is a "medium risk" type of account. It seems as though its all concentrated on one investor, Vanguard. I do not think that is a good thing.  I do not fully understand how these investments work. If I had done nothing, I would have still had that amount, even if it has not earned much interest. I was told that it is not a good thing to have that sort of amount sitting there , it should be made to work. But it has backfired. I am thinking I might close it all and suffer that loss, at least I would not loose any more.  

If you invest in the stockmarket, you must have known there is a risk of market drops, that's the nature of the beast. The markets are cyclical, it rises, it falls.

If you cash in now, in a few years, maybe 5, or even 10. You'll regret cashing in on such a loss.

Obviously it's completely your choice. 

bobdisk

But what is considered to be the "long term" , how many years? Is this likely to firstly, recover to the original amount within a couple of years, I know it cannot be guaranteed, and then make a profit. but all I see is loss. 

Nebulous2

Rollinghome said:

Nebulous2 said:

It's certainly gone if you sell. Then you could possibly add another 10% loss on top for inflation over the next year if you are in cash. 

There isn't an easy way out I'm afraid. 

Didn't the adviser discuss the long-term nature of what you were doing, your attitude to risk, and the possibility of fluctuating prices, before you bought? 

Just to be clear. The value of the investment will also have lost a further 10% in real terms too.  It's often very misleadingly suggested on this board that real-terms loss due to inflation magically doesn't apply to equity investments. It does.

To the OP.  That is the nature of investment versus cash savings. The return on investments can never be predicted. All we know is that, historically, equity investments have provided a better return than cash savings over the longer term.  Whether your investments are suitable for you depends on your very specific circumstances, details of which you may not want to put on a public message board.

From the scant details you have given, the advice seems fine, but no one can tell you where your investments will go from here, or when.

I think you may have misread or not understood the bit you have highlighted.  It was projecting forward. You have no idea whether equities will fall behind inflation over the next year or not. Going by the forecasts its very likely that cash will. 

Many investors measure their equity returns net of inflation - and are aiming for a percentage above inflation.