Bad Advice. Can I do anything?

Rich1976

masonic said:

bobdisk said:

masonic said:

Rich1976 said:

masonic said:

Rich1976 said:

wmb194 said:

The OP didn't notice how quickly the markets tanked when they panicked over Covid in Feb/Mar 2020? It was all anyone was talking about at the time. If they've been savings in cash Isas since they began - 1999 - then they've lived through multiple periods of stock market turmoil.

They were only invested from October 2021.

It seems like you are suggesting that nothing short of someone having their own money invested and seeing it fall can lead someone to a true understanding of how much they'd be willing to see their investments fall.

I’m saying that even if they were aware investments go down, the impact of this may not have been obvious until they saw the value plummet.

I can’t imagine many people with no prior knowledge of investments and who are potentially risk averse/ low risk being comfortable with the loss they have had when they have clearly stated they would not have expected a fall that big.

it is my interpretation they were not aware or did not appreciate that a medium risk fund can have double digit returns, and I can understand where they are coming from. 

Most people I would imagine unless they are experienced investors with lots of knowledge and who take a keen interest in such things would not have thought they’d have made a bigger loss with what they perceive to be a safer fund than a fund with 100% invested.

im just trying to see it from their point of view and tbh can understand their thoughts. I don’t think it was bad advice but simply is down to a lack of understanding and being invested above their risk tolerance.

If they wouldn't have expected a fall that big, then that points to them not being aware of how their investments could reasonably perform, which leaves the door open to it being bad advice.

If they had a conversation about the possibility they could see 20% wiped off their investment '...just like what happened a couple of years ago', and that didn't lead them to anticipate a 15% drop coming along at some point, then I don't think any amount of discussion and visualisation would have helped. But I don't think many people would come away from a conversation where a recent drop of 20% was mentioned expecting that never to happen again. An adviser needn't specifically reference the Covid crash when discussing potential losses, but they should certainly be giving their client an appreciation for what could happen under various levels of economic stress.

If they genuinely had no reason to expect that a 15% drop was possible, because their adviser didn't mention loss potential or what had happened to the funds in the recent past, and they didn't volunteer that they'd be prepared to tolerate a drop of that magnitude, then clearly something was lacking on the advice front and their could even be grounds for complaint. It therefore seems sensible to explore this possibility, which is the only one that leads to any practical action (the "Can I do anything?" part of the thread title).

If these potential percentages of losses had been mentioned, I would not have gone ahead, and left the money where it was. I am not a gambler, I only do things like the Lottery when there is a rollover, but am prepared to lose the cost of the ticket! 

Investing isn't gambling, but if you are sure that your adviser did not discuss with you what your investments could potentially lose in the short term, then it seems worth making a complaint.

I think it’s more whether they were told explicitly your fund could plummet by xx%, not necessarily your fund could fall in value. 

Albermarle

bobdisk said:

masonic said:

Rich1976 said:

masonic said:

Rich1976 said:

wmb194 said:

The OP didn't notice how quickly the markets tanked when they panicked over Covid in Feb/Mar 2020? It was all anyone was talking about at the time. If they've been savings in cash Isas since they began - 1999 - then they've lived through multiple periods of stock market turmoil.

They were only invested from October 2021.

It seems like you are suggesting that nothing short of someone having their own money invested and seeing it fall can lead someone to a true understanding of how much they'd be willing to see their investments fall.

I’m saying that even if they were aware investments go down, the impact of this may not have been obvious until they saw the value plummet.

I can’t imagine many people with no prior knowledge of investments and who are potentially risk averse/ low risk being comfortable with the loss they have had when they have clearly stated they would not have expected a fall that big.

it is my interpretation they were not aware or did not appreciate that a medium risk fund can have double digit returns, and I can understand where they are coming from. 

Most people I would imagine unless they are experienced investors with lots of knowledge and who take a keen interest in such things would not have thought they’d have made a bigger loss with what they perceive to be a safer fund than a fund with 100% invested.

im just trying to see it from their point of view and tbh can understand their thoughts. I don’t think it was bad advice but simply is down to a lack of understanding and being invested above their risk tolerance.

If they wouldn't have expected a fall that big, then that points to them not being aware of how their investments could reasonably perform, which leaves the door open to it being bad advice.

If they had a conversation about the possibility they could see 20% wiped off their investment '...just like what happened a couple of years ago', and that didn't lead them to anticipate a 15% drop coming along at some point, then I don't think any amount of discussion and visualisation would have helped. But I don't think many people would come away from a conversation where a recent drop of 20% was mentioned expecting that never to happen again. An adviser needn't specifically reference the Covid crash when discussing potential losses, but they should certainly be giving their client an appreciation for what could happen under various levels of economic stress.

If they genuinely had no reason to expect that a 15% drop was possible, because their adviser didn't mention loss potential or what had happened to the funds in the recent past, and they didn't volunteer that they'd be prepared to tolerate a drop of that magnitude, then clearly something was lacking on the advice front and their could even be grounds for complaint. It therefore seems sensible to explore this possibility, which is the only one that leads to any practical action (the "Can I do anything?" part of the thread title).

If these potential percentages of losses had been mentioned, I would not have gone ahead, and left the money where it was. I am not a gambler, I only do things like the Lottery when there is a rollover, but am prepared to lose the cost of the ticket! 

As said, if you can prove that the advisor never mentioned the possibility of drops of this magnitude( or greater), than you could have a case for bad advice.
Also normally they should ask you questions to assess your risk tolerance. If it came out that you were risk averse/low risk etc and you were still put into high or medium high risk investments, you could also have a case.

You need to carefully check any paperwork that was sent to you, to see exactly what it says. It could be all this info was given to you and you did not read it, or take it in. If so then there is no case for bad advice. 

masonic

Rich1976 said:

masonic said:

bobdisk said:

masonic said:

Rich1976 said:

masonic said:

Rich1976 said:

wmb194 said:

The OP didn't notice how quickly the markets tanked when they panicked over Covid in Feb/Mar 2020? It was all anyone was talking about at the time. If they've been savings in cash Isas since they began - 1999 - then they've lived through multiple periods of stock market turmoil.

They were only invested from October 2021.

It seems like you are suggesting that nothing short of someone having their own money invested and seeing it fall can lead someone to a true understanding of how much they'd be willing to see their investments fall.

I’m saying that even if they were aware investments go down, the impact of this may not have been obvious until they saw the value plummet.

I can’t imagine many people with no prior knowledge of investments and who are potentially risk averse/ low risk being comfortable with the loss they have had when they have clearly stated they would not have expected a fall that big.

it is my interpretation they were not aware or did not appreciate that a medium risk fund can have double digit returns, and I can understand where they are coming from. 

Most people I would imagine unless they are experienced investors with lots of knowledge and who take a keen interest in such things would not have thought they’d have made a bigger loss with what they perceive to be a safer fund than a fund with 100% invested.

im just trying to see it from their point of view and tbh can understand their thoughts. I don’t think it was bad advice but simply is down to a lack of understanding and being invested above their risk tolerance.

If they wouldn't have expected a fall that big, then that points to them not being aware of how their investments could reasonably perform, which leaves the door open to it being bad advice.

If they had a conversation about the possibility they could see 20% wiped off their investment '...just like what happened a couple of years ago', and that didn't lead them to anticipate a 15% drop coming along at some point, then I don't think any amount of discussion and visualisation would have helped. But I don't think many people would come away from a conversation where a recent drop of 20% was mentioned expecting that never to happen again. An adviser needn't specifically reference the Covid crash when discussing potential losses, but they should certainly be giving their client an appreciation for what could happen under various levels of economic stress.

If they genuinely had no reason to expect that a 15% drop was possible, because their adviser didn't mention loss potential or what had happened to the funds in the recent past, and they didn't volunteer that they'd be prepared to tolerate a drop of that magnitude, then clearly something was lacking on the advice front and their could even be grounds for complaint. It therefore seems sensible to explore this possibility, which is the only one that leads to any practical action (the "Can I do anything?" part of the thread title).

If these potential percentages of losses had been mentioned, I would not have gone ahead, and left the money where it was. I am not a gambler, I only do things like the Lottery when there is a rollover, but am prepared to lose the cost of the ticket! 

Investing isn't gambling, but if you are sure that your adviser did not discuss with you what your investments could potentially lose in the short term, then it seems worth making a complaint.

I think it’s more whether they were told explicitly your fund could plummet by xx%, not necessarily your fund could fall in value. 

When I say "what your investments could potentially lose in the short term", I am explicitly referring to amounts rather than a nebulous concept that they could go down by some undefined amount.

Jami74

wmb194 said:

Rich1976 said:

Many people take no interest in the stock market. Out of everyone I know I’m the only one who knows how their pensions are invested. Everyone else doesn’t even look at their statement .

Come off it, the dot-com crash, the 2008 financial crisis and the Covid crash - just to name a few without delving into the 1929 crash and other historical ones - are common knowledge.

In just the last year we've had the sell-off into the June lows, a bounce back and now another sell-off. At what point does someone twig that it can be volatile?

I'm with Rich1976. I don't know anyone in real life who has any interest in the stock market. When I've told friends that their work pensions are probably invested in the stock market they first look alarmed and then tell me I'm talking rubbish. I do remember long ago someone telling me that the stock market had crashed, I asked what it means and they shrugged and we continued about our day. Even now my little ISA Vanguard Fund feels far removed from the excitement of Wall Street.

Albermarle

Jami74 said:

wmb194 said:

Rich1976 said:

Many people take no interest in the stock market. Out of everyone I know I’m the only one who knows how their pensions are invested. Everyone else doesn’t even look at their statement .

Come off it, the dot-com crash, the 2008 financial crisis and the Covid crash - just to name a few without delving into the 1929 crash and other historical ones - are common knowledge.

In just the last year we've had the sell-off into the June lows, a bounce back and now another sell-off. At what point does someone twig that it can be volatile?

I'm with Rich1976. I don't know anyone in real life who has any interest in the stock market. When I've told friends that their work pensions are probably invested in the stock market they first look alarmed and then tell me I'm talking rubbish. I do remember long ago someone telling me that the stock market had crashed, I asked what it means and they shrugged and we continued about our day. Even now my little ISA Vanguard Fund feels far removed from the excitement of Wall Street.

It is trus that the level of ignorance on financial matters is frightening.

However in legal terms ' ignorance of the law is no defence' and I think the same has to apply in financial matters.

wmb194

Jami74 said:

wmb194 said:

Rich1976 said:

Many people take no interest in the stock market. Out of everyone I know I’m the only one who knows how their pensions are invested. Everyone else doesn’t even look at their statement .

Come off it, the dot-com crash, the 2008 financial crisis and the Covid crash - just to name a few without delving into the 1929 crash and other historical ones - are common knowledge.

In just the last year we've had the sell-off into the June lows, a bounce back and now another sell-off. At what point does someone twig that it can be volatile?

I'm with Rich1976. I don't know anyone in real life who has any interest in the stock market. When I've told friends that their work pensions are probably invested in the stock market they first look alarmed and then tell me I'm talking rubbish. I do remember long ago someone telling me that the stock market had crashed, I asked what it means and they shrugged and we continued about our day. Even now my little ISA Vanguard Fund feels far removed from the excitement of Wall Street.

Nah, plenty of people were well aware of the crashes surrounding the dot-com bubble, the 2008 GFC and Covid. You'd have to have been living under a rock not to. Someone who must be at least in their late thirties saying that they're unaware of the potential for losses in the stock market pushes credulity.

Btw, we're not talking about someone who's unaware of how their pension is invested, we're talking about a situation where they made the active decision to invest in the stockmarket.