Can I sue my finacial advisor, and or company

dunstonh

Bbeanie said:

Thank you for your replies, however I am still unconvinced.  What exactly does a FA do to earn a 1% fee?  Leaving my case aside.  

The service will be whatever you agreed it to be.   That can be a package of services or bespoke services.

Back on my case.  There was a 1% fee for a face to face review, but a reduced fee for a telephone review.  Shouldn't any fee charged for the so called declined revew offer be based on the lesser telphone review fee?

Companies put in place resources to cover the expected workload.   You declined the work but the firm still had to have the resources in place.  Plus, some of the service would have been covered.  For example, the due diligence on the DFM and the portfolio.   The adviser firm carries the liability on those.

The 2020 instructions for a withdrawal were given in Mid Feb,  The cut off date was 18th March.  His advice not to withdraw was given on 23rd March. 

The big covid falls were between 22-24 feb to 22-24 March (the actual day depends on whether live assets or overnight priced assets were used).   So, it hit bottom on the 23/24 March and 22nd Feb was the YTD peak before the CV falls.    Depending on your asset mix, you would have been down around 16-35% in that month.

Within days of the 23rd March, it was recovering fast.   It would have been up around 10% by around the 26th March and around 13% by 8th April.  and around 18% by the end of April.

So, by luck, the delayed draw would have grown fast and likely not leave you out of pocket.

The advice is one thing, but you are free to overrule the adviser, and the adviser should act on that.  FAs may have less scope to do that than IFAs.

Bbeanie

dunstonh.  The total charges on my account for 2020 was 2.13%.  Even taking off the 1% advisor charges, it still left 1.13% for DFM charges, fund charges, trading charges etc.

I could not overule the FA, it was too late, it was a week after the cut off date. Although it let them off the hook, It's irrelevant that it went on to grow. 

Bbeanie

I have just been going over the reports since my investment and on average the fund has grown under 1.8% per year over the last nearly eight years, (after charges).  Surely I could have done better myself?

masonic

Bbeanie said:

I could not overule the FA, it was too late, it was a week after the cut off date. Although it let them off the hook, It's irrelevant that it went on to grow. 

It's not irrelevant, it's extremely relevant. If you'd experienced a loss as a result, you'd be entitled to have that loss compensated. It's win-win for you though, as despite gaining from the adviser's inactions, you don't have to repay those gains in order to receive compensation for distress and inconvenience.

Bbeanie said:

I have just been going over the reports since my investment and on average the fund has grown under 1.8% per year over the last nearly eight years, (after charges).  Surely I could have done better myself?

That very much depends on the level of risk you can tolerate and your own financial capability. But yes, DIY investors can cut their fees to the bone and put the odds firmly in their favour for outperforming someone who opted for expensive DFM under advice. That's why many of us DIY.

Bbeanie

masonic.  My risk was medium which I didn't think equalled virtually no returns.  I am now thinking I may as well just withdraw it all, even if I have to do it in stages because of the tax and especially as I would have to pay thousands to transfer to a new account.  DIY is fine if you are finacially savvy.  I am not.  Thanks for replying.

dunstonh

dunstonh.  The total charges on my account for 2020 was 2.13%.  Even taking off the 1% advisor charges, it still left 1.13% for DFM charges, fund charges, trading charges etc.

It pays to shop around.  I am just finishing work on a review client, where the total charge is 0.79% (or 0.83% if you include transaction charges, which must be disclosed but should be disregarded).     

FA firms are often more expensive than IFAs, but ultimately, you make that choice to buy the service at the price that is disclosed.    You may regret you didn't shop around more later on but you cannot go back in time and change that.      We all have regrets about purchases made on many different things.      its best not to dwell on it and look forward rather than backward.

I could not overule the FA, it was too late, it was a week after the cut off date. Although it let them off the hook, It's irrelevant that it went on to grow. 

  It was lucky for them, but not irrelevant.      Your financial position is one of missing a tax allowance vs gaining on investment returns giving you a net position of a loss or gain.  If in a loss position, you would get redress covering the loss.  If you gain, then you don't get anything, as you are better off.

masonic

Bbeanie said:

masonic.  My risk was medium which I didn't think equalled virtually no returns.  I am now thinking I may as well just withdraw it all, even if I have to do it in stages because of the tax and especially as I would have to pay thousands to transfer to a new account.  DIY is fine if you are finacially savvy.  I am not.  Thanks for replying.

Medium risk would typically involve a large helping of government bonds. These have had their worst period in living memory and could quite feasibily wiped out most of the gains from equities. For example VLS40, a low cost low-medium risk multi-asset fund returned about 2.5% over 5 years, which doesn't include the Covid crash. If you subtract your exorbitant DFM and advice fees from that, you could easily end up below 1.8%.

Over the long term, the outcome would be better, but the lower the risk, the more impact fees will have on your net return.

Bbeanie

dunstonh. Yes, unfortunately, it was done in a bit of a rush.  I had a good company lined up before I started the transfer from my company pension as I only had 1 month to complete after which the window closed for another year.  Two weeks into the transfer, the company doubled their minimum investment rates and I no longer qualified.  I asked a friend who suggested going to Skipton Building Society as he had investments with them.  They said they did not do SIPPs but they had a FA who worked from there and set me up with an interview.  Sadly, I did not have time to shop around and nearly missed the window anyway.

Bbeanie

Thanks masonic.  Lack of knowledge, I would not have known that.  Would be hopeless at DIY.