losing money advice please

dunstonh

That risk profile is not consistent with the funds recommended.

Let me put those funds on a risk scale of 1-10 so you get an idea of the risk:
balanced distribution fund - 5-7 (it can vary with different funds and you have given no names)
global property - 8/9
distribution fund - 5/6
Std Life select property - 8

Cautious would see you with an average of 4 maybe moving a bit towards 5 or bit towards 3 depending on how cautious you are.

You dont have a single fund in the risk 3 or 4 range and may not have one in the 5 range. 50% of the portfolio is in high risk.

Property funds come in two types. Bricks and mortar and share (actually there is a third and thats one that uses both). Bricks and Mortar funds are lower risk. Property share is high risk (higher than normal stockmarket as it is a focused area). Standard Life's select property is invested globally (and not UK specific) and invests in listed companies and REITS. That makes it high risk.

I cannot see a complaint being rejected because of the following:

Attitude to investment risk

We then moved on to talk about your attitude to investment risk and which funds the investment bonds would invest in. During our meeting you confirmed yourself to be a cautious to balanced risk investor meaning that you were happy to invest in assets outside of traditional bank and building society accounts, and were prepared for the value of some of your investments to fluctuate. Given that this is the start of your investment portfolio my recommendation was to use asset classes that had lower volatility than direct equity holdings and reduced the risk exposure by creating a rounded portfolio including distribution funds (which would invest in equities, bonds and commercial UK property) and global property. When added to your cash holdings this will provide a balanced exposure to different assets without placing a large proportion of your capital under the exposure of the stock ma

The highlighted points contradict the recommendation.

1 - confirmed risk is lower than portfolio recommended.
2 - some of the investments to fluctuate - not all of them
3 - confirms you are a new investor and want lower volatility but 50% of the funds are high volatility from the specialist sector.
4 - creating a well rounded portfolio - there is nothing well rounded about that (although that is not really something you can complain about by itself but it is something that should be added in a complaint with other things)
5 - commercial UK property - where? He hasnt recommended a uk commercial property fund. My guess is that he has mistaken the standard life select property to be a commercial property fund. A common error with inexperienced individuals.
6 - without placing a large proportion of your capital on the stockmarket - the vast majority is on the stockmarket and at the high risk end.

If you name the four funds I will tell you exactly how much is on the stockmarket.

Footsie_2

Absolutely right, the funds do not match your profile to risk at all. It is a very lazy portfolio and not nearly enough diversification considering we all knew property was going down sometime ago.

You have two choices really, sit it out and wait to see what happens to the markets. Although property is down now it's the feeling of many that it will only be a small bump so by the time your investments mature you may be back to where you want to be.

Your other choice, if you are really worried, is to take the hit and move your funds but this time consult a different adviser and see what they say. Personally I would stay put, it's costly and if you say to your new adviser what has happened they will consider you to be very low risk and will put your funds into something similar to what you have moved your property funds into - desposit style funds - and you'll be no better off and you will have paid an exit charge.

dunstonh

The third choice is to complain and request the contract to be voided. This will cancel the investments from inception and return the money with interest if upheld. Then see a new investment IFA and get it done properly.

Also, forgot to mention, where is the ISA? First point of call in any investment is using up the ISA allowance.

Footsie_2

It's worth trying to complain, it's free after all! The only problem is that the complaint will be arriving as we had a market drop so it may not be taken into account in the best possible light. Certainly I think you have been mis-advised but the official line on it may not indicate this, as is often the way in these things.

But by all means do try and complain as it could well be the best way out.

westy69

thankyou for your replys on this

firstly £20K which i didnt mention has gone into ISA share tracker funds with barclays which was set on the FTSE at approx 6000 points again a 5 year package capped at a 50% return if the FTSE rises 10%

the funds are
Norwich Union balanced distribution income S4
Norwich Union Propert S4
Standard Life Distribution S1
Standard Life Select propert fund

dunstonh

firstly £20K which i didnt mention has gone into ISA share tracker funds with barclays which was set on the FTSE at approx 6000 points again a 5 year package capped at a 50% return if the FTSE rises 10%

Thats a guaranteed equity bond. Ghastly product. No dividends and a low cap. You arent having much luck are you.

Norwich Union balanced distribution income S4
Norwich Union Propert S4
Standard Life Distribution S1
Standard Life Select propert fund

You have put NU Property but higher up you mentioned it was Global Property. Can you clarify if its the NU Property fund or the NU Global Property fund please?

Assuming global property the asset allocation of the combined portfolio would be:
61% property (of which 50% is property shares and 10% is bricks and mortar commercial property - rounding makes 1% difference)
22% UK equities
13% fixed interest
4% cash

So, that portfolio gives you a stockmarket content of 72% with 50% of it in higher risk and 22% in medium/high (of the overall portfolio)

westy69

sorry global property

http://www.trustnet.co.uk/life/funds/?fund=10685

dunstonh

Thanks. I have edited my post to reflect that.

fimonkey

WOW, Westy sorry to hear your trouble, stories like this scare me from investing, how do you KNOW if an IFA is any good or not? People say recommendation, but then what if you DON'T know anyone who can recommend an IFA? (Not meaning to hijack the thread, jsut curious and doing some research before I take the plunge into investing).

Footsie_2

It's very very difficult to know if an IFA is a good IFA, mainly because we're all different. The most important thing in an IFA is that they listen to your needs and accurately read your level of risk. Obviously this is hard to assess so, as with every aspect of life, it's a good idea to try to obtain a very basic understanding of the markets yourself. Forums like this are a good idea to try to ascertain your own risk profile and to see if advice provided is in line with your risk profile.