Stocks and Share ISA advice...

karen_newcastle

Aegis wrote: »

All in all, it's a good lesson as to why business should not be mixed with family unless you're absolutely certain you're doing the right thing for their needs and that they fully understand everything you're recommending.

So true!!! And not a mistake I will ever make again,. This website has really helped me in more ways than one.

Thank you so much for your advice. I do feel a lot better now ad hopefully she will have a nice little amount for when she turns 18.

She doesn't know about it yet and I haven't decided what the money it for yet - Uni? Or a car? Or maybe to be invested again for when she is finished Uni? Maybe a wedding fund or a deposit on her first home.Who knows!!!

karen_newcastle

Here's a thought......if I complained to Pearl, would they actually contact my cousins husband? He no longer works for them so what would they gain from that?

I am thinking that I could complain without causing a family fall out?

turbobob

Just a heads up but compensation for a mis-sold investment would normally be based on a refund of all payments made, with gross "interest" at Bank of England Base Rate +1%. I have written "interest" because its supposed to be equivalent to a notional investment return and therefore not subject to income tax.

http://www.financial-ombudsman.org.uk/publications/technical_notes/QG5.pdf

They could contact the ex-adviser regarding the complaint. if they can get hold of him. However I really wouldn't worry about that. I've seen father/son and husband/wife mis-selling complaints and even "self sale" complaints (where the adviser claims he mis-sold himself a product!).

dunstonh

I've has a stocks and shares ISA for 8 years. I've paid in £40 a month so far (£3840) but as of yesterday the balance was £3808. It's totally pants.

Actually its not.

This PEARL savings plan was set up for me after advice 8 years ago

And thats the reason why. You started in 2000 and went into an ISA that has capital security and no market value reduction. Its low/medium risk.

As horrible as it sounds, if your financial adviser friend gave you bad advice, it might well be worth filing a complaint. 8 years of non-growth when you were saving specifically to give something to your daughter is absolutely awful, and given that you thought it was a cash ISA, it seems that the risks weren't explained to you at all, which is an example of extremely negligent business transacting on the part of your friend.

Cannot see how the complaint would be upheld. There are no investment risks to the capital with the Pearl ISA Bonus account and it was started just before one of the worst stockmarket drops in a generation. Plus, 2 years later Pearl closed for new business. Ironically, they have been coming to life a bit more in recent years although I wouldnt personally have my money there.

You are not able to complain about investment returns and had you gone into a FTSE tracker you would have been worse off.

Here's a thought......if I complained to Pearl, would they actually contact my cousins husband? He no longer works for them so what would they gain from that?

Complaints follow the adviser. Whilst Pearl would have to settle any complaint, it will go on his record.

However, I would be interested to know what your complaint would be because FSA state that investment returns (or lack of) are not grounds for complaint. Given as the Pearl ISA bonus account has no initial charges, and no risk to your capital invested you cannot claim it doesnt match your risk profile either. So, with those things not available to complain about, what would you choose instead?

Aegis

dunstonh wrote: »

Cannot see how the complaint would be upheld. There are no investment risks to the capital with the Pearl ISA Bonus account and it was started just before one of the worst stockmarket drops in a generation. Plus, 2 years later Pearl closed for new business. Ironically, they have been coming to life a bit more in recent years although I wouldnt personally have my money there.

Surely if she was told information that led her to believe it was a cash ISA or a cash product with interest, it's a mis-sale?

You are not able to complain about investment returns and had you gone into a FTSE tracker you would have been worse off.

As I said, it's not so much the lack of performance I would be focusing in on with any complaint, but the fact that it sounds like it was sold as a cash product rather than a market-linked one. Surely that can't be ok under any circumstances?

karen_newcastle

It certainly is a terrible savings plan! My financial advisor knew I was saving for my daughter and I said I wanted something safe that could build up some interest. What I've got now is LESS money that I've actually saved!!! I appreciate that my investment may not have made much interest but to LOSE money is just a kick in the teeth.

I have saved £3840 and only have £3808 in the account! My financial advisor should have give me better advice and told me to stick in uder my matteress. I would be better off now.

dunstonh

Surely if she was told information that led her to believe it was a cash ISA or a cash product with interest, it's a mis-sale?

8 years ago, this wasnt a stocks and shares ISA. It was an insurance ISA. It would be Karen's word against the illustration, key features document, factfind and suitability report. Pearl had many faults but the documentation for their ISA bonus account was pretty good.

Karen may say "I thought it was a cash ISA". Pearl will show factfind showing low or medium risk investor. Suitability report will show that it is an insurance ISA and cover the appropriate risk warnings including that you can still take out a cash ISA and a stocks and shares ISA. Her information on this thread shows inconsistencies and errors and 8 years is a long time ago to remember what was or wasnt said.

Karen may say "I didnt want to risk my money". Pearl will say that no money is risked as the product is capital secure.

As I said, it's not so much the lack of performance I would be focusing in on with any complaint, but the fact that it sounds like it was sold as a cash product rather than a market-linked one. Surely that can't be ok under any circumstances?

It is possibly closer to to cash to market based investments. It is a capital guaranteed product. Funds available within a week for withdrawals without penalty after 5 years. No initial charges and bonus rate is set after charges (so no explicit charge). Its only the bonus rate that is subject to fluctuation. There are two bonuses added to this plan. The very low daily bonus which once added cannot be taken away and the additional bonus which can change in value but cannot go into a negative position. Most Pearl ISA bonuses I have seen had very little or no additional bonus until a couple of years ago.

It is actually quite a good concept on paper and had a bigger insurer like Pru or Norwich Union offered it, then it would have done very well. Indeed, Pru do offer something like it now with their Prufund. NU do as well with their inflation linked with profits guaranteed fund. However, they are single premium based and this was monthly only.

It certainly is a terrible savings plan! My financial advisor knew I was saving for my daughter and I said I wanted something safe that could build up some interest. What I've got now is LESS money that I've actually saved!!!

You have not got less than you have saved. It is not technically possible with this product to lose money. Your figures are not correct.

At the time the product was launched at Pearl, your Pearl sales rep would not have considered it a bad product. Plus at that time Pearl was still a viable company. AMP hadnt destroyed it yet.

It hasnt paid off for you and any ISA bonus account I have come across I have transferred to better but it is not as bad as you are making out. Indeed, it could have been a lot worse.

karen_newcastle

dunstonh wrote: »

You have not got less than you have saved. It is not technically possible with this product to lose money. Your figures are not correct.

I have been saving £40 per month for 8 years now. The account was opened in 2000. I can't remember ther exact month but my daughter was 8 in Ferbruary 2000 and it was around that time (as I wanted a 10 year savings plan)

I am going to ring PEARL again on Tuesday and ask them exactly when started and how much interest this account has made and I will come back on here with more precise figures.

I understand your comments about how I may have been sold a decent product at the time but at the end of the day it has been very poor and I need to move it so I can maximise the interest I can earn over the next 2 years. Advice on that score is more useful to me at the moment.

dunstonh

I am going to ring PEARL again on Tuesday and ask them exactly when started and how much interest this account has made and I will come back on here with more precise figures.

Good idea. They dont call it interest though but bonuses. There are two bonuses on this plan. Daily bonus and additional bonus. Make sure you get both.

I understand your comments about how I may have been sold a decent product at the time but at the end of the day it has been very poor

That is it basically. However, the problem is that it is not grounds for complaint.

Also with regards to your friend that recommended it you must remember that he was not a proper financial adviser. He was an insurance company sales rep. Its a common mistake and something the FSA has allowed to happen with salesmen and financial advisers all using similar titles doing similar roles. The good news for the future is that the FSA have realised this is not a good thing and next year the insurance salesmen will not be able to give or present their products in an advice process and will not be able to use the term "advice" or call themselves advisers. Your friend has a responsibility to recommend the best product from his product range and given the Pearl produce range at the time, he did that (Pearl only had around 3 unit linked funds for ISAs and they would have seen a drop in value at various points although 2 of them would have higher values now and they also had a minimum premium of £50pm)

I need to move it so I can maximise the interest I can earn over the next 2 years. Advice on that score is more useful to me at the moment.

2 years suggets that only savings accounts are the option that is sensible here. Not investing.

MRLX69

munk wrote: »

If you're a basic rate tax payer AND you're aiming to invest in a cash savings account (ie cash ISA) I don't think that there's any benefit from using the full £7200 allowance just on S&S due - you're better using up £3600 in cash ISA and the other £3600 in S&S. I might be wrong though, to be honest I'm still slightly confused about whether dividends paid out on investments inside an ISA are taxed or not. As I understand it the only tax you're avoiding paying on an ISA is CGT, dividend payments are still taxed (used to be dividends were tax free until a few years back).

AS for whether S&S do better than Cash - I've seen a stat bandied about in the press a lot about how over 20 years the average return on S&S is 6.9% (of course though that's the average, some equities will do a lot better, some a lot worse). What the average return on cash is ... who knows, I guess it'd be around 4-5% over 20 years but tbh can't remember what the articles said about cash.

At any rate you want to be looking at your investment in S&S for at least 5-10 years to iron out any 'bumps' - like those over the last 6 months! Not a bad time perhaps to be getting into S&S given prices have fallen a fair bit recently.

As for what to choose, that's dependent on your attitude to risk. Investment funds (unit trusts or OEICs) let you leave the picking and choosing of stocks to the fund manager and in turn you pay a charge to them for doing this. Picking individual shares in a stock or stocks is a lot more risky and probably best once you've dabbled in funds first?

As for how to choose the funds... there have been a few new articles in the savings/investments section on this site recently (look at top menu where it says 'banking/saving'). Have a read of some of those article see if you can get any ideas. I don't think they recommend funds though, you'd have to go to a financial advisor to get advise on which funds are best for you.

If you do have a look around and end up choosing a selection of funds (a portfolio), maybe come back on here and ask for *opinions* on your selection (don't ask for advice, is against forum rules). To give you an idea, I read up for maybe 3-4 months pretty heavily before I contemplated settling on a portfolio. If you're not up for that then maybe it'd be best to just pay an IFA (if your time is important to you it might be worth paying them instead of spending 100+ hours researching investing! (although it does pay to at least be savvy of what you're getting into)).

http://unbiassed.co.uk/ have a good list of IFAs local to you.

Wow! - thanks a lot for your very in dept reply!!! Last thing.... can you point me in any direction where I can read up about funds? I've spend a fair few months now reading about shares, learning about different investments as well.... but I don't know much about funds... how did you get into it? - I've tried looking on this website for info but can't seem to find any....

Also - if I invest in funds, would it be possible to invest in shares later or would the admin charge during the switch make it not worth while? (I know that this could be the case when switching between 2 asset managers....)

Thanks!!!