HELP! I think we've lost lots of money, what to do now?

rhubarb1

payless wrote: »

Did you buy direct or through an adviser...
what % of your total investment portfolio is this bond.

We bought it from a tied agent, part of Alliance and Leicester. The penalties for pulling out do go down 1% each year, reaching 0% in a further four years from now.

About 35% of our total investment portfolio is tied up in this.

Our main concern is what we do if it goes down any more. We realise you cannot predict the market, but the advice we are being given here will at least enable us to make the right decision for us.

I wish we'd come on here first!

surreysaver

kittie wrote: »

sheep sell at the bottom of the market and they buy at the top. Most people are sheep so they crystalise losses. I am not saying that any of this applies to you OP but I am quietly buying. It will be bumpy for some time yet though

I am the same. You haven't actually lost any money unless you sell. The only time you should sell is if you believe the fund will not recover and will continue to fall in value. Otherwise hold on to it.

Morgan2010

rhubarb1 wrote: »

We bought it from a tied agent, part of Alliance and Leicester. The penalties for pulling out do go down 1% each year, reaching 0% in a further four years from now.

About 35% of our total investment portfolio is tied up in this.

Our main concern is what we do if it goes down any more. We realise you cannot predict the market, but the advice we are being given here will at least enable us to make the right decision for us.

I wish we'd come on here first!

35% seems a large proportion. If you don't feel you were advised properly I'd complain. You can either do this direct to Alliance & Leicester or ask Legal & General to forward on.

I'm sure this is probably already on here somewhere but a couple of quick suggestions if you do complain

1. Do you research. Find your original paperwork and look at how the product works etc.
2. Lay out your points clearly. i.e. I don't feel this product was an appropriate investment for me because and a list of points.
3. Give them your phone number. A lot of companies will call you if they need clarification of points and it's a lot quicker
4. Be reasonable.
5. Be nice. I know that sounds stupid when your unhappy but remember it's a person who reads your letter. If you go off on a mad rant while it won't (or should that be shouldn't) change the outcome it may effect any goodwill payment you get on top of any financail loss.

rhubarb1

Morgan2010 wrote: »

35% seems a large proportion. If you don't feel you were advised properly I'd complain. You can either do this direct to Alliance & Leicester or ask Legal & General to forward on.

I'm sure this is probably already on here somewhere but a couple of quick suggestions if you do complain

1. Do you research. Find your original paperwork and look at how the product works etc.
2. Lay out your points clearly. i.e. I don't feel this product was an appropriate investment for me because and a list of points.
3. Give them your phone number. A lot of companies will call you if they need clarification of points and it's a lot quicker
4. Be reasonable.
5. Be nice. I know that sounds stupid when your unhappy but remember it's a person who reads your letter. If you go off on a mad rant while it won't (or should that be shouldn't) change the outcome it may effect any goodwill payment you get on top of any financail loss.

My husband doesn't like complaining. We have all the original paperwork, but yes I do feel we were (he was) ill-advised because he was not told that it may suffer so many losses, he was led to believe that it was a "medium risk" investment. The agent knew exactly how much our investment portfolio was worth.

If we did complain, would we be asking for a withdrawal of our money and compensation? How does it work exactly?

rhubarb1

My husband has just revealed to me that he signed a kind of disclaimer when he bought the Bond, confirming that the agent advised him correctly.

I must take some of the blame, although I told him not to buy the Bond, I didn't get too involved because I trusted my husband to make the right decision. I knew about this website then and I should have made more enquiries and gotten more involved. Still, water under the bridge so to speak. If his dinner's are burnt from now on that'll be nowt to do with this!

rhubarb1

"First thing to do is realise that the bond and the funds you choose to invest in are two different things. The L&G bond has a hundred or so investment funds with free switching between them."

Dunstonh - if we did want to switch within the Legal & General, do you have any recommendations for us? Say we were looking at stability right now, preferably no more losses!

dunstonh

Regarding discounts for new investors. If you applied for any investment through an Advisor they will normally be paid commission by the company. What some companies do is offer discounts to customers who apply to them directly. This is normally slightly less than the commission. So they could be making more money from these customers than customers that apply through advisers.

L&G sell their products direct at full retail price most of the time.

Mid table, top table, bottom table, it doesn't matter, it has lost a significant amount of money. How is the tax wrapper going to help if the fund is losing money?

It is currently invested in just one fund. There are over 100 available. The tax wrapper isnt losing money, the fund is. There are plenty of other funds to choose without incurring a surrender charge.

Or put it in a fund that wont lose money or is not likely to be as volatile.

35% seems a large proportion. If you don't feel you were advised properly I'd complain. You can either do this direct to Alliance & Leicester or ask Legal & General to forward on.

It is a large proportion but it was bought via an insurance salesmen. They dont recommend funds but tell you to choose (real life they may prompt the funds but read the documentation and it will almost certainly say you chose).

he was led to believe that it was a "medium risk" investment.

Actually, its low/medium so its a bit under your husband's risk profile. One year of 19% loss and 14 years of positive returns. You dont invest for one year and you say your husband was willing to accept medium risk and thats typically a 20%-25% loss potential in a year.


The money is already lost, so the decision is will it drop 6% or more in the next 12 months+? If you think it may, then a savings account will recoup that 6%.

If we did complain, would we be asking for a withdrawal of our money and compensation? How does it work exactly?

Nothing said in this thread so far is a mis-sale.

Part of the problem is your husband didnt get advice from an adviser. He saw an insurance company salesman. They dont have the full advice remit and from next year the FSA have proposed and even further reduction in what they can do (long overdue). However, under current rules the tied agent probably has this wrapped up on the fund choice.

However, I would look at the tax wrapper as a way in. I have put in a few complaints over the last year or two against banks selling bonds and all but a couple have been upheld. ISAs are the most tax efficient followed by unit trusts (unless higher rate taxpayer, discounts or trusts apply). So, if no ISA was sold with it or you are basic rate taxpayers or lower you could go down the mis-sale route based on wrong tax wrapper.

Dunstonh - if we did want to switch within the Legal & General, do you have any recommendations for us? Say we were looking at stability right now, preferably no more losses!

I cant recommend on the board as its against board rules. Plus random recommendations would breach FSA rules (which is why Martin doesnt allow them). However, assuming the L&G product is the normal retail version and not a cut down version you should have a large fund range with some low risk funds in there such as gilts, index linked, corporate bonds, high yield funds etc (edit: checking and it does appear to be a cut down version of the IFA product as well as being more expensive but there may be enough funds there). There is also a deposit fund which isnt great but it wont go down in value and you wont pay an exit charge.

rhubarb1

Thank you! Lots to consider there. The Bond is tax-free so we can't complain going down the tax wrapper route can we? It was sold as 60% of an investment, the other 40% went into a fixed-rate bond, one year with a 2.8% bonus on maturity. This he has just told me. I'm getting the impression here I should perhaps manage finances from now on, ho hum!

Switching seems to me to be the logical solution. I certainly didn't know that a medium risk investment could potentially lose so much! 25%! Can you swear on this board?

Sorry for asking you to do something against board rules. I didn't realise. We need to look at the other options available to us through L&G. We also need to go back to this guy and talk to him further.

I cannot tell you how much we appreciate your advice. When we found out how much we stood to lose today we were pretty much gutted. Now I feel more knowledgable and therefore more in control of the situation.

amcluesent

>this money was to be our deposit on any house we bought in the future<

Of course, if house prices come of 20%-25% on a three year view than remain static, you're net position isn't so bad.

dunstonh

The Bond is tax-free so we can't complain going down the tax wrapper route can we?

Its not tax free. There is corporation tax on the gains at 20% (indexation is still available which reduces it a little). With the unit trusts (which includes L&G property fund) there is no corporation tax to pay and you only pay capital gains tax (at 18%) if gains exceed nearly £10,000 . You can also bed and ISA each year (transfer £7200 into ISA from the UT) making it truely tax free.

If it was sold as tax free, then thats another thing that could be mentioned in a complaint as its certainly not.

Just for information, if you look at the L&G property fund in unit trust form and insurance fund form and unit trust inside an ISA over the last 12 months, there are the returns:
Insurance: -19.38%
unit trust: -15.74%
ISA: -15.5%