27-year investment that earned a mere $50003
A grandmother left money so her grandchildren could one day buy a house, less than three decades later the family discovered it had earned just $5000.
Dozens of impacted families contacted Stuff after reading Anna Campbell’s story of the death of her father and the issues over his estate with Public Trust.
That has included complaints over hefty fees, some waiting years for probate, and others who lost family possessions after estate mismanagement.
Sandra Roberts, of Christchurch, told Stuff her children – then aged two and three – were two of six grandchildren left $10,000 each by their late grandmother in 1996.
The grandmother’s will was with Public Trust, and her money was left in trust until each grandchild turned 30. The grandmother always intended that the initial $10,000, which was the equivalent of a 20% home deposit in 1996, would be used for a deposit when the children turned 30.
After 27 years of managing the money, Public Trust finally released the first inheritance sum to Aiden Horton, who is based in the United States, when he turned 30.
That amount fell well short of the $50,000 or more he was expecting, and he was “blown away”, Roberts said.
“It amounted to a miserly $15,000.” If that $10,000 had been invested at an average interest rate of 7%, which compounded quarterly, it would have led to a return of around $65,120; a $50,000 difference. “We were totally appalled and they are terrible to deal with, and won’t provide any statements as to how this figure was derived,” Roberts said.
“They need to be held accountable as
their grandmother would roll over in the grave if she knew.”
Public Trust was unable to comment on the specific case, citing privacy law and confidentiality obligations.
A spokesperson said their investment service managed several diversified funds, aalso a cash fund and common fund, generally used on a short-term basis or where there is a lower appetite for investment fluctuation.
“Our approach provides customers with diversified investment exposure at a reasonable cost.”
Public Trust investment returns were in line with the market, and it also completes an annual investment review to ensure funds were appropriately invested, based on the customer’s circumstances, the spokesperson said.
Annual statements were also provided to estate and trust beneficiaries, and anyone with issues was urged to contact Public Trust directly.
Another family’s unhappy with their experience with Public Trust was Stuart McLagan, of Blenheim, who said his experience was poor. His late father died in 2001 and his six grandchildren each received $12,144 to be held in trust until they reached 20.
McLagan said he requested the funds be invested in a higher risk fund as the returns were “abysmal”.
Public Trust had invested the money in conservative funds with poor returns, and said McLagan had no authority over that money while financial statements stopped arriving in 2008.
The final payment, which was only made after Public Trust was approached, was just under $16,000, meaning it had increased by just under $4000 over 15 years.
Financial Services Complaints (FSCL) Financial Ombudsman, Susan Taylor, said professional trustee and estate administration companies were regularly investigated by FSCL.
The most common issues of complaint were fees, and the time taken to administer an estate.
FSCL was a free and independent financial ombudsman and dispute resolution service, could investigate complaints concerning professional trustee and estate administration companies.
It could investigate unreasonable or excessive fees, and award compensation up to $350,000 for financial loss and $5000 for non-financial loss.
Anyone wanting to lodge a complaint, could call 0800 347 257 or email complaints@fscl.org.nz.
A Public Trust spokesperson confirmed it had updated its website to make information about the independent complaint process easier to find online. “We welcome the public discussion on how we can improve to meet New Zealanders’ need.”
People wanted upfront certainty about the costs involved in estate administration, and “In response, we make our price list freely available on our website”.
Public Trust, which was established in 1873, was New Zealand’s largest provider of wills and estate administration services. The autonomous Crown entity also provided a range of products and services including legal, financial, investment, trusts, estate administration, and estate protection.
A 2022 letter of expectation from former minister Aupito William Sio urged Public Trust “to have regards to the interests of the communities in which it operates and put its customers and staff at the heart of everything it does”.