Good advice on the money
THE stock market has been on an encouraging climb since last summer, bringing welcome respite to some battered investment and pension portfolios. However there are still thousands of investors who have lost vast sums through poor advice from banks and independent advisers.
Andrew Hummersone, a chartered financial planner and claim manager at Whitehall Randall & Associates, said: “The Financial Services Act has been around for 24 years. In spite of that we are still seeing, daily, practices that have barely changed.
“Sadly this is invariably driven by commissions paid to companies selling the products. If people realised up to seven per cent of their investment was disappearing on the first day would they choose to invest?”
As new capital has been in short supply in recent years many advisers have focused on transferring capital between different investments and different pension funds. This often triggers large commission payments in return for no realistic benefit.
Mr Hummersone said: “Some pension funds have very high charges. As a result, moving to a low-cost pension scheme can make sense. Charges are guaranteed but growth isn’t.”
He added that most schemes have low or reasonable charges and a large range of investment options within existing policies making it possible for any change in an
‘People are searching for the holy grail of higher returns for
no risk’
TREAD CAREFULLY: Many schemes are driven by the commissions paid to the seller individual’s investment objectives to be accommodated free of charge within a current policy.
He said: “There is simply no need to transfer to a new plan thus incurring new commission costs. Any transfer of pension benefits would benefit from being reviewed.”
A typical case he handled involving a pension scheme arose from the transfer from a former employer’s scheme into a personal pension.
Most employers’ schemes have significant guarantees built in but when you transfer out some or all of those guarantees are lost.
Mr Hummersone said: “This client received £48,000 to cover the loss the advice he received had caused.”
A common situation is when an adviser employed by a bank suggests unsuitable investments (with subsequent losses) to a customer holding money in a deposit account.
Mr Hummersone said: “The key is to make sure your pension fund and investments match your present tolerance to and your understanding of risk which will be determined by your age, income, savings, etc.
“With interest rates at 0.5 per cent, people are searching for the holy grail of higher returns for no risk and many have lost all their money trying to find it.
“We have acted for many victims of poor investment and pension advice with individual clients having won more than £100,000 in compensation. We are keen to hear from anyone who thinks they may have been affected.” Whitehall Randall & Associates: 0800 328 7416/lostinvestment.co.uk