Financial Advisors - Give them the spanish archer or not?

Discussion in 'Finance, Property, Law' started by MarkOnesBroken, Aug 30, 2008.

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  1. To cut a long story short, I have a portfolio with a risk grading of 3 with a large company of financial advisors. 12 months ago they informed me that my portfolio had lost £20k ish and 6 months ago it has lost a further £60k ish.

    I did ask why this had happened (economic situation was my thoughts but wanted to hear their side) but more importantly how this was allowed to happen given all the warning signs!! Effectively they have undone about 5yrs work!

    I am still awaiting a reason as to why this was allowed to happen under their supervision. I will be having a meet soon with them and would like some thoughts as to my next move with them by those more economically minded than I.

    Do I ride it out or get them to run its course and not re invest once shares are sold?

    If I do sack them, is land or housing the way to go?

    Any thoughts/advice taken into consideration or indeed any questions that I should be asking this guy when he comes to visit?

    my thanks in advance.
     
  2. Financial Advisers are there to assist you in putting your money in places where your money is most likely to do best, but that primarily fits your risk profile. If they didn't carry out a risk profile (which would have made you aware that you could lose small/gain small or lose big/gain big) then they have messed up.
     
  3. msr

    msr LE

    Caveat Emptor.

    msr
     
  4. "It's never too low to sell" so if you're thinking of riding it out with them then the conventional wisdom is to take the loss and deal with the psychological problems afterwards.

    Personally, I'm out of all markets at the moment with everything in cash and waiting for some good bargains / falling knives early next year on property and equities. If you're risk averse then of course long bonds aren't too bad; if you'd like some risk too then going long on commodities is an interesting posish as are currency bets. I made 10% shorting the GBP against the USD since December but I'm in the City and surrounded by people who (unlike me) do at least seem to have a clue.
     
  5. For a start it is not how much you have lost but what you have lost in percentage terms that you should worry about. Losing 80k on say a 250k portfolio is significantly different than losing it on a 2m portfolio.

    Secondly, as someone already pointed out, they should have carried out a risk profile (from your post it sounds like they have) which you agree to. That offers both sides a measure of protection from fraudulent or incompetent management (know your customer and all that). I am also assuming from your post that you have let them have full discretionary control over how they invest? There may be questions for them to answer if they have simply sat there and watched the value of your portfolio dive without apportioning some of it to less risky investments, e.g. cash or government bonds. There has never been any doubt on the part of investment professionals as to where the market was heading over the last nine months - so question what action they have taken to limit the losses or hedge against significant price movements.

    Thirdly, like in any other profession, there are good IFAs and bad ones. Also some are truely independent and can advise you impartially on the best course of action whilst others are tied either wholly or partially to investment/asset management companies and will therefore only promote their products, regardless of what might be better for the customer.
    I have been in finance (not as an IFA) for many years and have seen both good and bad. If you run into any problems and want to take an impartial view from somewhere I will happily point you in the direction of someone I consider to be very good.

    Finally, before you do confront them, make sure that you know exactly what issues you want to raise and what questions you want answered. Money is always an emotive issue and you want to make sure that you approach it rationally and get answers that either satisfy you or that you can challenge from a purely logical/objective point of view.
     
  6. Firstly, thank you to all who have bothered to impart some advice in this lowly direction.

    Two, to answer some questions, the 80k loss was on a 600k(ish) portfolio where the IFAs (Frenkel Topping) do have discretion as to when and where to invest. I do recieve from time to time permission paperwork to sign for them to continue.

    Three, I agree that money is indeed an emotive issue and have thus far restrained myself from planning a non PC extraction of information exercise(?) when he meet. My main grumble is how this was allowed to happen over such a long period of time given the warnings.

    My main questions are as follows,

    1. When we spoke last you informed me that my assets would have moved to a safer location thus slowing down if not halting the decline of the portfolio. Has this happened?

    2. What is the current valuation of the portfolio? ( I dont need a print out just a figure) i.e. has it dropped further since we spoke a month ago?

    3. What are my options for continuing with your company to my benefit?

    4. What are the options and costs of pulling out all assets or running them down until none are left invested?

    5. Reasons for allowing the portfolio to continue in decline for the period of a year.

    Any other questions worth asking??

    My thanks to all again.
     
  7. :p

    Please take a look at my survey at

    www.msc-research.org

    which I'm conducting as part of an MSc course (distance learning at University of Liverpool).

    It looks at the type of questions you are discussing and in the middle of it is the website of a mock company which seeks to fill the gap left by the financial services currently available to service personnel and their families.

    This company has designed its services to simplify the whole investment minefield, using collective funds designed specially for soldiers and their families.

    As well as genuine research I've conducted regarding fund performance ('Facts & Figures' page) there are five mock examples using soldiers with different financial planning needs.

    Please run through it and see if you think such a company would be of use to service people and their families.

    Cheers

    Rick