The Lemon Fool

A Reminder that Portfolio Diversification is Essential & Needs Applying Correctly
Millions of pounds of investors' pension savings have not been returned by a German property company that was promising to keep them safe, a BBC investigation has revealed.

Another case of "if it looks too good to be true?"

AiY

AsleepInYorkshire wrote:Another case of "if it looks too good to be true?"

It's also a weakness in prudential supervision. There don't appear to be sufficient controls on where pension money can be invested. This is in a regulatory environment that more or less prohibits UK private investors from investing in US based ETFs.

I've been helping a friend who got taken for a ride by an IFA. Unfortunately he ended up with 'investments' in Store First storage pods, a Panamanian timber scam and Dolphin. There's currently a creditor's association trying to get some recompense for those unfortunate folk who put money into Dolphin:

https://www.german-property-group-creditors.co.uk/

The IFA went into bankruptcy shortly after I got involved trying to help my friend. The IFA still has his nice house and smart car. Another reason why I wouldn't touch an IFA with a bargepole.

RC

Oh indeed. Right now, I've got an IFA telling me that I should put my "ultra-safety ring fenced" money (my description) into a so-called balanced fund that has a 60% weighting in bonds and a 25% weighting in whizzy US tech and banking stocks. I don't know which of those two is set to crash and burn faster, frankly? I've told her I'd rather stay in cash until things settle down a bit, and she makes a face like Priti Patel. I am now looking for a new IFA.

But our very good friends were properly fleeced by an adviser who put them deeply into a Japanese recovery fund. In the 1990s..... They lost a helluva lot. He then told them to buy a precipice bond that would forfeit half their money if five major Eurozone banks should see a 20% fall in their share prices at any time within the next five years. And they asked me whether they should go for it, and I told them to go out and buy the biggest bargepole they could find. The year was 2008.

The advisor closed down his business when the RDR professional regulations came in in 2012, and he was last heard of sunning himself in Florida.

BJ

bungeejumper wrote:Oh indeed. Right now, I've got an IFA telling me that I should put my "ultra-safety ring fenced" money (my description) into a so-called balanced fund that has a 60% weighting in bonds and a 25% weighting in whizzy US tech and banking stocks. I don't know which of those two is set to crash and burn faster, frankly? I've told her I'd rather stay in cash until things settle down a bit, and she makes a face like Priti Patel. I am now looking for a new IFA.

But our very good friends were properly fleeced by an adviser who put them deeply into a Japanese recovery fund. In the 1990s..... They lost a helluva lot. He then told them to buy a precipice bond that would forfeit half their money if five major Eurozone banks should see a 20% fall in their share prices at any time within the next five years. And they asked me whether they should go for it, and I told them to go out and buy the biggest bargepole they could find. The year was 2008.

The advisor closed down his business when the RDR professional regulations came in in 2012, and he was last heard of sunning himself in Florida.

BJ

I think we all have differing risk reward ratio's but some people do seem to completely ignore risk. I suspect they simply say to themselves it won't happen to me and that's the extent of their risk mitigation strategy

AiY

AsleepInYorkshire wrote:I think we all have differing risk reward ratio's but some people do seem to completely ignore risk. I suspect they simply say to themselves it won't happen to me and that's the extent of their risk mitigation strategy.

Advisors can say "it won't happen to me" when it's their own money they're investing and not mine. But when they're professionals who are being very well paid to look after my interests, then different rules apply.

BJ

I'm sure there are some good IFAs but there are many, many bad ones and I'm not sure the word 'professional' applies to many of them.

There is far too much emphasis on smooth talking selling and (large) percentage fee charging and too little on sensible objective advice.

The FCA really must be asleep on the job to allow so many scams to persist.

We need to have confidence in our own ability. We can all lose money for ourselves and do not need to pay an IFA to help us.

Dod