Last year, a new client came to us feeling overwhelmed by her pension. She’d lost faith in her previous advisers, especially after they invested a significant portion of her funds shortly after her divorce, which left her with a substantial mortgage debt.
We uncovered several significant problems with her previous financial advice. Firstly, she was vulnerable at the time of the investments. Her divorce settlement had provided enough capital to clear her interest-only mortgage and leave her with a substantial surplus.
Secondly, a thorough fact-find should have revealed that her past income, which never exceeded £50,000 before she became a mother and housewife, would make servicing such a large mortgage impossible. A key principle in financial planning is to address debt before long-term investments, yet this was not done; the debt remained.
Finally, despite her inability to secure employment and service the debt, her money remained invested, compounding her financial difficulties.
There were so many things wrong with the advice the client originally received that we recommended she talk to the Financial Ombudsman Service, after putting her complaint in writing to the original advice firm. This is a lengthy process, and we have helped her as much as possible, while looking after her retirement planning. This has made the case very complicated, and we continue to treat the client as vulnerable due to the financial position poor advice has placed her in.
The need for a trusted financial adviser has never been greater in the complex world we live in. When choosing your adviser, look at their client testimonials to help you know how they treat clients, and ask to talk to an existing client if you continue to be concerned. A good firm will always be happy to ask a valued client to talk to another prospective client without concern. Not all firms or advisers are sales driven, and mistakes occur when the lure of a large investment clouds the advice the client needs the most.
