Suing a financial advisor

[Garpal Gumnut]

Thanks, really appreciate everyones views. Just to clarify more information for a few who’ve asked…

The FP did place me into managed funds with investments in property (APN property, RREEF Paladin Property and SG Hiscock Listed Property). Other assets in the portfolio he put my money into are Perpetual Industrial, ING, Lazard, Schroder,, etc.

I’m unemployed and it’s cost me $2,000 in lawyer fees for one consult, a letter to the FP and a few phone calls.

Unfortunately I don’t have a written record of my instructions to the advisor, it was all by word of mouth. I do however have notes from 2 previous advisors I’ve seen. They’ve both stated my short term objectives on record. With regards to the FP in question, there is no much paper work suggesting “short term”. I made the mistake of “trusting” he would be doing the right thing. I knew little, if anything about what the “assets” were about and he knew it!!! I believe he took advantage of my lack of knowledge.

What coaxed me to believe in him? Because he is licensed and has been an FP for nearly 20 yrs. He seemed to know his stuff….but in hindsite it was all an elaborate ploy to depart me from my cash.

When did I first realize he had placed me into long term investments? When I received my first statement in February 2008 and noticed a $60,000 loss.

The FP made the assertion that stocks would rise in another few months (he made this claim in late February 2008). By then I had only lost $60,000… now it’s climbed to over $180,000 loss. No…he should NOT have made such an assumption. This is nothing less than gambling peoples money away.

Before I signed anything with the FP, I do recall a meeting where I noticed a few “longer term” assets on the SoA. Some were international shares that wouldn’t show profit for 4 years. I set up a meeting with him and got him to change the portfolio around to closer match a “short term” investor. I saw him shift a few things around and he announced it’s “geared for a short term investor”. Unfortunately he didn’t do that at all. Perhaps he didn’t expect such a financial disaster was close ahead?? He relied on the “long term investments” he had placed me into to perform well.

I have complained to FICS and ASIC. They referred me to FOS who now have dropped my case since it’s passed the $100,000 loss limit. During the complaints period we obtained my FP’s notes and I cannot see where he has documented my meeting with him (prior to me signing the SoA) to adjust it to a more “short term investment” strategy. He had omitted it from his notes.

Where does that leave me? They suck us in, use our lack of knowledge against us, give misleading information and are protected by the law via signatures whilst they gamble with our hard earned money.

Thanks dette your idea on breaking my complaint into a few small ones to get around the FOS limit of $100,000 is certainly worth looking into.

Watsonc - you work in compliance, vetting and complaints? where do I find such a service?…and I wasn’t too clear with your last sentence. I already have had my FP served with a “letter of demand” by my lawyer, the FP responded by putting the matter into the hands of his indemnity insurance. We haven’t heard from his insurance yet.

Mate you have been had.

There is no recourse to your losses.

Move on.

Spread the word that the Financial Advice Industry is a scam with ethics below that of Used Car Salesmen.

Sorry to be so harsh, but you've been a mug and been taken.

Get over it and move on.

gg

 

[ROE]

Without some concrete evident, you don't stand a chance in court, your word against his and lawyers will suck you dry with another 40 - 50K or more.

Best to forget it and move on.. I know it's tough with such large amount of money but if you fight on it takes a toll on you, your family and more money and you may not get anything back.

Learn to manage your own money and if someone promise some crazy return like 20% a year... use this lesson and walk away.

 

[1080p]

Did you sign the SoA as well as an 'Authority to Proceed' document? The latter would insulate the FP fairly well unfortunately...

 

[Julia]

dont mean to be rude,
but was this a case of easy come, easy go?

if you had worked your butt off for that cash, would you have let it slip away so easily? just curious!

Whoa, that's a bit harsh, isn't it? How do you know he didn't, as you put it, work his butt off for that money? I can't see anywhere that he has stated that the funds were "easy come".

Duped, it seems your basic error was in not having everything documented in writing. Obviously this is something you won't do again. Meantime, you're down a significant amount, and I'm sorry about that. It must be particularly difficult given that you're presently unemployed. You should be able to trust F.A.'s but sadly you can't in many cases.

Imo the rule about the FOS only pursuing claims of not more than $100K is unreasonable. However, that's how it is apparently, so the suggestion made to adjust your claim to two smaller claims makes sense.

I hope something may positively come out of this. I don't think you should give up too easily. Best of luck.

 

[James Austin]

Then gave misleading information such as "the market will recover in a few months"...don't cash it in.

What coaxed me to believe in him? Because he is licensed and has been an FP for nearly 20 yrs. He seemed to know his stuff….but in hindsite it was all an elaborate ploy to depart me from my cash.

When did I first realize he had placed me into long term investments? When I received my first statement in February 2008 and noticed a $60,000 loss.

The FP made the assertion that stocks would rise in another few months (he made this claim in late February 2008). By then I had only lost $60,000… now it’s climbed to over $180,000 loss. No…he should NOT have made such an assumption. This is nothing less than gambling peoples money away.

Whoa, that's a bit harsh, isn't it? How do you know he didn't, as you put it, work his butt off for that money? I can't see anywhere that he has stated that the funds were "easy come".

Duped, it seems your basic error was in not having everything documented in writing.

Not critical of the fellow, just curious as to how he came to hand over the cash.

However, the above comments by duped suggest a lack of research. He had a license so I gave him $190grand. . . . What??

But by that I’m not implying the FP has the right to defraud him, if he has done that. If he can get his money back then I hope he does.

 

[Garpal Gumnut]

Listen up you guys and gals.

Garpal decides to become a financial adviser.

The FIRST thing I am going to do is ensure that if everything goes pear shaped my good wife and children will not be compromised.

I put the house, the boat and anything of value in her name.

I form a limited liability company.

I then engage a young lady who is smart and presentable to be my pa , receptionist, I lease an office in the company name, oh by the way I've gotten a dodgy financial planners license along the way, not difficult, and the I work out a marketing plan.

I ally myself with some accountants, use my contacts in business to generate throughflow, etc etc.

Ensure that my office has karma, swimming fish, fountains etc etc.

And now I am in business.

Any profits get sent over to my wife and children to ensure that if it goes pearshaped our assets are protected.

When you , you poor mug realise that my decisions have left you broke.

TOUGH

I wind up my company and start again.

You cannot sue my wife.

You can sue my company but its broke.

TOUGH

Perfick.

gg

 

[watsonc]

Did you sign the SoA as well as an 'Authority to Proceed' document? The latter would insulate the FP fairly well unfortunately...

Even if the SOA, and authority to proceed has been signed - that does not mean the planner is insulated. The SOA may not constitute a "reasonable basis for advice". e.g. the SOA must attempt to meet the client's goals and objectives. If the client has expressed a need for short-term investments, and the SOA recommends long-term styled investments (e.g. an agricultural product which matures in 10 years - that would not be appropriate advice!)
Thus the advisor would not be insulated if what s/he was recommending were not appropriate to the client's situation.

ALSO - If there is a lack of paper work (trail) - the planner is not doing their job properly. ALL conversations, etc must be recorded. Poorly detailed and un-measureable goals need to be discussed, ellaborated on, and recorded. If this is not done - this would result in a compliance breach where I am currently working.

 

[Garpal Gumnut]

Even if the SOA, and authority to proceed has been signed - that does not mean the planner is insulated. The SOA may not constitute a "reasonable basis for advice". e.g. the SOA must attempt to meet the client's goals and objectives. If the client has expressed a need for short-term investments, and the SOA recommends long-term styled investments (e.g. an agricultural product which matures in 10 years - that would not be appropriate advice!)
Thus the advisor would not be insulated if what s/he was recommending were not appropriate to the client's situation.

ALSO - If there is a lack of paper work (trail) - the planner is not doing their job properly. ALL conversations, etc must be recorded. Poorly detailed and un-measureable goals need to be discussed, ellaborated on, and recorded. If this is not done - this would result in a compliance breach where I am currently working.

Listen up you guys and gals.

Garpal decides to become a financial adviser.

The FIRST thing I am going to do is ensure that if everything goes pear shaped my good wife and children will not be compromised.

I put the house, the boat and anything of value in her name.

I form a limited liability company.

I then engage a young lady who is smart and presentable to be my pa , receptionist, I lease an office in the company name, oh by the way I've gotten a dodgy financial planners license along the way, not difficult, and the I work out a marketing plan.

I ally myself with some accountants, use my contacts in business to generate throughflow, etc etc.

Ensure that my office has karma, swimming fish, fountains etc etc.

And now I am in business.

Any profits get sent over to my wife and children to ensure that if it goes pearshaped our assets are protected.

When you , you poor mug realise that my decisions have left you broke.

TOUGH

I wind up my company and start again.

You cannot sue my wife.

You can sue my company but its broke.

TOUGH

Perfick.

gg

Get real mate.

We live in the real world.

All these acronyms matter sfa unless you can get your dough back.

gg

 

[dupedbyadvisor]

Even if the SOA, and authority to proceed has been signed - that does not mean the planner is insulated. The SOA may not constitute a "reasonable basis for advice". e.g. the SOA must attempt to meet the client's goals and objectives. If the client has expressed a need for short-term investments, and the SOA recommends long-term styled investments (e.g. an agricultural product which matures in 10 years - that would not be appropriate advice!)
Thus the advisor would not be insulated if what s/he was recommending were not appropriate to the client's situation.

ALSO - If there is a lack of paper work (trail) - the planner is not doing their job properly. ALL conversations, etc must be recorded. Poorly detailed and un-measureable goals need to be discussed, ellaborated on, and recorded. If this is not done - this would result in a compliance breach where I am currently working.

Hi watsonc... could you please send a pvt message of where you work or a similar company/contact ??

 

[Garpal Gumnut]

Hi watsonc... could you please send a pvt message of where you work or a similar company/contact ??

You'd be better off going to the video store and hiring out "The Castle"

The financial advisers have totally insulated themselves against any comeback by getting the mugs to sign all sorts of disclaimers.

Its "The Vibe" in reverse.

gg

 

[dette]

There seems to be a bit of commentary suggesting that you can’t win anyway and that you would be better off giving up on your claim.

Please don’t.

Where there have been compliance breaches you have a reasonable chance of making a claim at FOS at least. As you may already know, the service won’t cost you, and their decision is not binding on you, but is binding on the FP. Each individual event may be deemed a separate breach with separate associated costs – seek advice.

Also, don’t forget about ASIC, ASX and ACCC where there have been compliance breaches that may cross their jurisdictions. It might be another avenue of clarification of your situation for you, but again is best navigated with a compliance specialist.

None of us should find it acceptable that FPs should be able to avoid the standards of compliance set for them as a minimum. The average person cannot be expected to have the same level of knowledge and does place such a substantial amount of trust in these advisers that can have such a massive impact on the investor. If we were to all say “oh, you have no chance mate, forget it and move on”, I would be concerned that that would be tantamount to offering FPs free reign.

Don’t we want a better standard of performance from FPs in our community?

Best wishes with your claim.

 

[Dowdy]

The best Financial Advisor is yourself.

That and alot of research

 

[Julia]

There seems to be a bit of commentary suggesting that you can’t win anyway and that you would be better off giving up on your claim.

Please don’t.

Where there have been compliance breaches you have a reasonable chance of making a claim at FOS at least. As you may already know, the service won’t cost you, and their decision is not binding on you, but is binding on the FP. Each individual event may be deemed a separate breach with separate associated costs – seek advice.

Also, don’t forget about ASIC, ASX and ACCC where there have been compliance breaches that may cross their jurisdictions. It might be another avenue of clarification of your situation for you, but again is best navigated with a compliance specialist.

None of us should find it acceptable that FPs should be able to avoid the standards of compliance set for them as a minimum. The average person cannot be expected to have the same level of knowledge and does place such a substantial amount of trust in these advisers that can have such a massive impact on the investor. If we were to all say “oh, you have no chance mate, forget it and move on”, I would be concerned that that would be tantamount to offering FPs free reign.

Don’t we want a better standard of performance from FPs in our community?

Best wishes with your claim.

I agree with this. We seem to be living in a culture which is more and more deeming fighting for what's right to be a waste of time.
And so it will be if we all take a passive, accepting attitude to bad professional behaviour.

After all the publicity re Storm, BCSCA and financial advisers in general you'd imagine Joe Average would be at least a bit informed and certainly wary.
A friend of mine is about to get a Work Cover claim paid out, not much, probably around $150K. I asked her what she planned to do with it.
She said she would go to see a F.A and take his advice. When I suggested he would likely place her into the investment which offered him the best reward, her eyes glazed over, and she clearly just didn't want to know.

So when you have such apathy, it makes for an ideal breeding ground for unscrupulous advisers e.g. Storm.

 

[alwaysLearning]

Listen up you guys and gals.

Garpal decides to become a financial adviser.

The FIRST thing I am going to do is ensure that if everything goes pear shaped my good wife and children will not be compromised.

I put the house, the boat and anything of value in her name.

I form a limited liability company.

I then engage a young lady who is smart and presentable to be my pa , receptionist, I lease an office in the company name, oh by the way I've gotten a dodgy financial planners license along the way, not difficult, and the I work out a marketing plan.

I ally myself with some accountants, use my contacts in business to generate throughflow, etc etc.

Ensure that my office has karma, swimming fish, fountains etc etc.

And now I am in business.

Any profits get sent over to my wife and children to ensure that if it goes pearshaped our assets are protected.

When you , you poor mug realise that my decisions have left you broke.

TOUGH

I wind up my company and start again.

You cannot sue my wife.

You can sue my company but its broke.

TOUGH

Perfick.

gg

Can it really happen this way? That's is horrible if true

And to the original poster. I hope that somehow you are able to get your money back. It does sound like gambling to me what he said to you. If you can get some free legal advice somehow that would be a good option. $2000 just for a consult is so expensive.

 

[dupedbyadvisor]

Thank-you all for the input. What is your definition of a "short term" investment? 4yrs or more? 3yrs or more? In the SOA, the financial advisor who "duped" me writes,

"To invest money that you currently hold in a bank account, so that when you need it to buy a house in three years or longer it will have grown in value enough to cover inflation and the increased cost of building".

Opinions?

The investment was made in October 2007...and has succumbed to a $180,000 loss. I doubt my goals will be met within 3 years (from oct 2007).

 

[nunthewiser]

Thank-you all for the input. What is your definition of a "short term" investment? 4yrs or more? 3yrs or more? In the SOA, the financial advisor who "duped" me writes,

"To invest money that you currently hold in a bank account, so that when you need it to buy a house in three years or longer it will have grown in value enough to cover inflation and the increased cost of building".

Opinions?

The investment was made in October 2007...and has succumbed to a $180,000 loss. I doubt my goals will be met within 3 years (from oct 2007).

not pointing out the bleeding obvious but october 07 was roughly around the peak of the markets ....

 

[dette]

Could be read as a guarantee. Think his crystal ball might be a bit cloudy though....

Thought shorter time frame suited 1-2 years. But if you had said that you wanted to buy a house in 3 years time, perhaps the implication is that the investment did suit your goals....

Arguments for and against...

However, if the SOA does point to your requirement for short term investment, he would seem to have given confusing advice with 3+yr timeframe, and that may not be appropriate to your requirements.

I imagine there would be lots of arguements to throw around when you are pulling this apart...

 

[Sir Osisofliver]

I agree with this. We seem to be living in a culture which is more and more deeming fighting for what's right to be a waste of time.
And so it will be if we all take a passive, accepting attitude to bad professional behaviour.

After all the publicity re Storm, BCSCA and financial advisers in general you'd imagine Joe Average would be at least a bit informed and certainly wary.
A friend of mine is about to get a Work Cover claim paid out, not much, probably around $150K. I asked her what she planned to do with it.
She said she would go to see a F.A and take his advice. When I suggested he would likely place her into the investment which offered him the best reward, her eyes glazed over, and she clearly just didn't want to know.

So when you have such apathy, it makes for an ideal breeding ground for unscrupulous advisers e.g. Storm.

Ahh Julia, what you do is this... you shout at the top of your lungs....

ARE YOU OUT OF YOUR FREAKING MIND WOMAN???

She will be so shocked that she may actually listen to what you say. Alternatively you can put on the fake green Hulk hands, slap her upside the head repeatedly while you froth at mouth yelling in a deep voice "value destruction make Julia MAD!!!"

Julia, horses, water, drinking - applies here - if you are a friend you won't say "I told you so, or If only you'd paid attention..."

When I give seminars there's always one in the room who've been burnt by their FA's, who treats me like a snake oil salesman until they actually hear what I am saying. Bad FA's give everyone in the industry a bad name.

Sir O

 

[Julia]

Ahh Julia, what you do is this... you shout at the top of your lungs....

ARE YOU OUT OF YOUR FREAKING MIND WOMAN???

She will be so shocked that she may actually listen to what you say. Alternatively you can put on the fake green Hulk hands, slap her upside the head repeatedly while you froth at mouth yelling in a deep voice "value destruction make Julia MAD!!!"

Julia, horses, water, drinking - applies here - if you are a friend you won't say "I told you so, or If only you'd paid attention..."

When I give seminars there's always one in the room who've been burnt by their FA's, who treats me like a snake oil salesman until they actually hear what I am saying. Bad FA's give everyone in the industry a bad name.

Sir O

Ah, dear Sir O, apologies if I'm appearing to generalise unfairly.
I'm sure you're entirely focused on the client's wellbeing.
I happen to know the FA this woman intends to see and he simply shunts everyone into the same managed fund. He does it very pleasantly and the client walks out really happy.

 

[Sir Osisofliver]

Ah, dear Sir O, apologies if I'm appearing to generalise unfairly.

Julia your generalisation is completely fair. Most FA's are parasites more concerned over their own cashflow. Call us all b@stards (just say "except that nice Sir O - he's a gem" )

I'm sure you're entirely focused on the client's wellbeing.

Damn straight.[/quote]

I happen to know the FA this woman intends to see and he simply shunts everyone into the same managed fund. He does it very pleasantly and the client walks out really happy.

(Then I suggest you ask your friend if you can go along for moral support and throw a curly question or two at him and make him squirm).

Sir O