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Spooky stories: five advisers' tales to make your toes curl

Five IFAs tell their scariest advice stories.

Halloween horrors

Running an advice business can be fulfilling. However, it can also be a headache, and sometimes a total nightmare. On All Hallows Eve, we take a look at financial ghouls rather than financial goals, asking advisers to share client cases and business blunders scarier than the latest Financial Services Compensation Scheme levy.

Halloween horrors

Running an advice business can be fulfilling. However, it can also be a headache, and sometimes a total nightmare. On All Hallows Eve, we take a look at financial ghouls rather than financial goals, asking advisers to share client cases and business blunders scarier than the latest Financial Services Compensation Scheme levy.

Phil Frapple, director, Nexus IFA, Bridgwater

When I was starting in the profession I was a life inspector with an insurance company. I had to deliver savings cheques to clients and reinvest the money, or set up a new policy.

One of my visits was to a lady who lived at the end of an alleyway. I knocked on the door and received a warm greeting. She told me she was having a brand new carpet fitted and asked if I could come back later in the evening.

Shrieking shack

I went back later. By now, the alleyway was poorly lit but I walked to the door and received another warm welcome. She ushered me through towards the living room, and we were just about to sit down when I heard a piercing shriek.

To my horror, I had walked dog poo all through the lady’s house. She took the cheque, and I promptly left having given her brand new carpet a new pattern.

Derek Stewart, managing director, Strategic Asset Managers, Glasgow

A new client asked me to advise on investments to go into a discretionary trust, which was being set up by an unauthorised adviser. I pointed out the possible flaws of the other ‘adviser’, and how this could cause trouble for the client.

Usually I would have thrown this out, but the client had been referred by someone I had advised for 25 years. I insisted the client met a lawyer and had a client agreement drawn up; until that happened the lawyer would be working on behalf of the unauthorised adviser. At least the client would have recourse if things went wrong.

Trick or treat

One of a number of mistakes was the lawyer copying and pasting previous trusts. My main concern was the lawyer being paid for by the unauthorised adviser, so who would compensate the client if things went wrong? As I was the authorised adviser in this situation I was concerned the liability would be mine.

I now have a new client who is very grateful that everything is above board and sorted out. However, there are unauthorised advisers setting up hundreds of these trusts, and they are copy-and-paste jobs. The unauthorised adviser wanted to work with me at a later date but his extortionate fees meant I did not entertain the thought for long.

Martin Cawley, chief executive, Devonshire Wealth Management, London

A high profile client of ours had a Sipp valued around £1 million. Two days prior

to the client’s review meeting we generated current valuations of all the client’s holdings that we look after, including the Sipp, which was showing a new valuation of £10. A dramatic drop!

Vanishing money

Rather than prepare for a very difficult client meeting, or legal action, we queried the valuation.

It transpired the Sipp provider was guilty of ‘fat finger syndrome’ and pressed an incorrect button, disinvesting the money. The funds had only been disinvested for a couple of days, and the provider reinvested and reimbursed the client for their loss while out of the market.

The provider rectified the issue quickly and effectively, hence why it has not been named, and we still act for the client and his wife now.

Tom Annear, head of business development and marketing, Epoch Wealth Management, Bath

We were approached by a client seeking a second opinion on an investment he had been sold while a resident in the Far East.

He was a pilot based in the region and had been sold a with-profits bond, which was then leveraged.

The client had invested £200,000 of his own money and borrowed 75% of the bond value (£350,000 total). The intention was to use the reversionary bonuses to pay off the interest on the loan after five years.

Toil and Trouble

When he approached us in 2008, the market value reduction (MVR) was so great that the surrender value was less than he owed in debt. In round terms, interest and capital on the loan was around £190,000 and the value after the MVR was £170,000.

We were unable to solve this client’s horror story. He had been sold a dream that came crashing down and with the lack of regulation in that part of the world at the time, there was little he could do.

Alan Hardie, financial services director, McHardy Financial, Kirkcaldy

In my old job at insurance broker JW Group I was responsible for employee benefits internally, for 110 members of staff across five offices. One day when I was printing the files in my office in Kirkcaldy, I hit print and nothing came out of the printer. Assuming it was a technical glitch, I hit print again but still nothing.

Printing poltergeist

Moments later I received a phone call. One of our newest recruits in our Galashiels office had noticed the printer working overtime and picked up the paperwork.

I had printed off the entire company payroll, including my own, right into the sales office. It included everyone’s salary, bonuses, and the directors’ dividends. I had to drive 50 miles to Galashiels to pick it up, and another 50 miles back.

Fortunately it was spotted early, and when I phoned the chief executive to apologise, he was fine with it.

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