Monkey Island Pensions? Always read the label ask LOTS of questions and get references
A good friend of mine forwarded me the front page of yesterday's copy of the Times. It tells the story briefly of a well known broadcaster who had transferred his £1 million+ pension offshore only to have had it misinvested and lost the spangle (market vernacular for 'the lot')
A glaring question springs into my mind about this is why would a UK broadcaster be offshoring his pension? It is extremely important to understand the law for pension assets. If you live in the UK and are planning to retire there I can see no fathomable reason for anyone to move it abroad. That should have been a massive alarm bell.
And who in their right mind would put 34k of their pension into a truffle farm that doesn't actually exist?
My key advice to anyone looking at these big scary headlines is to do your own research and make sure whoever is offering to help you move your money has a track record is fully qualified and is willing to give you references. If they are offering to invest in something a little bit fruity my advice would be to stay out of it.
You need to be 100% sure of why you are exiting your pre-existing pensions and the benefits or risks that entails. You should not be afraid to ask any and all questions about this. If at any point the company or adviser offering his services gives answers to your questions that seem vague then seek secondary advice. I am happy to stand as a point of contact for any EU based people facing these issues.
I only use blue chip funds with a strong historical track record. I also tend to try and have a connection to the fund managers to try and get a personal feeling of their strategies. I do not use funds that charge upfront entry fees or exit fees and most of the funds are institutional class (sadly some of my favourites have minimum investment sizes that would make your eyes water so am forced to use retail class in those cases).
All of these things are very important to have the lowest possible costs for clients meaning their growth will be maximised.
There are many 'IFA's' in flashy suits out there who give the industry a bad name. However there are equally very many who are passionate about helping people. I have come across both types in my shortish time in wealth management. I am reminded of the insurance salesman called Stan from the game Monkey Island. If any of you are old enough to remember the series Stan was a hyperactive arm waving character who would try and sell anything to anyone.
If you do your homework and follow these key tips hopefully you will not become the next headline or victim to a shiny suited salesman..
If you think the headline in the article is bad for those of you who don't know some of the story behind Bernie Madoff it is worth touching on. Bernie sold himself as a genius investor with a stable of very high net worth investors. He only had 4,800 clients but at the end of the scam it is estimated the total fraud amounted to around 65 billion dollars with clients losing around 18 billion. His returns clearly should have rung alarm bells- nothing ever goes in a straight line in the markets.
If you read the list of his investors it would be like a who is who of investors. They should have known better and done some due diligence. I personally know two people who lost money with him and they are bankers.
https://en.wikipedia.org/wiki/List_of_investors_in_Bernard_L._Madoff_Investment_Securities
The simple answer is that scammer are always going to scam and even financiers can fall foul of them.
Don's key tips to not getting scammed
1/ Publicly available information on investment products and providers
2/ Daily NAV tradeable funds with a public 3 year track record with no upfront fees or exit costs
3/ Diversification of risk - never put your eggs in one basket. I tend to use a minimum of 7 funds in portfolios
4/ Simple investments - if it promises out of this world returns it should be ringing alarm bells.
5/References freely given
6/ A clear understanding of the law explained to you before you move your money
7/ A suit does not mean expertise - look at the man not the clothes
8/ A full breakdown of costs (trust costs, investment wrapper costs, any 'service charges')
On that cheery note Barry Dodger and I wish you a Happy Sunday. I am off to splosh about in a lake.
Don
