/ Money

Financial advice: can you trust your adviser?

Rogue advisers

What do you do when you realise that something’s gone wrong with the financial advice you’ve received? When you realise that your trusted financial adviser isn’t so trustworthy after all…

Imagine realising that, despite telling your financial adviser you didn’t want to take too much risk, they’d placed your life savings in medium or high-risk funds. Or that they’d failed to follow basic investment principles, such as diversification, and put everything into one type of asset, so that years later it’s worth far less than you anticipated.

What we’re finding here at the Which? Money Helpline is that all too often, we’re dealing with the fallout from the uglier side of the financial advice industry.

Rogue financial advisers

We helped one Which? member get his money back after receiving some dodgy advice from his financial adviser to invest his pension in an unregulated scheme.

It turned out that there’d been no discussion of his attitude to risk, no letter outlining why the investment was suitable and all the money had been put into one investment, so there was no diversification.

We’ve also finding cases where people are being sold investments that are completely unsuitable for them.

In March, we spoke to a member who was advised to invest all of their money into self-storage pods. Two years on and the income had dried up. But they’re unable to get their money out because there are no buyers for the pods, despite being told this wouldn’t be a problem when they signed up.

This unregulated investment was completely inappropriate for their cautious attitude to risk.

Implications of poor advice

The problem is that it’s not just the financial loss which leaves its mark – there are emotional and sometimes even physical tolls taken by the realisation that you’ve fallen foul of poor advice.

Although poor performance alone isn’t usually strong grounds for a complaint, if you think you’ve fallen victim to a rogue adviser, don’t take it lying down. We’ve had notable successes helping members seek redress when they’ve been mis-sold an investment. And in some cases, we’ve seen members receive tens of thousands of pounds worth of compensation.

So have you fallen foul of poor financial advice before? What did you do about it?

This column first appeared in the May issue of Which? Money magazine.

Carole says:
5 May 2016

Personally I don’t trust Financial Advisers even if you have paid for a review (£500 +) they are only interested in making money/achieving their targets.


One of my friends is a personal financial adviser and seems to know what he is talking about. His advice to friends rather than clients is not to bother with a financial adviser. For years I had good financial advice from my father, at no cost.


A distinct lack of figures in terms of performance which if it were a financial product would be distinctly worrying. I have no doubt that there has been the occasional major success and that is excellent news. My fear is that every individual will have unrealistic hopes of what can be done after the horse has bolted.

The flipside of this Conversation is surely what has happened to the rogue advisers ? Banned from financial services, jailed, the employers stumping up and hushing up?

So how about a name and shame regime? Employed financial planners should always be reporting to someone above who makes sure that the planner is obeying the rules of the game.

For some useful background on the industry this Wikipedia article is very useful.

In my opinion the lowest level – equivalent to first year of a University course – seems quite low. Having said that at the lower level many people with small investment pots will need to be addressed and for that an almost formulaic approach would suffice. My qualifications for saying anything is around 20 years in the bandking and finance industry, exams, and my own reading. I also channel the comments of in-laws very dissatisfied with one financial planner in the last two years.


We’ve used an IFA for many years, paying a fee based on account valuations. Our initial concern was whether holding investments on our behalf was potentially open to fraud, but held in nominee names was said to be the safeguard. I have wondered whether this really is secure .

However, we have had no problems, risk was agreed, investments built up, and traded at their discretion, have been sensible and they have applied expertise we would not have had. Employing an “expert”, or “specialist” is surely far better than an amateur trying to go it alone – unless you are prepared to put in an awful lot of effort and make mistakes. And the cost? Trivial in proportion to the value they give…….if you find the right company..


Seems to me a portfolio management situation . Fortunately there are good firms. Churning of the portfolio is always a concern if you have a shady firm.

Financial planning in terms of my brother and sister-in-law was sorting out the various pensions they both had plus an unneeded £100,000 plus. This did not proceed well an the charge AFAIR was meant to be a fee of £2300.


I watched their trading and they don’t churn. Over the years I have become more and more confident in their integrity. It is portfolio development and management at their discretion. We have had a few face-to-face discussions – including 3 home visits at no cost – on our requirements and attitude to risk, including appraisals of our overall financial position which helps determine their (recommended) strategy.

Financial planning, particularly for retirees, is crucial. Most will not have the knowledge or expertise to do it properly, or maybe at all. The fees paid for a competent professional service are likely to be more than repaid in better performance than you might achieve on your own.

I am not sure that asking just a few basic questions of IFA businesses is enough to sort out the good from the bad. Asking people who have used IFAs for a number of years for the overall growth in their portfolio, the income it generates, churning, how pensions were handled might, for example, yield more useful results. Fees are important but performance is more so.


Could not agree more. I actually censored my post somewhat as I veered into discussing the current unique situation for those retiring. Suffice to say there is no easy answer -at all.

I am concerned that the Govt. has made buy to let seem attractive by its allowing 25% withdrawals. This does raise the spectre of two [or more] illiquid assets and buying in a boom in house prices. I could go further but I actually have ethical qualms about reducing the available for purchase housing stock for the next generation. The next Government may also think so.

The trouble is that this is a very deep and complex subject and not really a Converstion -al friendly topic.

On the simpler question of IFA discipline and punishment more can be said if Which? provides the information.


We know a few people who have piled into ‘buy-to-let’ and are now starting to worry very seriously about the government’s increasing pressure on this sector which is reducing overall returns, and about the CGT and IHT implications of their investments such that they now need to plan a staged exit from the business over several years. As if that were not enough they realise that outside major cities there is market saturation and rentals are not advancing as anticipated. Those with mortgages are dreading even a half a percent rise in interest rates as they might not be able to pass it on. I should be surprised if an IFA would now recommend this area except in very particular circumstances.


A friend who I have known since university days has been running a successful buy to let business for around 20 years. When approaching retirement he started to dispose of some of his property because of the tax implications. On the other hand, the estate agents were very busy with people wanting to buy up property in advance of the introduction of additional SDLT on additional homes.


Yes there has certainly been a flurry of buy-to-let acquisitions in order to beat the deadline [which has now passed, so any buyer who did not exchange contracts by around mid-March might have come a cropper if the transaction was unexpectedly protracted]. Renting out properties is still seen as a very lucrative business because of the leverage whereby – so long as the income covers all the outgoings from the outset [and possibly provides a surplus as profit] – any and all capital appreciation on the entire initial purchase price is a bonus . . . until CGT, and ultimately IHT, intervenes. The new SDLT surcharge has raised the costs of purchase and thus reduced the potential gain which might be a favourable consideration in some cases but taken all together the Chancellor’s new rules have dampened the buy-to-let market and made being a landlord more problematic and much more difficult to do without using an agent [which impacts on income].


I have to say I am not a fan of a buy-to-let economy. I prefer to see people in a position where they can buy their home and not purchase it for a landlord. It seems that many properties that could be affordable to new buyers are taken for investment purposes. No doubt they are good investments but not for those in need of a home.


It would be great if everyone was able to own their own home but that’s unlikely to happen and home ownership is less common in many countries than in the UK. Thankfully mortgage providers seem very good at warning that your home is at risk if you do not keep up payments.

Some income redistribution could enable more people to own their own homes but would that prove popular with those who have decent incomes or have inherited sufficient money to get on the housing ladder?

Beryl says: