I still believe I can play football, even if it is mostly in my head rather than on the pitch.
That said, I recently played against my grandson’s under-8s team in the parents/guardians versus children end of season match. I rose majestically in the first minute to score the opening goal with a stunning header.
Ex-England captain Alan Shearer would have been proud to score that goal. But he will have been less proud of his selection of financial adviser, if the news a couple of weeks ago is anything to go by.
A lot of well-known sports and media personalities end up in conflict with their advisers.
The problem in Shearer’s case seems to be that his had recommended unregulated and non-mainstream products. The adviser had invested his Sipp monies in Ucis products and, I gather, had lost rather a lot.
It is something that happens all too often. Indeed, I think it is better to recommend “boring” investments for clients. One of the key points of our investment philosophy is that clients should understand each and every part of their portfolio.
Back to basics
Understanding is generally easier where the investment funds themselves are simple. For example, single asset class funds are usually transparent and when they go up or down in value it is easy to identify why.
On the other hand, less transparent structured products are often more difficult to understand. This is particularly true where the outcome of the investment is determined by the performance of a number of indices.
That is not to say such products are not perfectly valid investment instruments but they do require a greater degree of explanation and a greater capacity on the part of the client to understand how they work.
Ucis remains a real problem for advisers. Each of us seems to be financially responsible for them even if we stay well clear for our own clients. Again, there may well be some perfectly valid Ucis products but they are now very tarnished indeed.
Each time I hear the Financial Ombudsman Service has received an increased number of Sipp complaints, I wonder if they are really Ucis complaints. In Shearer’s case, the problem seems not to be the product – the Sipp – but the underlying choice of investments – the Ucis.
Or perhaps the real problem is an adviser simply trying to be too clever?
It is worth asking why Ucis is being recommended at all. It surely cannot be that there are no suitable authorised and regulated alternatives. Is it too cynical to believe this might have something to do with commission?
How did Shearer find his adviser? What due diligence was carried out, what questions were asked and what checks were made?
We all know what a challenge it is for a consumer to identify the right adviser for them but there is no excuse for not shopping around, just as we would do for any other goods and services we are not used to buying.
Shearer would have made a much better job of heading that goal against my grandson’s team but I reckon I would have done a better job of helping him select his adviser.
Nick Bamford is executive director at Informed Choice