# brokers responsibilities to me and my pension



## retired soon (23 Oct 2008)

I am due to retire very shortly and for over 20 years had a broker who i thought was looking after my pension.  I have only ever recieved yearly reports and never any montly statements. After numerous phone calls recently they issued me with a statement showing that i had lost over 25% since the previous report.  In the two weeks it took to for the brokers to meet me i had lost a further 10%.

Had I known that my pension was losing so much i would have done something about it. All i am told is it may go back up in value.

When was i going to be told of this? Do brokers owe a responsibility to their clients to inform them that their pensions are losing so much? I have no idea what to do next!


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## Complainer (23 Oct 2008)

Can I ask what age you are? Are you paying an ongoing fee to the brokers?


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## retired soon (23 Oct 2008)

I am 69 years old.  I do pay fees although I can not see how much!


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## therock (23 Oct 2008)

retired soon said:


> I am due to retire very shortly and for over 20 years had a broker who i thought was looking after my pension.  I have only ever recieved yearly reports and never any montly statements. After numerous phone calls recently they issued me with a statement showing that i had lost over 25% since the previous report.  In the two weeks it took to for the brokers to meet me i had lost a further 10%.
> 
> Had I known that my pension was losing so much i would have done something about it. All i am told is it may go back up in value.
> 
> When was i going to be told of this? Do brokers owe a responsibility to their clients to inform them that their pensions are losing so much? I have no idea what to do next!



You are I imagine fairly typical of what has happened in this country.

People leave it to their broker to make decisions on their behalf and at most they choose a medium risk investment profile for their pension. The brokers depend on fees and commission, so they are not going to tell you to stop paying into your pension, ie they are a vested interest, and the last person you should go to for independent advice is a vested interest. 

I do however think that a good financial advisor who doesn't act as a vested interest, is a good person to know and have manage your pension portfolio and for the money you pay them, they could save you hundreds of thousands in the long run....there are a few posting on this site for example...as long as they give you good independent advice about how to move your pension around to limit your exposures to crashes, then you should talk to them.

Now is the worst possible time to be exposed to the stock market in any way shape or form. The losses we have seen in the last year may take years and more than likely decades to make up, and we haven't even seen the bottom yet.

But your broker does seem negligent not to have transferred your pension into a safer investment five years prior to your retirement. And your pension may have a bit to drop yet I am afraid.

My advice would be to contact your broker and request them to transfer the remainder of your pension into a safe option such as a savings account or something like that.

If your broker is unresponsive within a day or two, get onto the Financial Regulator or someone like that. Your pension is far too important to sit back and let others do what they please with it.


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## retired soon (23 Oct 2008)

Thanks for that comment. My pension has lost so much now which I would not have let happen if I had known. Had I been contacted that my pension was losing so much I would have directed the broker to move it to a savings account. I wonder when they were going to tell me - when I retired?  What was the point in having a broker? Should the broker have informed me?


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## Askar (23 Oct 2008)

retired soon said:


> Thanks for that comment. My pension has lost so much now which I would not have let happen if I had known. Had I been contacted that my pension was losing so much I would have directed the broker to move it to a savings account. I wonder when they were going to tell me - when I retired? What was the point in having a broker? Should the broker have informed me?


 
Your broker should have been advising you 5/10 years before expected retirement date to be moving into bonds and cash, and away from equities - so as to avoid dramatic equity downturns, such as has happened.


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## retired soon (23 Oct 2008)

But can anyone tell me if my broker should have told me that my pension was losing so much so that i could have taken action!


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## mf1 (23 Oct 2008)

retired soon said:


> But can anyone tell me if my broker should have told me that my pension was losing so much so that i could have taken action!




You are supposed to be aware of the economy and keeping an eye on your own interests. 
It is highly unlikely that you have any cause of action against anyone. 
In future, you will undoubtedly keep a closer eye on your investments.

mf


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## retired soon (23 Oct 2008)

mf1 said:


> You are supposed to be aware of the economy and keeping an eye on your own interests.
> It is highly unlikely that you have any cause of action against anyone.
> In future, you will undoubtedly keep a closer eye on your investments.
> 
> mf


 

I thought that i was employing a broker to look after my pension! They are the professionals - I am not. That is what i was advised at the time and led me to believe that my pension was being looked after!

If you employed an architect to build your house and found out later that it was not built to current regulations and had to be knocked down, would you like to be told that it was you that should have kept up with the building regulations and that it was you who should have informed the architect?  

I just do not understand why i was not informed that my pension which was being looked after by professionals was decreasing by so much.


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## David_Dublin (23 Oct 2008)

retired soon said:


> I thought that i was employing a broker to look after my pension! They are the professionals - I am not. That is what i was advised at the time and led me to believe that my pension was being looked after!
> 
> If you employed an architect to build your house and found out later that it was not built to current regulations and had to be knocked down, would you like to be told that it was you that should have kept up with the building regulations and that it was you who should have informed the architect?
> 
> I just do not understand why i was not informed that my pension which was being looked after by professionals was decreasing by so much.



Your anger is well founded, and in a perfect world you would have some sort of recourse. What a good broker should be doing is meeting up with you anually at least to review your portfolio, but all along should have made you aware that over the course of time that your portfolio should reduce in risk, as you approach retirement age you should be exposed to as little risk as possible. The problem with our brokers is that they earn comission from the life companies they do business with, so the more you put in the more they make. 

If you feel you have to do something about it why dont you talk to a solicitor and see what they have to say. There are rules governing their practice whereby they have to have documentation showing why they recommended one thing over another afaik


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## Complainer (23 Oct 2008)

retired soon said:


> I am 69 years old.  I do pay fees although I can not see how much!


Forgive a dumb question, but don't most pension funds pay out at 65 - Is this definitely a pension fund? Is it one of those self-managed funds?


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## Towger (24 Oct 2008)

Complainer said:


> Forgive a dumb question, but don't most pension funds pay out at 65 - Is this definitely a pension fund? Is it one of those self-managed funds?


 
It must be self managed of some sort or general fund, a standard pension fund would/should mainly be in cash and bonds etc by retirement age.


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## NorthDrum (24 Oct 2008)

It really all depends on the circumstances and how your relationship has been with your broker.

Somebody mentioned comissions, which really has little to do with pension funds 20 years after they have been taken out. By then most fees that the broker would of gotten would be well gone so what has that got to do with leaving a retiring client exposed in equities.

I actually have a client retiring who has a pension with myself and another broker. We put him in a default strategy fund were it shifts you into safer waters near retirement (which is what most people should do). His other broker left him in higher risk funds and he got badly burned.

Bottom line is, despite the fact he was upset he accepted that it was his responsibility to contact the broker to discuss the current situation. If anything, It was more in the brokers interest to contact you to discuss your pension, its the best way a broker can make more business, give a better service and get potential refferals.

When meeting a financial advisor it is up to the client and the financial advisor to agree the level of service and communication that they wish to have.

People put alot of emphasis on comissions here which is a little unfair. Yes there are, like in all industrys, rogue advisors who go after the comission, but not all hard luck cases like this are because of comission and the financial regulator has the industry so aggresively regulated its very difficult for anybody in our industry to sell products soley on comission rewards.


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## Askar (24 Oct 2008)

NorthDrum,

I don't think that any industry outsider would believe that the 'financial regulatory has the industry so agressively regulated' that you cant sell products solely on commission rewards.  Perhaps you could back that up with some pertinent rules and annual enforcement actions/investigations undertaken by the regulator in this regard.

What exactly does the duty of care and/or rules  prescribe for brokers in terms of advice close to retirement? Can the broker just put someone into a fund, pocket the commission and move on, or are they required to advise in writing that person should review portfolio and asset allocation 10 and 5 years before retirement date?


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## NorthDrum (24 Oct 2008)

Askar,

Firstly the policy this client took out was 20 years ago when there was far less regulation, times have changed alot since then. Your arguement seems to imply that the industry is still the same which is very Joe Duffy like.

Secondly the industry is highly regulated. If I advise you to go with a product today I have to proove to the financial regulator why I chose a specific provider, what research I did to get you the best deal, how I came to my conclusions among other things. They have random checks on brokerages(during the year) and if somebody goes to the ombudsman to complain if I cant proove I was acting in your best interest, I could be shut down or held liable for your losses. If i give you advice over the phone, whether or not you took my advice the ombudsman will take the consumers side unless I have physically recorded the conversation, so the broker is guilty until PHYSICALLY proven innocent. 

Thirdly I can think of other industrys that are alot less regulated (some self regulated) that could be justifiably questioned on some of their fees, but yet they are left to their own accord. (This doesnt justify anybody being badly advised but further highlights how easy it is to take pot shots at a profession thats probobley over regulated in comparison to similar financial professions).

Lastly, you will find that most financial advisors are starting to lean towards fee based charges as opposed to comission and for good reasons. One of them being the obvious distrust of the public (which you have pointed out).

In the OP's case I do have great sympathy for their situation but the truth of the matter is that we are all responsible for our own finances. The OP paid comission on their policy for advice on where to invest their money and who with, job done. If they wanted regular meetings with the broker it was up to them to organise them (the broker just missed out on more potential comission by not doing it himself).

"Brokers care of duty on advice to those close to retirement"

20 years ago the client wasnt that close to retirement so you could find that the advice given at the time was possibly sound. Some brokers and some clients have differant relationships (some meet regularly some only once). If brokers phone up clients some people think they are just looking to sell products for business, if they dont, then its automatically assumed that they are just taking comission and leaving the client in the lurch.

The initial comission paid when the policy was taken out would of been for the services that the advisor provided at that time. Good financial advisors will keep a good contact and relationship with clients, but because you lose touch (assumed as OP doesnt say) with the client probobley means that it suited both parties not to continue their  "client - advisor partnership".

Anyway, to go back on my original comments, this has nothing to do with comissions as the broker has no motive not to continue contacting the client or for leaving the client in a high risk fund.


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## David_Dublin (24 Oct 2008)

NorthDrum said:


> the broker has no motive not to continue contacting the client or for leaving the client in a high risk fund.


Maybe no motive, but certainly if he/she is not on the ball the broker might "overlook" the fact that their client is invested in inappropriately risky funds. A lack of motive does not absolve all responsibility the broker has to the client.


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## NorthDrum (24 Oct 2008)

David_Dublin said:


> Maybe no motive, but certainly if he/she is not on the ball the broker might "overlook" the fact that their client is invested in inappropriately risky funds. A lack of motive does not absolve all responsibility the broker has to the client.



I wasnt saying that it does absolve all responsibility. Somebody mentioned comission I said that has nothing to do with this clients situation.

As far as accountability goes I think its a mutual relationship and its up to either client or broker to keep in touch. He paid the advisor for advice he got, at what stage do you think the broker is not responsible for correct advice? 

the point I am trying to make is that the Financial advisors industry is much better regulated and more professional then it was in the 80's or 90's. Sure farmers used to be able to be advisors (without any knowledge of the industry or products they sell). Now you need qualifications to be a broker in this industry and have to meet specific learning criterias on an annual basis (which have to be recorded and disclosed).

If I get advice from a solicitor, accountant or say a doctor today that actually changes in time, do you think I should get a call in 10 years time to clarify the changes to my circumstances or outlining what I do? Depending on my relationship with them I would have differant expectations.

I think it is bad practise not to meet your clients regularly or to keep an eye on their investments. But by your reckoning a financial advisor should be held accountable for appropriate advice given years ago.

This whole comission thing has created much confusion and distrust to consumers. It should not be considered anything differant to paying 45e to a doctor for a visit or €x to a solicitor or accountant. The advice you get at that time is what you are paying for.


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