# Some advice needed on a big loss



## zoe-90 (22 Sep 2008)

Hi Guys 

First post here being a long time fan of this board hope someone can help me out here.

ln June last year with the advice from a broker l took out a policy with friends first called Corinthian insight property fund.

So about about a month ago l got a letter from friends first saying we are pleased to tell me  that the 20,000 l invested is now worth 11,200 :-(

This is a geared property and is a for 5 years minimum it states in the letter that l cannot surrender this policy until the 5 years is up but in exceptional circumstances friends first will consider a request.

My gut feeling is that l should try and get out of this now so my question is can l get out of this? and what do they mean by exceptional circumstances.

Any advice will be *greatly* appreciated,  I really hope someone can help me.

thanks in advance..


zoe


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## ClubMan (22 Sep 2008)

Do the terms & conditions of the investment agreement not clarify? 

Why did you/your broker consider this investment (the most?) suitable for your particular needs at the time?


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## LDFerguson (22 Sep 2008)

This is a highly-specialised fund, invested in just four properties, three in Dublin and one in Bray.  It also has borrowing of twice the investment amount, or at least that was the original plan.  As such is it a high risk fund - one asset class, one tiny geographical region, one industry sector and highly geared.

While obviously it's uncomfortable seeing the value of your investment go down in its first year, that is the nature of high-risk funds.  They can go down as well as up quite dramatically.


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## JR Rizzo (23 Sep 2008)

zoe-90 said:


> ln June last year with the advice from a broker l took out a policy with friends first called Corinthian insight property fund.


 
This was awful advice, sorry!

For reasons not to flame the broker, but rather provide better feedback
for readers to make better financial decisions in future,
do you want to reveal this broker's details??

Have you contacted the broker to ask them to explain his advice now??
- if so what has he/she said??


As far as what to do,
first you have to *forget about the initial e20k figure*
its history and will only cloud your future short term decisions.

whats important now is the e11k left

do you need access to this e11k? will you in the next 4 years?

have you any alternative options for this e11k?
- do you have ANY overall investment plan taking into account your
current situation in life?? including any other investments, savings,
pensions, mortgages, how close to retirement, etc


if no to above, you could just leave where it is!

it looks bad that you have lost so much, and you probably rightly fear
you will lose more

one idea would be to withdraw 50% (if possible) and probably get 
penalised on this cause "early withdrawal" and deposit this in
"secure" high interest account
and just leave the other 50% "bet" on
- at least you wont lose everything.

but my advice would be to cut your losses and learn you lessons
- *take it all out and never go near any funds again, unless they are*
*your pension and you have to*

the figures spell a painful financial loss, but if its any comfort
know that there are many many others nursing similar and bigger
losses from the last year and a bit.

JR.


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## ClubMan (23 Sep 2008)

JR Rizzo said:


> This was awful advice, sorry!


How do you know? We don't have enough insight into the original poster's specific circumstances as far as I can see.


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## LDFerguson (23 Sep 2008)

As Clubman has said, you cannot decide whether or not zoe-90 received good, bad or indifferent advice while knowing no background whatsoever.  How do you know what advice s/he received?  How do you know what sort of product s/he required?

As regards your suggestions as to what s/he should do next, again you know nothing about what s/he's trying to achieve, circumstances, attitude to risk, timeframe etc.


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## Towger (23 Sep 2008)

ClubMan said:


> How do you know? We don't have enough insight into the original poster's specific circumstances as far as I can see.


 
We just don't know. It would not be just the 20k I would be worried out. As LDF says, the investment was geared at * 2, so 20k invested + 40k from the bank makes 60k. By my reading of it, if the value has almost halved the OP would lose all their 20k and still owe the bank their remaining money, if they pulled out.


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## shipibo (23 Sep 2008)

ClubMan said:


> How do you know? We don't have enough insight into the original poster's specific circumstances as far as I can see.



Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.


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## Dogsbody (23 Sep 2008)

(This was awfull advice sorry)! Hindsight is a great thing is it not?

To be fair to the op and his broker this was one of the very few of these type of products to be regulated and also having the Friends First wrapper may have influenced things a bit.

Advising him/her to avoid all funds in future seems a bit ott.


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## ClubMan (23 Sep 2008)

crumdub12 said:


> Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.


I'm not joking. The investment timeframe is at least 5 years. We don't know what advice the original poster received. We don't know what they were looking for. We don't know what their circumstances are (they could be a billionaire taking a high risk punt on a leveraged €20K investment for all we know). In short we cannot judge the investment or advice in the absence of more detailed info.


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## LDFerguson (23 Sep 2008)

crumdub12 said:


> Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.


 
This always was a high-risk investment product.  

If it had gone from 20K to 29K in the same time period, what would you then think?  Would you still be looking to prosecute?


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## Bronte (24 Sep 2008)

OP did you or did you not realise the investment could go up as well as down?  Did you think it could only go up ? Did you know it was a high risk investment?  From your post it seems you took a gamble and you now want to get out of it because it didn't go the way you expected.


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## Brendan Burgess (24 Sep 2008)

Zoe

Did you get a "Reasons Why" letter from the broker? 

Did it explain clearly that this is a high risk investment? 

If it did not do so, then you may well have been mis-sold and should ask the broker to refund your money. 

If the broker did tell you clearly that this was a high risk investment, then you have no complaint. And you must decide whether it is still appropriate for you to have this investment.

Brendan


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## John joe (24 Sep 2008)

Was this a once off lump sum investment of 20K or have you contribuated anything monthly? Also you need to read you policy statement and see what it states there!


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## shipibo (24 Sep 2008)

LDFerguson said:


> This always was a high-risk investment product.
> 
> If it had gone from 20K to 29K in the same time period, what would you then think?  Would you still be looking to prosecute?




Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.

The fact this fund was sold to a novice buyer is a scandal.


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## ShaneMc (24 Sep 2008)

crumdub12 said:


> Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.
> 
> The fact this fund was sold to a novice buyer is a scandal.


 
Perhaps but we dont know the details of the transaction, perhaps the client went to his broker and said " I want to invest 20K into a leveraged high risk property product - I am aware that the investment could rise significantly or fall drastically as is the nature of the product" In which case the broker may have sold the above investment as an ideal investment to suit the OP's needs.

It could just be a case of *The fact that a novice buyer bought this investment is a scandal.*


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## LDFerguson (24 Sep 2008)

crumdub12 said:


> Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.


 
You can only say that with hindsight.



crumdub12 said:


> The fact this fund was sold to a novice buyer is a scandal.


 
How do you know that zoe-90 was a novice? Do you know something we don't?

Let me be clear.  If zoe-90 posts more information to suggest that s/he was not made aware of the risks of investing in a high risk product or it was in any way mis-sold, I'll be the first to suggest that s/he takes every step necessary to seek redress.  

But s/he has not given enough detail for any of us to jump to this conclusion.  Until s/he clarifies this, there's no point in leaping to the conclusion that it was a disgrace and that the broker should be hung from the neck until dead or whatever.


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## PMU (24 Sep 2008)

crumdub12 said:


> Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.
> .


 I’m not certain on this.  If you use the prices of the Hibernian Irish Commercial Property Fund as a proxy for IE commercial property prices, the value of IE commercial property was increasing until November 2007.  (Since then the Hibernian fund has declined by about 22%, so a geared fund would decline by more.)  

If the OP’s broker advised buying in June 2007, he / she advised buying in a rising and not a declining market, so I suggest it would be difficult to argue mis-selling here.  

The OP’s main risk is probably that if the LTV value of the fund declines significantly the fund might breach its banking agreement. Rather than speculate further, it would be prudent for the OP to query his / her broker on this point.


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## shipibo (24 Sep 2008)

ShaneMc said:


> Perhaps but we dont know the details of the transaction, perhaps the client went to his broker and said " I want to invest 20K into a leveraged high risk property product - I am aware that the investment could rise significantly or fall drastically as is the nature of the product" In which case the broker may have sold the above investment as an ideal investment to suit the OP's needs.
> 
> It could just be a case of *The fact that a novice buyer bought this investment is a scandal.*


 

You could be right, the inference I took was OP did not get good advice, maybe she can update with information broker gave.


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## shipibo (24 Sep 2008)

LDFerguson said:


> You can only say that with hindsight..


 

Not true, property market was weak in 2006.




LDFerguson said:


> How do you know that zoe-90 was a novice? Do you know something we don't?
> 
> Let me be clear. If zoe-90 posts more information to suggest that s/he was not made aware of the risks of investing in a high risk product or it was in any way mis-sold, I'll be the first to suggest that s/he takes every step necessary to seek redress.
> 
> But s/he has not given enough detail for any of us to jump to this conclusion. Until s/he clarifies this, there's no point in leaping to the conclusion that it was a disgrace and that the broker should be hung from the neck until dead or whatever.


 

Agreed. Lets wait to see what was said.


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## shipibo (24 Sep 2008)

PMU said:


> I’m not certain on this. If you use the prices of the Hibernian Irish Commercial Property Fund as a proxy for IE commercial property prices, the value of IE commercial property was increasing until November 2007. (Since then the Hibernian fund has declined by about 22%, so a geared fund would decline by more.)
> 
> If the OP’s broker advised buying in June 2007, he / she advised buying in a rising and not a declining market, so I suggest it would be difficult to argue mis-selling here.
> 
> The OP’s main risk is probably that if the LTV value of the fund declines significantly the fund might breach its banking agreement. Rather than speculate further, it would be prudent for the OP to query his / her broker on this point.


 

I agree, If OP was given all advice, then broker could only be accused of being a moron.

Anyone investing in property in Mid 2007 ....


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## JR Rizzo (24 Sep 2008)

Dogsbody said:


> (This was awfull advice sorry)! Hindsight is a great thing is it not?
> 
> To be fair to the op and his broker this was one of the very few of these type of products to be regulated and also having the Friends First wrapper may have influenced things a bit.


 
its important to learn from mistakes, and this is where hindsight can be useful.

Looks like regulators got it wrong,
despite knowing the property sector was in a potential state of flux, 
to lose so much so fast on a fund is more like a speculative gamble
rather than a medium/long term investment.

I dont think the broker can really be trusted - my own view,
but, like so many other posters say, we need OP to give more details
and MAYBE say if they knew it was so risky - its hard to admit one's mistakes.

What emotions drove OP decision at the time,
would OP be considered "novice level" and did the broker manipulate them?

JR.


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## smiley (24 Sep 2008)

zoe-90...i may be wrong but i get the impression that 'you' bought an investment and now that investment is showing a 'paper' loss.

now perhaps you want to blame somebody else rather than blame yourself? you signed the dotted line after all.


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## askU (24 Sep 2008)

- Its a geared fund so if you think the property market will get worse then get out - the worse it gets its multiplied by x for you. If you think things will improve then stick with it but you will have to give it at least its five year term. Its only you can decide what to do. NO ONE CAN FORESEE OR PREDICT THE FUTURE! 
 
- I'm in the same boat i've lost 40% on Bank shares. I'm going to stick with it and ride the storm and hopefully in say seven years time or so things will have turned around. I knew the risk when i started this investment - that it could could go up or down..


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## Dogsbody (24 Sep 2008)

Surely given the speculative nature of this fund the advice to the op should be to stick with it.

Aquisition costs and planning applications etc all have a dramatic frontloading effect on such a fund, however a grant of planning down the line can have an equally dramatic effect on the valuation.

If this thread highlights anything it is the wisdom of hefty min.investment amounts of 50-100k for most similar products.(more thought going in and less chance of early redemption later)


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## ClubMan (24 Sep 2008)

Dogsbody said:


> If this thread highlights anything it is the wisdom of hefty min.investment amounts of 50-100k for most similar products.(more thought going in and less chance of early redemption later)


I don't understand this point? Surely such minimum amounts might just encourage some people to stick their total life savings into such investments?


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## Dogsbody (25 Sep 2008)

Possibly true Clubman, but in general I think such limits help to avoid widow and orphan territory.However I take your point.


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## LDFerguson (25 Sep 2008)

crumdub12 said:


> I agree, If OP was given all advice, then broker could only be accused of being a moron.


 
Can you predict with certainty that this product will not recover and provide a decent return over the medium to long-term?


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## Towger (25 Sep 2008)

ClubMan said:


> I don't understand this point? Surely such minimum amounts might just encourage some people to stick their total life savings into such investments?


 

Most geared investments have a much higher min unit price than 20k, more often 100k plus. This keeps the small investors out of that marked. Also they tend to be sold directly to those in the know (the financial Elite), rather than advertised to the mass market. If you google the Friends First investment's name you will find a Presentation (PDF) of how their geared investment work and the multiplying effect of the gearing, it even has a graph of the gearing if the value of the investment goes negative territory. Here is the link : http://www.lia.ie/u_documents/doc_28_2.pdf

Sorry just had another look:
No graph, but page 19 shows the result of a 10% drop in value. 
Page 38 to 40 while I have not read them in detail, seems to say that the investment will go negative in the first year due to the high start up costs.


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## LDFerguson (25 Sep 2008)

JR Rizzo said:


> Looks like regulators got it wrong,
> despite knowing the property sector was in a potential state of flux,


 
What has the regulator got to do with this?  

Surely you're not suggesting that the Financial Regulator should make judgements about whether or not it thinks an investment product is likely to go up or down?  

It's a very volatile time on equity markets at present.  Should the Financial Regulator ban all Managed Funds and Equity Funds because they invest in equities and they too might or might not go down in value over the next few months?


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## JR Rizzo (25 Sep 2008)

LDFerguson said:


> What has the regulator got to do with this?
> 
> Surely you're not suggesting that the Financial Regulator should make judgements about whether or not it thinks an investment product is likely to go up or down?


 
Regulator needs to do more,
sure we were in the middle of boom time and not many were complaining
but when things turn bad, like now, you get alot of people licking wounds,
and complaining - alot of the time its their own fault.

Its upto the consumer to educate themself, only they can do it 
but, like dealing with a dodgy car salesman, a broker may try nudge buyer
into something that may contain more risk than the marketing information
says.

Example of posible new regulation :-consumer to have to fill out a 
checklist form stating they understand various risks and rules,
and also have the broker sign saying they have BY LAW explained
each checklist item honestly,
dont just sign the form blindly under the broker's advice.

JR.


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## smiley (25 Sep 2008)

JR Rizzo said:


> Regulator needs to do more,
> sure we were in the middle of boom time and not many were complaining
> but when things turn bad, like now, you get alot of people licking wounds,
> and complaining - alot of the time its their own fault.
> ...



i couldnt agree more. people always find it very hard to admit it their own fault. Its very easy to blame somebody else.

something tells me if the regulator brought in check lists like you mention, people still would check all the boxes and not read whats beside them.


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## Bronte (26 Sep 2008)

smiley said:


> i couldnt agree more. people always find it very hard to admit it their own fault. Its very easy to blame somebody else.
> 
> something tells me if the regulator brought in check lists like you mention, people still would check all the boxes and not read whats beside them.


  Reminds me of the Eircom shares which were only ever going to go up.


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## shipibo (30 Sep 2008)

LDFerguson said:


> Can you predict with certainty that this product will not recover and provide a decent return over the medium to long-term?




Without input from OP , this conversation is dead.

If she was advised long term, the timing of the purchase was wrong, as it is on its way down in a big way and has further to go.

She has lost 45% already, has to make 80% to get back to original value ...


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## LDFerguson (1 Oct 2008)

crumdub12 said:


> If she was advised long term, the timing of the purchase was wrong, as it is on its way down in a big way and has further to go.


 
So a broker's job is to time the market, is it?

I agree - as the original poster hasn't responded, the thread is pretty much dead.


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## shipibo (1 Oct 2008)

LDFerguson said:


> So a broker's job is to time the market, is it?




Brokers have moral obligation to make money for clients, selling property last year means OP will not make money for a long time ....


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## zoe-90 (1 Oct 2008)

Hi Guys 


Sorry for the delay in getting back have been very busy_ so_ thanks for all your replies will try and answer all your questions...




ClubMan said:


> Why did you/your broker consider this investment (the most?) suitable for your particular needs at the time?



Hi ClubMan  my broker who l have known for the past ten years advised me tho invest in this because he thought it was a very good investment at the time and he told me that my capital was
guaranteed! and also that because it was being invested in lrish property in his opinion it would do very well over the 5 years.

To be honest l did not research fully about this fund and trusted him on the fact that my capital was guaranteed.





JR Rizzo said:


> This was awful advice, sorry!
> 
> For reasons not to flame the broker, but rather provide better feedback
> for readers to make better financial decisions in future,
> ...





Bronte said:


> OP did you or did you not realise the investment could go up as well as down?
> 
> Yes but not lose my capital.
> 
> ...


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## LDFerguson (1 Oct 2008)

crumdub12 said:


> Brokers have moral obligation to make money for clients, selling property last year means OP will not make money for a long time ....


 
If you can find me a broker who can time the markets, give me his number and I'll sell everything I own to invest with him.  

Brokers have a moral obligation to advise their customers on the most suitable investment for them, from the range available.  Any broker who would claim to have an ability to time the market would be doing their client a disservice at best, or simply lying at worst.


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## LDFerguson (1 Oct 2008)

Just read zoe's subsequent post.  It seems the broker advised her that capital was guaranteed and didn't advise her that this was high risk.  That's simply mis-selling.  I'd make a formal written complaint to the broker requesting money back plus interest and if this doesn't work, submit a claim to the [broken link removed].  It will help if zoe has copies of relevant documentation, in particular the "reasons why" letter.


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## Bronte (2 Oct 2008)

crumdub12 said:


> Brokers have moral obligation to make money for clients, selling property last year means OP will not make money for a long time ....


  You do realise that investments can go up as well as down whether is is shares/property/equities/minerals and this has nothing whatsoever to do with a broker.  
OP - were you told that the capital was guaranteed or did you get it in writing, what exactly did you get in writing?  Also asking your broker lots of questions now seems just a tad late don't you think?


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## shipibo (2 Oct 2008)

Bronte said:


> You do realise that investments can go up as well as down whether is is shares/property/equities/minerals and this has nothing whatsoever to do with a broker.




Why do you pay a broker ?? , if he advises, would it not be a logical assumption you should make Money.

Back to Original point, 45% loss in one year, invested in a falling property market.

Stop parroting "investments can go up , as well as down", his advice made OP buy, and this is fairly normal occurence, for some reason people trust them.


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## JR Rizzo (2 Oct 2008)

LDFerguson said:


> Brokers have a moral obligation to advise their customers on the most suitable investment for them, from the range available.


 
is this a LEGAL obligation?

can a broker be held accountable for advice that turns out in the short-term to be very poor?
or can they simpley use same excuse as "professional" fund managers 
-> "well the market is down 20% overall, your fund is just down 15%", etc

Its a grey area, theres no perfect advice because nobody can tell the
future and everyone's situation is unique,
but, at the end of the day the broker makes their money by *SELLING *
*YOU SOMETHING!*

and alot of the time, its a SPIN-INFECTED, GLOSSY BROUCHURE,
FANCY NAMED "investment fund"
*-> *note bigger the boom we are in the more hyped the marketing

*A financial advisor / investment broker needs to prey on your GREED emotions, while supressing your **FEAR!*

you dont drive your banger into a garage and expect the salesman to
say "your car is fine, you dont need to buy a new one"

summer 2007 the best advice would have been to sell everything
and goto cash, ok this is hindsight
but I'd bet youd have not ONE single broker / FA / investment fund anywhere that would even have entertained this idea at the time

cause they'd have no job

I'm not saying society doesnt need brokers/FA, we do
I'm saying we need a system were they can be ranked and reviewed
by customers, like hotels, cars, etc (and similar system for estate agents)

but we also need ALOT more input and effort, from financial regulator, 
to educate public overall, and not just during downturns.

JR.


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## LDFerguson (2 Oct 2008)

Crum Dub - I've already said that if, as looks likely from the subsequent post, this product was mis-sold to this individual, that's wrong and she should seek redress. I'm not trying to defend that. 

But this idea that a broker should have some form of crystal ball that will allow them to do what some of the best financial brains in the world cannot - time the markets - is absurd. By your logic, anyone in the world who invested money in equities in any form over the last twelve months has been pooorly advised by their broker, as their money has declined in notional value in the short-term. Did the brokers of the world not see the current turmoil coming and advise their clients to switch to cash in Summer 2007?


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## Bronte (2 Oct 2008)

crumdub12 said:


> Why do you pay a broker ?? , if he advises, would it not be a logical assumption you should make Money.
> 
> Back to Original point, 45% loss in one year, invested in a falling property market.
> 
> Stop parroting "investments can go up , as well as down", his advice made OP buy, and this is fairly normal occurence, for some reason people trust them.


 I disagree with you when you say 'should make Money' you are incorrect it's 'may make Money' and also when you say 'his advice made OP buy' rather than 'OP decided to buy.'  All investment advertising I've heard on Irish radio says investments can go up as well as down - there must be a reason this is attached to these ads, but obviously the message is not getting through and it's needs to be parroted some more.


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## shipibo (2 Oct 2008)

LDFerguson said:


> But this idea that a broker should have some form of crystal ball that will allow them to do what some of the best financial brains in the world cannot - time the markets - is absurd. By your logic, anyone in the world who invested money in equities in any form over the last twelve months has been pooorly advised by their broker, as their money has declined in notional value in the short-term. Did the brokers of the world not see the current turmoil coming and advise their clients to switch to cash in Summer 2007?




Property investment is 2007 Ireland, not world equity markets


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## shipibo (2 Oct 2008)

Bronte said:


> I disagree with you when you say 'should make Money' you are incorrect it's 'may make Money' and also when you say 'his advice made OP buy' rather than 'OP decided to buy.'  All investment advertising I've heard on Irish radio says investments can go up as well as down - there must be a reason this is attached to these ads, but obviously the message is not getting through and it's needs to be parroted some more.



If all pros / cons are outlined, fine. 

"May make Money" , Is that Paddy Powers you are thinking about.


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## LDFerguson (2 Oct 2008)

crumdub12 said:


> Property investment is 2007 Ireland, not world equity markets


 
I see.  So brokers should be able to accurately time certain markets but not others?  Would you have a list of which markets I, as a broker, should be able to time?  Irish Property - Yes, World Equities - No etc.


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## shipibo (3 Oct 2008)

LDFerguson said:


> I see. So brokers should be able to accurately time certain markets but not others? Would you have a list of which markets I, as a broker, should be able to time? Irish Property - Yes, World Equities - No etc.


 

No need for a list, just know the products you sell and pros/cons involved, good brokers make money, bad brokers lose money.

BTW, I am not taking any shots at you.


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## JR Rizzo (3 Oct 2008)

LDFerguson said:


> I see. So brokers should be able to accurately time certain markets but not others? Would you have a list of which markets I, as a broker, should be able to time? Irish Property - Yes, World Equities - No etc.


 
A broker should have some grasp of economics and investment 
fundamentals, ie business cycles, and BOOMS and BUSTS.

Nobody can time any market -> unless they are very lucky,
but a broker should be aware that, based on historical evidence,
its *less probable* a market will continue to rise at certain times,
and *more probable *a market will continue to drop at others, etc

in presenting products to customers the broker should be honest and open about these probabilities, even if it means it costing them sales /
commissions

like any salesman, being honest and open will probably get them more
business and loyal customers in future.

JR.


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## Blinder (3 Oct 2008)

Zoe
You should check your policy again
If the capital was guaranteed, then it's possible that this will only apply if you leave it for the full term.
Most likely what you are seeing now is the surrender value ( what the policy is worth if you were to pull out now) . I think these type of policies would have a heavy penalty if it are encashed early. So you balance that you see would already have the penalty removed

Have you phoned your broker and talked to him since you received the statement?


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## PMU (3 Oct 2008)

JR Rizzo said:


> based on historical evidence,
> its *less probable* a market will continue to rise at certain times,
> and *more probable *a market will continue to drop at others, etc
> JR.



Assuming we are talking about efficient markets, this implies that stock prices are serially correlated and do not follow a random walk.  Evidence please!


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## LDFerguson (3 Oct 2008)

Blinder said:


> Zoe
> You should check your policy again
> If the capital was guaranteed, then it's possible that this will only apply if you leave it for the full term.
> Most likely what you are seeing now is the surrender value ( what the policy is worth if you were to pull out now) . I think these type of policies would have a heavy penalty if it are encashed early. So you balance that you see would already have the penalty removed
> ...


 
The Corinthian fund contains no guarantees.


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## Blinder (3 Oct 2008)

LDFerguson said:


> The Corinthian fund contains no guarantees.


Ok, then my suggestions is out the window.


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## roro123 (3 Oct 2008)

Encashing out of property funds can be a nightmare, many of these investments have a waiting period for encashment.
See this link from Dec 07
http://news.bbc.co.uk/1/hi/business/7155261.stm


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## proudford (10 Oct 2008)

In January 2007 I went to a broker and asked advise on investing 20,000 that I had because my husband died the year before. This was the entire of my worth and I wanted to invest the money for my son. He advised me to invest in an eagle star investment bond matrix (for 5 years, 5 star global fund 25% and 5 star europe fund 75%) This was my first ever investment and I am a novice. He told me it was medium risk and that he had seen investments like this generate upto a 50,000 return in recent years. Have I been taken for a ride? The value is around 11,000 today if I take my remaining money out. Should I cut my losses or wait to see if I can gain anything back??


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## Dave Vanian (11 Oct 2008)

Do you still have the "reasons why" letter from the broker (i.e. the letter detailing why he recommended this particular fund)?

If it says that this is a medium risk fund, I'd be inclined to go back to him and point out that as this is a high-risk choice of funds and thus unsuitable for an inexperienced investor to put all her investments into, you feel you were mis-sold and want your original sum back. If he doesn't agree, contact the Financial Services Ombudsman.


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## PMU (11 Oct 2008)

proudford said:


> Have I been taken for a ride?


 You have received sound advice and you should follow it.   Your son’s functional currency is the euro (i.e. it is  the currency in which he will make future financial decisions) so putting 75% of the investment into euro equities makes sense.  However, euroland doesn’t have a monopoly of future progress, so putting 25% into global equities will ensure your son picks up any upside occurring outside of Euroland, without exposing him to excessive currency risk.  I can’t comment on the individual Eagle Star products as I’ve no experience of them, but the 75: 25 euro:global split to me is a good split, especially if your son won’t cash it for some time yet. 




proudford said:


> The value is around 11,000 today if I take my remaining money out. Should I cut my losses or wait to see if I can gain anything back??


 They’re no longer your losses: they’re your son’s.  If you pull out now your son, and not you, looses 9 grand and also looses any upside potential from future increases in euro and global stockmarkets.  Why would inflict this loss on your son?


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## proudford (11 Oct 2008)

Thanks for the advise but I am worried that there will be nothing left if I dont pull out his money before its too late, that wouldnt be doing him any favours.


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## z103 (11 Oct 2008)

> Why would inflict this loss on your son?


Because they don't want to lose a further €11k?


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## proudford (11 Oct 2008)

Dave Vanian said:


> Do you still have the "reasons why" letter from the broker (i.e. the letter detailing why he recommended this particular fund)?
> 
> 
> I dont ever remember getting a 'reasons why' letter ??


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## rosiecat (11 Oct 2008)

try not to panic. the term of investment is 5 years for a reason, to allow for down turns and upturns in cycles. in fact it prob should be more 7-10 yrs for commercial property returns to mature. trying to sell in a bear market is questionable. i imagine you may not be able to get your money out as it is a closed fund, to redeem your units they need would need to sell on your share of the investment - by 1) selling some of the property (unlikely) or 2) sell your share to another investor (unlikely if this fund is no longer being marketed). Property is a fairly illiguid asset class and going into the fund you should have be made aware of the pitfalls of falling values and exit strategy. If the properties are fully let to good tenants on long leases and producing good income that covers off the interest on the loan, and management fees then it remains a good investment and trying to exit at the moment - when the whole world is losing their head might not be sensible. the valuation is reflective of the price the properties would fetch today on the market. we all know that nobody is buying at the moment and the banks have shut down their lending. thus the market has tanked due to loss of confidence (which is exactly what you are suffering from!) but this may well not be the case in 5yrs time, the investment may well in time rise in value as the market recovers.  Ring your broker and get a full update on the properties , lettings, leases, management fees etc... so you can assess whether the fund is still an ok asset.


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## Dave Vanian (11 Oct 2008)

If everything that this person has posted can be verified, I think she has been mis-sold.


Recommended fund(s) described to her as "medium risk" when even Eagle Star themselves accept that both of these funds are high risk.
Two concentrated equity funds (only 25 stocks in each fund) is not a suitable place for the investment, given that it's the entire of her worth, her first time investing and she's a novice.  I'm assuming that the broker knew this - the fact-find should have established it.
It appears she didn't get a reasons why letter.
I agree that the funds themselves will probably recover and do well in time.  These funds are generally good investments..._*if*_ you are aware of and comfortable with their high-risk nature. 

But that still doesn't take from the mis-selling issue that this person's posts infers.  If all of the detail of the posts can be verified, she should contact the broker and then the Ombudsman.  

Lambourghini make wonderful automobiles, but they're not suitable for learner drivers.


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## proudford (16 Oct 2008)

I rang the broker yesterday and my broker left the company 6 months ago. I am disgusted. I asked for a broker to call me back but have heard nothing as yet. They sent me details of a secure fund that I can transfer my remaining monies to. Apparently I could have made 4 changes per year into other funds. It details my current fund as 'high risk'! Can I ask them for a copy of the letter I should have received detailing why I was sold this policy? Is this letter standard practise? I really dont think I was given this letter, I am good at filing all my paperwork and would have kept this if I receiived it. The person on the phone said it was really up to me to manage the fund myself...


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## johnnygman (17 Oct 2008)

crumdub12 said:


> Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.


 
With all due respect Zoe would have to accept full responibility for investing in such a high risk fund, was it not explained to you that this was a geared fund or high risk fund? if not then you may have a case for complaint re miselling. In any case you would be unlikely  to receive any compensation for your initial investment as you would of course have signed up to such a fund stating clearly that you knew the type of high risk fund that you invested in. Again you have given no backgraound to why you invested in this fund apart from your brokers advice, surely you at least thought over what you were investing in the risks associated with a fund of this nature?


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## Dave Vanian (17 Oct 2008)

proudford said:


> I rang the broker yesterday and my broker left the company 6 months ago.


 
That's frustrating for you, I'm sure.  But it's irrelevant if you have a legitimate complaint.  Your complaint is against the firm and not the individual.  All regulated firms must take responsibility for the actions of their employees, so if the firm is still trading, your complaint is still valid.  



proudford said:


> Can I ask them for a copy of the letter I should have received detailing why I was sold this policy? Is this letter standard practise? I really dont think I was given this letter, I am good at filing all my paperwork and would have kept this if I receiived it.


 
It's not just standard practice - it's the law.  You must receive a "Reasons Why" letter detailing the reasons why the broker thinks that the recommended product is the most suitable for you from the range available to you.  

I'd send the firm a letter requesting a copy of their Terms of Business letter, the fact-find they completed about you and a copy of the reasons why letter.  



proudford said:


> Apparently I could have made 4 changes per year into other funds...The person on the phone said it was really up to me to manage the fund myself...


 
These are red herrings and you should ignore them.  The main issue is that, based on the information you have posted, you were sold a combination of funds at the outset that were unsuitable for your needs.


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## johnnygman (17 Oct 2008)

crumdub12 said:


> No need for a list, just know the products you sell and pros/cons involved, good brokers make money, bad brokers lose money.
> 
> BTW, I am not taking any shots at you.


 
No offence but this is ridiculous and childish thinking no help to anyone, i would assume you have lost funds recently though a managed fund of some sort from your posts as you are very keen for prosecuting and what not? you really need to put the full case together with more info before you can make snap judgements like this, you would have to prove it was bad advice in the first place, losing money does not always mean bad advice i have lost money through managed funds myself this year but i am not blaming my fund manager or bank this was my own desicion and i knew the risks.
Somtimes you have to hold your hands up and accept some responsibility for your decisions re investment. Of course there are cases where bad advice is the case and these should be followed up and taken further.
I am not a broker by the way and am in no way connected to brokerages this is just my opinion on them.


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