The Aggrieved Investor

Over the past couple of years, we have had numerous enquiries from investors who have had problem investments or had been provided with inappropriate advice.  We really feel for their difficult situation.  It has been an unfortunate experience for the industry as a whole.  The good news is that some of the worst offenders in the industry have been clearly identified and a number have seemingly exited the industry.

There is no doubt about it; some of the advice and investments recommended by certain advisers has either been negligent or very self serving for the adviser and the organisation that the adviser was working for.  Obviously some adviser groups’ approved/recommended product list for fixed interest investments was dominated by investments that paid well above industry norm levels of brokerage for finance company products.

We have seen the angry groundswell of investors who protested over the failed ING products.  Never before has there been such a reaction from investors.  If the two investment products that they were protesting over had been used appropriately in portfolios, the destruction of client wealth would have been nowhere near as great.  The positive that has come out of this, has been the buyback of the investments by ING, albeit at a cost to the investor.

We have also seen a bank admit that in some cases, its advisers did not give appropriate advice, and they are working through the remedy process.  This will be a costly exercise for the ANZ bank.  It has also been a very costly exercise for their investors.  These investors have also suffered a lot of emotional distress, and for many of them, their golden retirement years could have been financially ruined.

We see that Suzanne Edmonds and EUFA (exposing unacceptable financial activities), the group that she leads, have now turned their attention against one of the major investment groups in the country.  Their website address is www.eufa.co.nz.  Over the past eighteen months or so, they have targeted Vestar, and ING.  Judging by recent stories in the Sunday Star Times and the National Business Review, it would not be surprising if this really starts to gain some traction.  The really unfortunate thing for this group of investors is that invariably a high portion of their portfolio is in illiquid and/or distressed assets. 

Recently, we have been kept busy helping people who have received inappropriate advice from other advisers.  Few, if any, have been made aware of the taxation relief available for some of the investments that were foreign investment funds.  Some investors did not even know that they were invested in foreign investment funds.  For one couple we helped, they had well over $500,000 of tax losses that they could claim.  More typically the losses that could be claimed will be less than $75,000.  But to benefit, a tax return will need to be filed with IRD.  We are aware of situations where tax returns had been filed, and the tax agent had not been informed about the investments that the person had, because there had been no taxable income from the investments over the past year. 

Unfortunately, the good ethical advisers cannot help people unknown to them.  Like them, we empathise with what has happened to those who trusted their adviser to look after their needs and were very badly let down by the less qualified and or less ethical in the industry.