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Executive summary- my wife recommended a badly behaved IFA to her mother, who's now down about 30k after compensation- should we compensate the m-i-l for the remainder.
Several years ago my wife recommended the IFA she uses IFA to her mother, to use to invest a sum of money to provide her with a monthly income.
Long and short of it is that my wife and her mother had a falling out, didn’t speak for a couple of years, during which time the IFA recommended moving around 100k into a new vehicle which was used to directly purchase several properties in London, for a fixed term, no withdrawals until maturity in Sept 2017. We didn’t know about this until last year when the m-i-l’s monthly income halted- all the liquidatable assets in her investment account had been used up paying her monthly income, leaving just the property fund investment.
My wife is understandably distraught that her (now retired) IFA is responsible for this- he recommended the investment, started up by an old colleague of his- the m-i-l signed off on the movements when her and my wife weren’t on speaking terms- but it doesn’t match her risk profile or requirements. We’ve been paying the m-i-l the equivalent of her previous income til now, but compensation from the FCA has just come through at 70% of the original investment, and the property fund has now pushed out the moratorium on withdrawals until 2021.
Morally, my wife feels bound to either make up the shortfall, or take the investment over and carry on paying the income. We can pretty much afford to do this, and I imagine we will, but is it the right thing to do- do we owe the m-i-l?
I didn't understand any of that!
100k into a new vehicle which was used to directly purchase several properties in London
How do you buy several properties in London for £100k?
She's an adult and just because you had a decent experience with a IFA no one could reasonably expect that you can guarantee that they are 100% legit, especially since she made decisions at a time when you had zero involvement.
I don't think you have a moral duty to cover her losses though I can understand why you might offer to if you can afford it even if it goes well above and beyond.
No
Legally I can't see it.
Morally up to you, I would be thinking about the circumstances, ie does she need it etc.
No way to sue for the 30%?
Your m-i-l made her own investment decisions after you were no longer involved - where do you have any moral responsibility?
My MiL sometimes hangs the loo roll on the hanger the wrong way round and puts none designated cooking utensils in the cooking utensil pot (instead of the drawer) and I sometimes feel like the gods have it in for me. I can't imagine that I would ever be paying out compensation for financial decisions she had made
when her and my wife weren’t on speaking terms
"Please remember that the value of investments including property and the income derived from them can go down as well as up"
How do you buy several properties in London for £100k?
It was an investment in a fund. Quite a number of people affected by this.
No, absolutely not, any more than you'd be responsible if you recommended a bike manufacturer and another buyer had a poor experience. A personal recommendation is merely saying "I had a good experience".
And that goes double when (as in your case) the other person went ahead with some futher decision without any discussion or consultation - that's entirely her responsiblity.
FFS I'm now increasingly taking on responsibility for handling my own parents' affairs through a PoA and I won't be compensating them if some investment goes pear-shaped!
No.
If you'd related some good experience with a particular car/TV, your MIL bought one, then upgraded to a different model from the same brand and had problems, would it be your fault?
Wife feels responsibility because a)that's in her nature, and b) she very strongly recommended using this guy (he'd been a staff FA at a bank she'd worked at, and trusted him) rather than letting her mother just keep the money in savings accounts, where it had been.
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That sums up nicely why I'd rather lose my own money than trust an IFA. I'm sure there are some good ones out there somewhere, but I've not yet met one that could match common sense, Google and STW combined.
I don't think its your problem at all, but it's rather decent of you to even consider making good on it. IF the situation were reversed, do you think she would make up the shortfall?
If you're feeling flush and the MIL is hard up, then helping her out financially is a nice thing to do. Morally obliged though? Norfolk & Waypal.
Your wife recommended a tradesman. That tradesman, in essence, failed to correctly predict the future (if you could do that with 100% accuracy we'd all be rich). That's the nature of "investments," it's essentially gambling, sometimes you roll a green zero and the house wins. I fail to see how you're in any way liable.
If you feel guilty, why not ask the IFA for the shortfall, see how far that gets you?
she very strongly recommended using this guy
As Metallica once sang, so what? It could very well have been a sound recommendation. The IFA may well have been exceptionally good at his job. Still doesn't make him clairvoyant.
NO.
Despite all the OPs strange use of language, no doubt a product of talking to too many BS IFAs – they’re only “advisors”, they’re not Financial Alchemists.
Your Mother in Law risked her money for the chance of making more money. There HAS to be risk, there is no human right to make money from money, so whilst the FCA has decided it wasn’t all above board, she’s already been given appropriate compensation. Move on.
Norfolk & Waypal.
naughty mod dodging the swear filter!
Ban hammer??? 🙂
would you be expecting share of the profit if the advice had been good?
although, whatever your wife wants to do is the correct answer.
naughty mod dodging the swear filter!
I was just wondering if that was the name of the IFA firm, I've no idea what you're talking about.
No moral obligation, but if paying all or some of the cash makes you feel less guilty you might consider that money well spent.
Why not park it for 6 months and see how you feel then.
Duplicate post! Burn him!
although, whatever your wife wants to do is the correct answer.
Good point there
Legal / Moral / Mum responsibility
Legal - nope.
Moral - nope.
Mum - ??
There is no legal or moral responsibility for the decisions that the MIL made, but ... if she is going to be in dire straits then it is within reason for a daughter to want to help out.
Duplicate post! Burn him!
Blast, I thought I'd deleted that. (I have now, so you look silly.)
Norfolk & Waypal.
I thought it was a reference to a relevant legal case...
he recommended the investment, started up by an old colleague of his- the m-i-l signed off on the movements when her and my wife weren’t on speaking terms- but it doesn’t match her risk profile or requirements. We’ve been paying the m-i-l the equivalent of her previous income til now, but compensation from the FCA has just come through at 70% of the original investment, and the property fund has now pushed out the moratorium on withdrawals until 2021.
Curious about the £30k compensation - is it due to his recommending a colleague with a inappropriate fund? MIL signed it off so she and the IFA are to blame - though if the IFA thought it was appropriate then not sure he's done anything wrong really. If it had done well, which it well could have if not dodgy, then she'd be happy.
You owe her nothing but if she's in trouble then taking on the investment is an option.
your mil signd the T&Cs with her own hand after reading them and making a decision, therefore you owe her not one penny. in the spirit of mumsnet go NC.
It was her investment, not yours/your mrs'.
Would she be giving you all the profit if it had gone well?
Don't understand why in any way you would feel obliged to make up the 30%. The MiL made the wrong decisions and didn't realise investment can be risky.
Had to laugh at the OP's use of financial terminology though, there's no need for all that industry speak.
She recommended the IFA - she didn't provide the financial advice, that is a long leap.
Also - FACT - all IFAs are sharks, you have no way of knowing if every single IFA on the planet would have given the same advice, my experience (I worked on a project investigating duff advice from IFAs so am somewhat biased) is that they lack the ability of original thought.
Was your MIL in full possession of her mental faculties ?
You should be helping her out if she in in any hardship, whatever the circumstances, but in no way is this your wife's fault.
I thought it was a reference to a relevant legal case...
No, that would be Arkell v. Pressdram.
[quote="jam bo"]would you be expecting share of the profit if the advice had been good?"
On the assumption that the Mum will die at some point, and doesn't disinherit her daughter in the meantime - yes.
But to answer the question, no, you have absolutely no obligation. If you [i]want[/i] to help her out then go ahead.
You should pay the same amount that you feel she would have paid you had the investment gone well.
Which is probably nothing, as it was her decision, her risk and her investment, so I don't see why you would have been entitled to any.
"Please remember that the value of investments including property and the income derived from them can go down as well as up"
^ that.
OTOH, I would net let a relative starve/loose house etc if the income stopped. Not out of guilt, more out of love.
Sounds like a cluster from start to finish.
As I read it.
MIL had two pots.
Pot 1: 100k invested in the property scheme with no withdrawals until 2017 (now 2021)
Pot 2: Cash that she was using for income (I am not sure how it ran out a year early but that is another matter).
She spent all of pot 2 on the assumption pot 1 would be returned with interest in 2017.
This is not the case and the FCA has awarded her 70k but it still seems like she has some investment in the property scheme or by accepting the compensation cede her rights to this investment.
In any event she still has the 70k to draw down on and should she still have the fund she can withdraw in a few years. At this time you are paying her an income so she doesn't use the money she had earmarked for that.
I would expect that you will be paying at some point but it would be better for you if she used some of the money she has now (you can save the money you are currently giving her) and then when things settle down you can see how everyone feels.
If you had both invested in the scheme and it had gone to the wall you you still feel obliged to pay?
Possibly not a good time to advise the MiL to begin selling Herbalife?
Good point cornholio, I've just re-read the OP and decided I don't quite follow it.
1) The compensation - is that 70% of the £100k property investment ? So she has £70k in cash right now ? In which case she needs to suck up the £30k loss (and be grateful it's not bigger) and move on.
2) Or is the compensation 70% of the other, income-bearing, investment and she still holds the property ? That sounds like a good deal. Except...
3) If the property investment payout has been pushed back to 2021, what's to stop it being pushed back to 2025 ? Or 2035 ? Or never, because it turns out to be some kind of Ponzi scheme ?
No legal obligation at all. It's your MIL's signature on the contracts.
Moral obligation, I would say none. You wife recommended the IFA and not the specific investments. Those where agreed by your MIL.
IMO discussing the specifics of the investments is irrelevant.
EDIT: of course the downside to all of this is the MIL writes her daughter out of her will all together. This may of course happen whatever the outcome. OP if you do give the MIL £30 make sure its a rock solid collaterised loan that cannot be circumvented. Otherwise imho there is a good risk she'll still write her out of any will.
Families and money are a very strange mix. A family memeber with a grudge just murdered all 4 of this sisters family, cut their bodies up and burnt them. All over an inheritance argument.
I have had a number of strange experinces with family members screwi g each other for money / inheritance. Money and family arguments make for an explosive mix
Also, if you're currently on good terms, and Assuming the mil is getting on a bit, consider whether getting a lasting power of attorney in place ready for 2025 when she may well be unable to deal with the shitfest
How do you buy several properties in London [s]for £100k?[/s] [b]and make a loss as measured at 2017 ??[/b]
How do you buy several properties in London for £100k? and make a loss as measured at 2017 ??
my guess would be it is an investment scheme where they are building, refurbishing or perhaps doing something with commercial property and they have run over budget/time or have not been able to sell/rent for the amount originally stated in the sales pitch...
despite what it may look like property development can be quite high risk...
Sorry nothing to add but if asked i never give financial advice, i do all my own research so take full responsibility for my actions. Never used an ifa as q enjoy diy.
Actually i have contributed to threads on here about shares, but usually given caveat about past performance.
I'm uneasy.
All respondents, including Jamba, are of the same opinion, on STW.
Did someone google 'google'? Had there been a glitch in the matrix? Is the day of judgement coming?
Anyway, to the OP, nope, none whatsoever. I've been given duff financial advice before, but luckily I realised myself before signing on the dotted line. How could a person recommending and ifa know that what they recomend wouldn't pay off, without knowing what they were going to recommend? I simply told my friend what happened and they could make up their own mind as to whether they continue to use them.
That said, keep the mil sweet form now until, well, you know...
[quote="scaredypants"]How do you buy several properties in London [s]for £100k?[/s] [b]and make a loss as measured at 2017 ??[/b]
My point #3 above ?
I'm not saying that's the case for sure, but if they can indefinitely keep saying "nah, you can't have any of your money, try again in <x> years" I really don't like the sound of it.