‘I told him not to invest, but he did it anyway’

Advisers do not relish telling clients “I told you so” when a savvy recommendation goes unheeded, but, as they tell PA, there have been a few opportunities to do so…

Mike Horseman tried his best to dissuade his client from investing £100,000 in the tax-advantaged technology investment scheme, known as Innovator One.

The Cockburn Lucas managing director had done the due diligence and it was more than just instinct that told him the money was at risk. The client, however, disagreed.

“He placed the deal through us but we disclaimed it by saying it was not on our advice,” Horseman explained. “We made the client sign a declaration [stating he] was acting without our advice on the basis we felt it may blow up.”

And blow up it did, with the client losing all his money. Innovator One is now the subject of a court claim by investors who allege it amounted to an investment fraud.

But there was one happy ending for the investor: his relationship with his adviser grew stronger.

Clients chasing returns

Investors’ temptation to make a quick buck is a recurring theme when advisers recall tales of clients failing to listen.

Colin Rodger, director at Alexander Sloan Financial Planning, remembers one such case.

“Before Northern Rock went down, I had a client who wanted to buy shares because he felt they were undervalued. I told him not to buy them at any price, but he went ahead and did it anyway. He lost all his money.”

For Rodger, the lesson from the Northern Rock fiasco has been to be even more vocal when he sees a client about to do something he considers careless.

“I have now taken my ‘are you crazy?’ speech to a more forceful level,” he said.

Know your client

But not all cases involve material detriment. Sometimes the adviser discovers he knows more about a client’s aspirations than the client does himself.

This happened to Cambourne Financial Planning managing director, Mark Loydall, who was in discussions with a 67-year-old customer who wished to retire.

“I told him he was mad. He was far too ‘young’ to stop work completely,” he said. “He assured me he was not and said his wife wanted him to be at home. About eight months later, in a very casual way, the client told me he was back at work.

“When I questioned him he said there are only so many jobs in the house one can do and only so many times he could visit the bowls club. He had become bored.”