Saturday 27 June 2009

Pensioners hold advisor 'accountable' for bad advice

An interesting story regarding the back-lash some advisers are experiencing due to the GFC. I'm glad the advisor escaped with just a few broken ribs, but I think the 'furious five' old-age pensioners who kidnapped and tortured their financial advisor for losing their savings by investing in a failed Florida property scheme will probably end up with the short end of the stick. Apart from still being out of pocket $4.1 million, the five pensioners are now facing up to 15 years jail time for hostage taking and torture.

I wonder if the advisor invested (and lost) any of his own money in the dodgy Florida property scheme, or if he just made money (via fees) by getting his German "clients" (marks) to "invest". It would be interesting to know the details regarding his actions - was he licenced to give financial advice, what advice did he give the pensioners regarding this investment (risk, returns etc.), and was the advice he gave "suitable" for his clients given their age, risk-tolerance, need for diversification, understanding of the investment. It appears to be another example of how high fees paid to advisers by risky investment schemes can lead to massive conflicts of interest and unsuitable advice being provided to clients.

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