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Effective Financial Planning Group

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Effective Financial Planning Group Ltd
15 Irish Town Gibraltar

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3rd February 2023

Month: December 2019

Investment Scams

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efpg
Tuesday, 17 December 2019 / Published in Advice, EFPG, Investment Advice, Services

Generally speaking, members of the public rely on professionals to provide services that they do not have the knowledge or experience to do themselves. I have tried to replace a toilet cistern with quite amusing results and now rely upon the services of a plumber.

I should imagine that if DIY dentist kits (drill included) were available in the supermarket, they would not be a good seller.

We do tend to rely upon the professionals that we choose to help us with our lives but as with all professions there are a few cowboys amongst the decent tradesmen. This includes Financial Services. When financial advice is given with the main objective being benefitting the person giving the advice, then serious long-term financial problems can result.

In 2013 EFPG decided to not to recommend commission paying products for our regular personal pension and savings plans – unless we were specifically asked to. We thought them inflexible, expensive and had extremely confusing and complex charging structures. Instead EFPG decided to design our own products with simple and clean charges, no commissions and as a result the plans are extremely flexible. We take great care in listing every cost that our clients’ savings and investments will face. EFPG wants our clients to have a pleasant investment experience with no hidden surprises. We also offer on-line 24 hour access so that our clients can monitor their investments. By doing this we hope to be seen as transparent, honest and trustworthy.

Not every IFA has the same philosophy.  In 2015 we were approached by an introducer that had pointed clients to two Advisory companies who then advised these clients into pension transfers and a truly awful investment.

The Cayman Island Fund

EFPG was presented the fund by the introducer to see if we would accept it in our overseas pension if they arranged the financial advice. We rejected it because on reviewing the investment prospectus our interpretation was that it offered no investor protection whatsoever. The directors and investment manager could do pretty much as they pleased and invest pretty much without restriction.

Time proved us to be right.

The introducer also controlled the fund’s investment management company. The investment management company invested in assets that the introducer also controlled. The investment management company also made investments in a way that the fund was not permitted to make. Additionally the same introducer also acted as the financial adviser to everyone (that I know of) who invested in the fund either from his own company or as a representative of another advisory company.

Completely staggering.

Currently the fund is being liquidated (meaning that the fund’s assets are being sold) and investors are facing very significant losses and delays in getting what they can out of the fund. Some investors were relying on the income from their pensions – income that has not been forthcoming for over 2½ years.

Although pension providers are not expected to be investment experts, a cursory glance at the fund and the surrounding arrangements should have set off all kinds of warning signals. Additionally, the fund had only just come in to existence, as had the investment manager.

There are a couple of easy methods that enable us to reject an investment offhand without spending too much time and effort reviewing the proposal. Firstly we look at the companies that provide services to the fund (auditors etc.). If the companies are not well-known this is a warning sign. Secondly we look at the Conflicts of Interest section and if it isn’t blank or short, we steer clear. Conflicts are a clear sign that a scheme exists not to achieve returns for investors but for insiders to strip out their cash in fees before it inevitably collapses. The investment mandate is also good reading as it permits us to judge how risky a fund is – risk with respect to liquidity and capital being the most pertinent elements of risk for a pension investment.

Obviously the stress and financial hardship suffered by the investors is the worst aspect of this mis-selling fraud/ investment fraud. However, the IFA acting in such a duplicitous manner compounds the issue – the investors have been betrayed by a trusted “professional” and as a result are extremely unlikely to seek financial advice in the future which could mean they would continue to make bad decisions.

The above shows that you do need to do your homework when seeking financial advice. Get personal recommendations, look online, make sure that the investments being advised are regulated and suitable for retail clients and if you are being shoe-horned into an investment bond, find out about the costs to you and the inflexibility of the product.

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TRANSPARENT

EFPG follows the UK model of charging by charging transparent, fully-disclosed fees rather than taking undisclosed commissions from products or investments that we advise on. This model was adopted as EFPG considers that our clients would prefer to know what fees they are paying and that the advice that EFPG provides would not be swayed by considering commissions.

EFPG also has long-standing partnerships with top-flight tax planning specialists in the UK and Spain for high net worth clients and UK expats. EFPG also offers property and estate agency/management services through EFPG Estate Agents.

LICENCE

Nexus Global specialises in providing a regulatory platform and compliance support to international financial advisers and intermediaries to enable them to meet regulatory requirements to provide their clients with a professional service.

The financial advisers trading under EFPG/BFMI  are members of Nexus Global. Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved members of Nexus Global are appointed Representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under licence number 3647:

http://www.fsc.gi/regulated-entity/blacktower-financial-management-international-limited-3647

 

Complaints Procedure – International Residents

Effective Financial Planning Group places the quality of advice as our top priority. It is important that we hear any concerns you have regarding the services we offer. Nexus Global operates a formal complaint handling procedure. A client’s complaint will be acknowledged promptly with a copy of our complaint’s procedure. Should you have a complaint we ask that you inform Nexus Global Office in the first instance. We will then review and make contact with the relevant office. If you have already spoken to someone regarding your complaint, please include their name in your correspondence as this will assist in your complaint being answered more promptly.

Complaints can be emailed to: info@nexus-global.net or you can also write to:

Nexus Global
Waterport Place,
Floor 2 Unit 2.3 Europort Road,
Gibraltar GX11 1AA

Nexus Global operates a formal complaints handling procedure. A client’s complaint will be acknowledged promptly and we will try to resolve the problem within eight weeks of the client telling us about their complaint.

If you consider that your complaint has not been dealt with appropriately by Nexus Global, you can write to the Gibraltar Financial Services Commission to:

P.O. Box 940, Suite 3, Ground Floor, Atlantic Suites, Europort Avenue, Gibraltar.

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Email: info@efpg.net

Effective Financial Planning Group Limited
PO Box 1483 15 Irish Town Gibraltar

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