I want to tell you a story involving a financial adviser almost 25 years ago and a former client, who retired recently. I think it’s a good news story – but I’ll let you be the judge of that.
My acquaintance – the client – has a decent retirement income, a combination of state and personal pensions, as well as a mishmash of public sector and private schemes from a time when defined benefits were still the norm for many employees.
Their overall savings pot might have been bigger, except for the fact that, about 12 years ago, the family experienced a life event that forced them to cash in their non-pension investments held in multiple Isas and former Peps, self-managed on different platforms.
This isn’t a sob story by any means: the savings helped them through a challenging period and the family has had a good life since. They always knew that at retirement they could rely on their combined pensions, which aren’t ungenerous. But still…
A few weeks ago, this person received a “trace” letter from Aegon, asking them to confirm their current address and provide a raft of other personal information about themselves to corroborate their identity. After checking this wasn’t some weird con, they complied with the request.
It turns out not all investments were cashed in. Back in April 2001, their adviser persuaded them to set up an Isa, into which they paid £550 a month for a year, so £6,600 into two funds. In a later tax year, they added a further £7,000 to two more funds, also in an Isa wrapper, a total of £13,600 – which they then completely forgot about.
I know, I know: how is it even possible to “forget” £13,600?
The family moved from one part of the country to the other. A year later, they did so again, and twice more in 2013 and in 2015. Four moves.
While they thought they’d updated all their records every time and recorded changes of address with the multiple institutions they had dealings with, it turned out this wasn’t the case. In addition, one of those house moves was related to the life event, in which they lost their possessions, including most of their paperwork.
They redeemed their disparate investments using a combination of their memories and their remaining records to guide them in terms of what they had. Everything was sold off bar their pensions, or so they believed – and the forgotten Aegon Isa, it turns out.
Strictly speaking, it’s not an Aegon Isa. Aegon is the fund platform where the Isa currently sits, as a consequence of multiple adviser firms being bought and sold over the past 25 years.
Not only does the original IFA firm no longer exist, neither does the one that took it over, nor the third one that supplanted it, the fourth one that replaced the other three, the fifth one that underwent a “merger” with a sixth firm, has undergone a re-branding and is now called something completely different.
Six IFA businesses later, it is perhaps not surprising this client lost contact with their adviser, who, in any event, retired a few years after the original investment was made.
But the Isa wrapper itself remained. Four funds in total, two UK-based and two international ones. At the time of writing, they are worth just shy of £70,000, an annual compound growth rate of about 8% after charges.
Not a complete life-altering sum, but one that will permit small worry-free changes, like a new car or a couple of nice holidays, as well as a small top-up income free of tax.
It could all have gone horribly wrong. To be honest, while the funds themselves have continued to outperform, there are now significant overlaps in terms of both overall sector weighting and underlying stocks held by each of them. A new adviser is in the process of reviewing and rebalancing the investment.
But the advice fundamentals all those years ago were good and have stood the test of time.
It is sometimes easy for commentators like me to point to mistakes on the part of the industry. In this case, a combination of multiple IFA consolidations meant this client became “orphaned” when they might not have been. Their own forgetfulness didn’t help either.
But we should also celebrate days when, despite everything, a combination of some luck and lots of good original judgement means the outcome turns out positive. In this case, it certainly has been.
Nic Cicutti can be contacted at nic@inspiredmoney.co.uk
Comments