Video: Scariest threats to your financial future

Video: Scariest threats to your financial futureWith Halloween approaching, we asked our Financial Planners about the scariest threats to your financial future.

Nick, Shelley and Martin donned a little makeup for this spooky video.

With Halloween coming up later this week, the scariest things out there are not zombies, vampires or werewolves, but some truly scary financial threats.

As Financial Planners, we wanted to share with you some of the scariest threats we regularly see to your financial future.

One of the scariest are Unregulated Collective Investment Schemes, or UCIS. These are investment schemes which are not subject to the usual rules for retail investment funds. According to our regulator, the Financial Conduct Authority, they are unlikely to be suitable for the vast majority of retail investors.

We think you should avoid UCIS at all costs. UCIS tend to be highly complex, have opaque charges and invest in high risk investment assets. If things go wrong, you have no recourse to the Financial Services Compensation Scheme, FSCS, or the Financial Ombudsman Service, FOS.

We see some incredibly risky unregulated collective investment schemes on a regular basis; there is some really scary stuff out there. If you invest in unregulated funds in areas like fine wine, teak plantations or bio fuel, you should expect to lose most or all of your money when things go wrong. Stay away from UCIS, they are terrifying.

Pension liberation schemes are another major threat to your financial future. These schemes, or scams, promise to release money from your pension pot before your 55th birthday, the minimum age at which HM Treasury allows you to access tax privileged pension savings. Pension liberation schemes sound good in theory, especially if you need access to the money in your pension pot early, but in practice are usually a breach of HMRC rules and come with some hefty tax consequences.

Add to that the high charges and typical requirement to invest what remains of your pension fund in a dodgy unregulated overseas scheme, and you will be lucky to see any of your pension fund at all – either before or after your minimum retirement age.

The financial threat which gives me nightmares are tied financial advisers. Usually working for a bank, these so-called advisers only have a limited range of investment products to sell, so aren’t in a position to offer any form of impartial advice. To be clear, tied advisers are not acting in your best interests but representing their company to sell more products. If you have an advice need, their only answer will be an investment or pension product offered by their company.

We have seen countless examples in recent years of the banks being stung with massive regulatory fines for poor sales practices and unsuitable investments. Thankfully, there are fewer bank advisers around today than there were five years ago, but there are still plenty of scary tied advisers around.

You can avoid this scary threat to your financial future by only seeking advice from an independent financial adviser, who is acting in your best interests.

It can be a scary place out there for you and your money. Stay safe by avoiding unregulated collective investment schemes, pension liberation scams and tied financial advisers.

Always carry a necklace made of garlic and keep your pistol loaded with silver bullets. And never leave home without a wooden stake or the phone number of your Informed Choice Financial Planner.

Happy Halloween.

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