Ask the Expert: My financial adviser is promising huge returns – should I believe him?

Carl Lamb, managing director of Almary Green

Carl Lamb, managing director of Almary Green


My financial adviser is making promises that sound too good to be true. What should I do? Carl Lamb of Almary Green responds.

I met a financial adviser at an event recently who told me that I could get a much better return on my investments if I moved them to a special fund that has been set up using overseas investments and a fund to support the development of the bio-fuels industry.

He told me that these funds will certainly increase in value and I should see my money grow quickly over the next five years.

Does this sound right to you?

Response from Carl Lamb of Almary Green

The problem with offers that seem too good to be true is that they probably are (ie not true).

The issue here is about whether you understand the risks involved with the investments being proposed – because it sounds like they are only suitable for someone happy to take high levels of risk.

Can I suggest that the first thing you need to check is that the adviser in question is a regulated adviser? You should never take financial advice from anyone who isn’t authorised and regulated by the Financial Conduct Authority (FCA).

Secondly, I suspect that the investments being proposed are what’s known as “unregulated investments”. This means that they are not covered by the FCA’s complaint and rescue service – the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) – so you have no redress if things go wrong provided you’ve understood the advice you’ve been given (and provided it’s correct).

Generally speaking they are not suitable for anyone but the most experienced and knowledgeable investor.

Regulated advisers are obliged to explain the risks involved in any investment they recommend to you and to only recommend solutions that are suitable for your circumstances and your risk profile.

This means they have to know all about you and your financial situation before they give advice.

The FOS and FSCS are available to you if a regulated adviser has failed to give you suitable advice or has misled you about the nature of the investment they are recommending.

The fact that this adviser seems to be making a recommendation based on a casual conversation at an event is very worrying.

Unless you’ve gone through a thorough analysis of your risk profile and fully explored the risks, I would steer clear.

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