Hi Jet II
I am referring back to your post #76. Apologies for the delay in getting back to you, I was laid low by man-flu!
I have tried to do some research into how much money Devere got paid out of your pension pot for selling you the QROPS but to little avail. The link you provided to Sovereign Group gives no information about that – do you have any documents from the time of the transfer that might shed light?
One of the things that I always look at when considering pensions or investments for myself is who is the person standing behind my pension/investment – how deep are their pockets, and what comeback do I have If they go bust (in passing, one of the minor consolations of buying the crap savings plans that these so-called financial advisers sell is that at least there is a large quoted and rated insurance company (e.g. Zurich, Generali etc.) standing over the obligation).
Your say that your QROPS is with Sovereign Group in Guernsey. I’m really struggling to find any meaningful information about who the SovereignGroup is. They appear to be supervised by the Guernsey Financial Regulator, but I can find no information about who owns them, nor how big they are. They are Gibraltar based, established in 1987, but don’t appear to have a credit rating from any of the credit agencies. I can’t see if there is an actual group (i.e. a pyramid of companied with a holding company at the top) or a collection of entities in different jurisdictions owned by the same person(s) (this is important from a corporate governance perspective).
As far as I can tell the operations of Sovereign Group in Guernsey are not covered by any investor/consumer compensation scheme, so if anything goes wrong you have no come-back.
The Chairman (and I think founder) of Sovereign is a guy called Howard Bilton, who appears to live in Hong Kong. So we have a Hong Kong based businessman, who owns (it seems) an unrated financial group based in Gibraltar, which has a subsidiary in Guernsey (with no compensation cover) that issues QROPS to GCC based expats now retired in X (wherever it is that you are enjoying that beer). I hope nothing goes wrong – if it does it will be a nightmare! Frankly, I would not be comfortable if my financial security in old age rested on that type ofstructure.
I have also looked at the document you posted about the Morgan Stanley Note, but again it gives no specific information about charges.
It is useful however as an example of the risks that these products present and why they are generally unsuitable for retail investors. The Morgan Stanley document says that these notes “are senior unsecured obligations of Morgan Stanley”.In other words you don’t own any underlying investment, you have a 100% counterparty exposure to Morgan Stanley, and the obligation is unsecured, therefore you will rank lowly among the creditors if Morgan Stanley hits financial troubles.
Morgan Stanley is a bank, and normally monies given to a bank are covered by government deposit protection, but Morgan Stanley make it clear that “the notes and deposits are not insured or guaranteed by the Federal Deposit Insurance Corporation”.
In Morgan Stanley’s own words “Structured products are predominantly high risk investments”. If you are happy that you understand the way in which the underlying deposits and derivatives (including leverage) are assembled, and are happy with the caps on returns that are typical, then go ahead.
Incidentally, you say that your note closed early after 2years with a return of 32%. I am happy for you, you deserve a good return because you took a lot of risk (and that risk/return relationship is immutable). You should however ask yourself why it was redeemed early. Was it because it was so deeply “in the money” that it made better sense for Morgan Stanley to take over your position?
I’m happy to engage further with you on financial issues generally, but what I’m really interested in is getting to the bottom of the charges of financial advisers, so if you have information on that please share.