How Did MK Financial Planning Ltd
Get A Client A 500k Bonus?
Imagine being told by your financial adviser that the pension you have held for 30 years might be the worst thing you have ever done, could be toxic and you need to contact your provider.
The adviser then went on to say, if he had a hazmat suit, he would be wearing it now.
Of course, it was said in jest, but he was trying to prove how bad the whole scenario seemed and he was right..He even went on to say —
You know when you take a car for a service and the garage tapes it up saying unsafe and DO NOT DRIVE —
That is how I feel about your pension.
He said he could be wrong, but he would not be able to touch the pension or give advice until it is checked and given the green light that it is ok or given a red light and fixed.
So he downed tools and walked away.
It was Mark Knight, an Independent Financial Adviser (IFA) based in Bristol who owns MK Financial Planning Ltd who spotted it. Let’s find out how the situation arose —
How it was identified
What steps were taken and what was the outcome
Let’s set the scene — Mark Knight set up MK Financial Planning Ltd in 2005. He had been working in the banking world and at the time noticed a huge amount of clients coming in and literally crying. The issue they were facing were huge shortfalls on their endowments and had no money and nowhere to turn.
So Mark started investigating and quickly found almost 90% of clients said the same thing –“I was told this would pay my mortgage off AND give me AT LEAST as much back.”
Mark eventually set up MK Financial Planning to help clients fix their problems by changing to repayment mortgages. Within a year, he had helped over 200 clients. Most of the issues were caused by banks and building societies, some insurance companies and a small minority of other IFA’s. He decided at the beginning that he could only ethically help clients who didn’t have their own IFA and if they did, he simply referred them back to them.
It was this indepth level of investigation and discussion that led us to this client. We will have to change the name of the client because of the amount of compensation she received but this is how it started.
Jane approached Mark at MK Financial Planning Ltd to ensure her Reassure pension would help her in retirement. Mark is always keen to discuss actual cases, actual figures and so the first thing he likes to see before meeting the client are the key details. This includes up to date information and point of sale information. This is what makes Marks analysis different to other IFA’s —
Mark knows that clients won’t remember what happened back then and he also feels that to know everything is important before you start future analysis.The information his firm MK Financial Planning Ltd received didn’t alert him too much, except the plan Jane held was really unfair to her and because of their exit charges, which were terrible and would stop her making changes.
During their first discussion, Mark talked to Jane about what happened at the point of sale and using the information he had already received, he was able to prompt her enough, so she remembered most of her story.Then, Jane mentioned something that made the hairs on Marks neck stand on end —
She was in an NHS company pension scheme when the adviser told her to come out of it and to go into his personal pension scheme.
This is when Mark, stopped the process and told Jane that he could not go further, there may be an issue and to write to Reassure to find out what really happened.
Months went by and MK Financial Planning’s robust diary system alerted Mark’s team to contact Jane to make sure all was well. But each time, Jane said she just keeps getting a holding letter and nothing else.Then 2 years after the initial query, Jane called Mark Knight.
Jane had received a letter saying, we have investigated, and you should not have been sold this plan. We are really sorry and you have lost out to the tune of £495,000.00
495k!!!
No matter how good Mark’s skills are at Financial Planning or fund picking or risk analysis. He could not have gotten his clients £50,000 pension anywhere close to this return.
How does Mark Knight feel about this — “I would like to say I am shocked that this was allowed to happen. But, I have seen thousands of cases like this over the last 20 years. This is by far the worst.
Before this, the worst scenario was a £97,000 loss by a client in a similar situation. The sad thing is that there is someone out there with a situation that is 2x worse than this —
If they don’t have someone with my eye for detail, how much are they going to lose?”
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