The quality of investment advice has come into the spotlight after three Premiership footballers announced they are taking legal action against their advisers over allegations of misselling of unregulated investment schemes.
The unnamed players – one is still currently playing in the Premiership – poured money into complex investments including UCIS (unregulated collective investment schemes).
However, subsequent investigations by HM Revenue and Customs (HMRC) led to some of the investors paying penalties of up to five times the sum they originally invested.
Now the firm acting for the footballers, Rebus Investment Solutions, is warning that there could be more than 200 footballers who have invested more than £1 billion in similar ventures in the last 15 years.
The players were advised to do so to create future income in retirement but many of the investments have often led to big losses.
Tax man tackles unregulated investments
One of the big issues, says Rebus, is that younger players in particular were steered by their agents towards investment advisors for a finder’s fee.
Since then, the firm says, increasing numbers of these investment schemes have been shut down by HMRC because they were considered to be aggressive tax avoidance schemes.
Martin Taylor of Rebus said many of the players had not been made aware of potential costs or investment risks.
He added: “In many cases, professional advisers appear to have recommended investments without completing a proper analysis, and if this is so, the players will seek financial redress for their losses.”
The firm says it is now talking to more players about their investments which have been examined by HMRC.
Meanwhile, investors who have exchange traded products (ETP) are enjoying a boom, according to one report.
Asset management firm Blackrock says the world’s ETP industry has just recorded its best ever Q1 with investments worth £46 billion.
ETP boom
Of these, the firm says, equity investments accounted for 93% – or £42 billion – with developed markets getting the remainder.
The success of ETPs, according to Blackrock’s head of research Dodd Kittsley, is down to their variety of asset classes which cover everything from short term government bonds to Japanese equities.
These help reduce the risk of volatility which is a crucial reason for investors making investments in an ETP.
He added: “The investments also show ETP investors how to rebalance their investments to take advantage newly emerging opportunities.”
The firm also says that there is renewed investor confidence in equity markets and that investors are gearing up for an interest rate rise by mixing their portfolios from fixed income products to short-term floating rate exchange traded funds.
