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Safeguard your future: How to spot a rogue financial adviser

by | Sep 6, 2022

Find out the common tricks and tactics rogue financial advisers will use to try and take your money away from you, and know the steps to help ensure you avoid making a massive financial mistake.

The financial advisory world centres around money and the desire to increase the financial capital that we all have. Making good decisions about financial products and investments will normally require the expertise of a trusted independent financial adviser who is qualified and has experience.

Unfortunately, while there are many such advisers who act with the upmost integrity, there are also rogue advisers and advisory firms whose intention is to specifically take advantage of clients, often resulting in significant financial loss.

While there are some protections and regulations provided by independent organisations such as the FCA in the UK, often their ability to protect and provide insurance over rogue advice is limited.

Ultimately it will come down to the consumer to make a good decision and key to this is being able to identify and reject advice provided by rogue advisers.

Using false FCA credentials and/or Incorrectly claiming FCA regulatory authority

Always check that that your current or potential financial advisory firm and/or adviser is regulated by the FCA. If a non-UK based financial advisory firm is claiming that they are regulated by the FCA, this is unlikely to be true. In the first or second instance it is always a good idea to check on the FCA register (located here) That the information provided on their website, or any documentation is accurate and up to date.


It is typically human nature to react to fear and making financial decisions is certainly no exception to this. Nobody wants to lose their investments or be damaged by circumstances out of their control.

Rogue advisers will typically use such tactics to scare people into making bad decisions – often incorporating time critical factors when pushing such techniques.

The truth is that Pensions and Investments can be highly lucrative for rogue financial advisers, who can receive massive commissions for transferring pensions and advising on investments which can tie clients into products (in some cases up to 5% of the value of the pension) and some unscrupulous individuals will use any scaremongering to force a pension transfer through for the reasons set out above.

Lack of clarity around payment, financial compensation, and commissions

In the UK, under FCA regulations, financial advisory firms are only allowed to provide advice on a fee-based basis unless insurance based.

In most cases a rogue advisers will inform their client of what they are being paid but not exactly what the client is paying. Many but not all advisers work on a percentage basis of income generated so if they are on a 60/40 split and they will tell the client they are earning £3k from the agreement but the company is getting another £2k, meaning the total charge is £5k.

Unfortunately, these payment structures are perfectly legal, but can have massive consequences.

So, before proceeding with any advice, ask questions around the fee structures and ensure you fully understand what you are paying for, what that firm is earning and what the adviser is earning. In nearly all cases, before the end of the first formal meeting, the adviser will understand what the charges are likely to be, so it is never too early to start asking the question.

It’s important to be aware that this is not always the case and there are a growing number of firms which are voluntarily moving towards a fee-based charging structure to provide clarity and ensure that your investment is not negatively impacted.

Poor choice of financial products

One of the biggest giveaways of a rogue adviser is the actual financial products that they advise people to choose. 

Many advisors are mechanical in their approach and the quality of the products promoted (not provided as a solution to your goals) is based on experience gained 10+ years ago. One dimensional selling is a very clear indication of poorly trained and UpToDate advisors.

Being advised on the whole story vs part story

Rogue advisers may also use a tactic where they only provide half the story. From our experience, clients have previously received reports only detailing the structure and often state that final investment decisions will be made at “a later date”.  This is crucial for anybody looking to make an investment decision off the back of financial advice as it is impossible to make an informed decision with only half the information.

This is often done to make their advice look competitive when compared to existing plans.  Unfortunately, compare part of the story with the whole story is like comparing apple and oranges as the existing plan will often provide the details of the total cost compared to what is often in the initial report.  Where it becomes even more confusing is those additional costs are often like the first set of costs and therefore one could assume they are the same thing.

Again, if you ever feel that something is missing, or you have actively been told that more will follow, you should not make any commitments until you have the “whole story”. If you are not being advised according to your goals, but rather investment performance, this is a red flag scenario.

Changing contractual terms without authorisation

Every day we are bombarded with contracts for services. In many cases, people will often check the box or sign the contract with the express understanding that the service provider will have document exactly what was expected.

However, with financial decisions, so much is as stake when signing any contract, it is vital that you read and re-read any contract that you have been asked to sign.

You must never assume that everything is as discussed and always check the fine print. If something isn’t clear, it is essential that you double check everything. In some cases, rogue firms have taken further steps to persuade clients to sign additional fee sheets which explain structural costs. If the client has signed these sheets without reading the detail, these fees can be charged and when the client discovers the additional charges, the rogue adviser will simply say that the client signed the agreement, and they were told.

While in the EU (and for the moment the UK), laws and regulations such as MiFID II are coming into play which require licensed firms and advisers to record all written and spoken communication to provide evidence of discussions, once you have signed a contract or agreement, it will be very difficult and potentially very expensive to correct any incorrect terms which were changed without your knowledge.

It is far safer to ensure you know and understand everything that you are agreeing to, and agree with it, in advance and if not, avoid signing anything.

Things that you should specifically be checking include:

  • Company details
  • Investment options
  • Overall tie in period (If any)
  • Cooling off period if you change your mind

Does it sound too good to be true?

While some financial products can perform well, quite often if something sounds too good to be true, it quite often is.  It is the rogue adviser’s prerogative to upsell the opportunity to ensure that it sounds like a “no-brainer” investment option.

Often rogue advisers will use unusual alternative investments, or schemes which are simply not safe and promise the earth with absolute simplicity.

While it may sound obvious, if something sounds too good to be true, but you cannot spot the downside – the best thing to do is contact a different independent adviser for a second opinion.

Was the initial contact unsolicited?

One of the most common ways for rogue advisers to push their products is to make first contact. They will literally spend their entire time on forums, LinkedIn, Facebook, and contact anybody and everybody. They may even be known to you.

Much like double glazing salesmen or PPI claims specialists, they are merely hitting the numbers and hoping that someone will begin a conversation. In most cases, the “adviser” will use some/all the approaches used in this article.

If you receive an unsolicited call, always treat with extreme caution. Of course, advice being pushed *may* turn out to be suitable – but you should always seek independent advice first to ensure that you are not being sold.

The misuse of “friendship” and the application of pressure

Financial adviser relationships with clients will, if things go well, last a very long time. Therefore, relationships tend to be relatively friendly.

While this is perfectly understandable and desirable in many cases but is a situation which can also be open to abuse. The friendly approach will often begin at the beginning of the relationship, but always question an overly friendly adviser.

However, the major misuse of the “friendship” is that they will start to put pressure on using terms such as “trust” and “pressures from management” to try to encourage someone to decide more quickly than they either need to or want to.

If you ever feel like you are being pressured, whatever the reason, always question the motive of the person applying the pressure. Ultimately, this is your life and your money, and you must always be comfortable with the decision you are making. If you feel uncomfortable, you should always feel able to ask the adviser to “back off”. If they do anything but and continue to apply pressure, it would be highly advisable to seek a second opinion on what’s being advised.

Need a second opinion? Request a free consultation through us

If you’ve been contacted by someone who you’re unsure about you should always seek a second opinion. At GSI, we have an office network manned by qualified, authorised and specialist advisors which offer independent financial advice that can be trusted.

This article has been adapted from a piece in Experts for Expats, written by the Editor


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