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An elderly relative (over 70) received financial advice from a regulated financial advisory company (in the UK). The service invested the money for them in several stock-market funds for a fee of 1% of the assets. There was no consultation with the family.

The relative has since been diagnosed with dementia, prompting a look into their situation which has raised alarm bells about the legality or ethicality of the advice they have received.

What are the conditions regarding financial advice to the elderly and/or infirm ? Has the company acted unethically in this situation ?

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    I think this is more of a legal question than personal finance. If the diagnosis was after the organization consulted with your relative and set up services I don't think they've broken any laws, since (on paper) they were just selling services to an adult of sound mind. Ethics is a different kettle of fish though - was it obvious that your relative didn't know what they were doing even without the diagnosis? You may need to speak to a legal professional. – CactusCake Jul 17 '17 at 18:11
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    Do you, or someone else in your family, have legal power of attorney (or the UK equivalent) for your grandmother now? – quid Jul 17 '17 at 18:39
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    Kinbaku, when you say "raised alarm bells about the legality or ethicality of the advice they have received", what specifically triggered the alarm. Do you mean the act of charging for advice to someone with dementia, or is there something in the content of the advice (e.g. specifically buying or selling a specific stock or fund) that raises your alarm? – sharur Jul 17 '17 at 19:23
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    Unless the actual investments were illegal or fraudulent, or the amount she was charged for the investment fee was not proportionate to what others are charged by that firm; I don't see what could possibly be illegal here? Fees are standard for managed portfolios. – Keith Jul 17 '17 at 19:30
  • Are the funds all 100% stocks? Even though the question states "stock-market funds" it's possible some of them are target date, lifestyle/allocation, or fund-of-funds that actually include a bond component, or even actual bond or money market funds. – stannius Jul 18 '17 at 20:03
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I can't speak about the UK, but here in the US, 1% is on the cheap side for professional management. For example Fidelity will watch your portfolio for that very amount. I doubt you could claim that they took advantage of her for charging that kind of fee.

Given that this is grandma's money, no consultation with the family is necessary.

Perhaps she did have dementia at the time of investment, but she was not diagnosed at the time. If a short time has past between the investment and the diagnosis, I would contact the investment company with the facts. I would ask (very nicely) that they refund the fee, however, I doubt they under obligation to do so.

While I do encourage you to seek legal council, there does not seem to be much of substance to your claim. The fees are very ordinary or even cheap, and no diagnosis precluded decision making at the time of investment.

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    After all, there are a lot of people who consider themselves of sound mind, and voluntarily take these contracts and pay that amount or more. – Aganju Jul 17 '17 at 19:23
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    @Aganju great point! There are people that are of "sound mind" that make much dumber decisions about money then this! – Pete B. Jul 17 '17 at 19:46
  • @PeteB. And on the facts given (so far), there's not a lot of evidence that this was a dumb decision (moving all one's money into the stock market at age 70+, when you'd typically opt for a more stable investment might not be wise, but the question doesn't explicitly say this is what happened). – TripeHound Jul 18 '17 at 8:26
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    @TripeHound the level of dumb I was talking about were more along the lines of payday loans, whole life, and timeshare purchases. If the asset allocation is good, then this was a fine enough decision. This person could live another 20 years. – Pete B. Jul 18 '17 at 11:20
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    @PeteB. Understood. – TripeHound Jul 18 '17 at 11:22

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