-         Undertrained advisers are losing clients money
-         Investors unlikely to make up any losses
-         233.3% return needed to make up 70% loss

British expatriates face losing tens of thousands of pounds through overly risky and poorly diversified investment portfolios, according to AES International.

Undertrained advisers operating in expatriate hotspots such as Spain, the Middle East and Asia, are jeopardising investors’ cash by recommending high risk funds while also failing to properly diversify clients’ portfolios.

David Norton, head of investments at AES International said: “All too often we come across new clients who have received poor advice in the past and have had their money put into a toxic mix of high risk funds and poorly diversified portfolios. Structured products and unregulated fund structures are particularly common.

“Some of the specific investments might not have been bad if they had been part of a well-diversified, balanced portfolio, but when they make up a substantial portion of that portfolio and begin to lose money, they can become extremely costly.”

There are scores of examples of funds which have been widely sold in expatriate markets and have gone seriously wrong. Often the advisers selling these funds have been paid large amounts of commission to do so.

To help clients understand the full risks within their portfolios as well as the associated charging structures, AES International is offering clients a free guide and a portfolio “X-ray” which will interrogate underlying investments and charges.

Harder to recoup losses

It is also rarely explained to investors that it is much harder to recoup losses once investments begin to fall.

For example, if a portfolio falls by 10% it would need a gain of 11.1% to recover this loss. Likewise, if a portfolio falls by 40%, it would need to increase by 66.7% to recover the loss and if it were to fall by 70%, an investor would need a 233.3% gain in order to break even.

Norton added: “We hope that by offering this free report we can open people’s eyes to the risks they are taking with their hard earned money.

“Unfortunately, it is often not in the interests of those advising people on their money to explain how risky their portfolios really are.

“At AES International, we are passionate about giving people the tools to manage their money successfully and that means ensuring that the advice process is geared round making money for the client, not lining the pockets of the adviser.”

Journalists  can download a copy of the free guide here

Investors interested in downloading the free guide or applying for a free review of their offshore bond portfolio should click here

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