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Stuart Ritchie

By: Stuart Ritchie

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May 10th, 2017

Ignorance is bliss: but it cost Pete £210,000

Financial Education

[Estimated time of reading: 4 minutes]

I remember the people I can’t help, as much as the ones I can.

Perhaps none stand out more than Pete, an oil and gas worker in Azerbaijan.

Pete wanted to retire in Cyprus.

He had a huge pension from an entire career at BP.

He’d been contacted by someone who then flew out to Baku, and explained the benefits of a pension transfer over a few beers.

Getting a second opinion, he contacted AES International and spoke to me.

  • I told him the solution recommended was dire,
  • Criminal in the UK,
  • And I explained why.

Resist the temptation

I’ll never forget Pete’s response…

“It all sounds like the same gobblygook to me - the guy seemed trustworthy enough.”

What happened next…?

Pete ignored my advice, and signed up with Mr. fly-by-night…

…and paid him over £210,000 in hidden commission.

More than enough for a nice retirement villa in Cyprus.

But worse, he locked himself in a 10 year RL360 bond, full of structured products that have – and will continue to lose him hundreds of thousands of pounds more. 

It’s too late for me to help.

He is locked in to horrific contractual terms – to which he freely agreed.

Ultimately, his retirement has been devastated because he wasn’t aware of some simple truths.

Comforting Lies


Whom can you trust with your money?

I recently wrote a post about how to differentiate between the two main types of financial adviser – the fiduciaries and the brokers.

  1. You can’t tell by job title alone…we’re all IFAs or ‘financial people’.
  1. Fiduciaries are almost impossible to find - but they’re the only ones required to act in your best interest.
  1. Brokers are the vast majority - but they are paid to sell you stuff.
  1. Brokers often walk away with bags of hidden commission generated by locking you into long-term plans (like poor Pete).
  1. Brokers are not required by any law, regulatory body or professional standard to act in your best interests.

Tony Robbins, the best-selling author of Unshakeable, explains this conflict of interest in 5 short quotes: 

“Brokers don’t have to recommend the best product for you. What?! Yes, you heard me right.”

“Brokers and their employers earn more by recommending certain products.”

“No matter how much you like your broker, your broker is not your friend.”

“How is it that profits over people has become the accepted standard?”

“Does it sound like there’s a conflict of interest here? Damn right!”

Removing this costly conflict of interest

So, if you can’t tell whether someone is going to sell you something for their gain, or help you achieve your goals just by looking at them – what can you do?

How IFAs are paid to mis-sell pensions

When drafting this blog, I began to write down a list of ways to judge advisers.

This was basic stuff like:

How well qualified they are.

What level of experience they have.

What’s their investment philosophy – is it low cost?

How do they operate…

But the truth is, you are best served not by trusting an individual, but by trusting the organisation they work for.

I joined AES because of its mission:

Positive change

Its culture: -

Knowledge, integrity, teamwork…

And its investment philosophy:

To change the way the world invests…

  1. I joined because it is the only Chartered Financial Planner outside the UK;
  2. The only fiduciary within the international marketplace; and
  3. The only financial organisation I would (and do) trust to look after my own family.

Unlike an individual, an organisation doesn’t die, doesn’t retire and doesn’t move companies.

The ‘ignorance is bliss’ proverb means:

“if one is unaware of an unpleasant fact or situation, one cannot be troubled by it.”

Pete was ignorant of the difference between a broker and a fiduciary – he was entirely untroubled by his lack of awareness – his obliviousness cost him his dream retirement.


Don’t risk your retirement – place your trust wisely

I still feel bad for Pete to this day.

I know it wasn’t my fault that he lost out on his home in Cyprus…

I was up against a charismatic salesman who met Pete face to face, befriended him, and bought him beer!

But if only I could have explained the difference between brokers and fiduciaries better…and the difference between all brokerages and AES International

Maybe he’d have made a better choice…

And realised the broker’s business class ticket and drinks he was being plied with were ultimately paid for by his pension…


How to inform your choices

I always say an informed choice is the best choice.

Here are three books that will inform your choices: -

Great wealth management


And one last thing…

We’ve created a tick box checklist that you can download for free to help you choose a financial adviser who has your best interests at heart. 

You never know, it might just save you thousands. 

How to choose an adviser checklist

About Stuart Ritchie

Stuart Ritchie is a Chartered Financial Planner, APFS, Chartered Wealth Manager, Chartered FCSI

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