Financial farrago in the case of my missing PEP
Having spent years telling other people how to handle their money, Martin Baker admits he's made a mess of things here.
Saturday 23 June 2012
This is a story of organisational anarchy, financial fiasco and muddled money management – partly other people's, but mainly my own. If I were a physician, I'd be so far from curing myself I'd be six feet under by now.
As things stand, I've managed to lose more than £15,000 and also, possibly (the longer this saga draws on, the truer this statement becomes) my sanity.
All of which would be bad enough in itself. But consider this: for more than two decades I used to be a journalist, dispensing "wisdom" on the importance of saving up and taking control of your finances.
So then, here's the tale, in all its awful vagueness.
In 1998, or possibly 1999, I bought a PEP (it couldn't have been an ISA, because they weren't introduced until April 1999). The tax-advantaged investment – ISAs and PEPs are onshore tax havens – was invested in Baring Asset Management's UK Smaller Companies fund, a unit trust.
I remember making the investment. I have what's known in cognitive analysis as a "memory anchor" – I wrote a long piece on small-company investment for a magazine, and thought I'd commit some cash myself.
I spent most of 2000 on gardening leave. From my metaphorical garden shed I set up a portfolio tracker with www.iii.co.uk.
I must have had some materials from Baring Asset Management at this time, as I entered a specific number of units in the tracker. I have a hard copy of a portfolio page, stating that the number of units was 4,687, according to a printout of my portfolio that I made (thank heavens) in late 2010.
I subsequently made a classic mistake – I believed the screen I was looking at to represent the truth. I monitored my investments online for several years, but cannot recall receiving annual reports from Barings, the managers.
Like most investors, I would have thrown them away after a quick perusal – as I did with investments run by other managers, such as Investec, Fidelity, etc.
In April 2011 I logged on and got a shock: The Barings fund was valued at zero. I called the custodians, and discovered it had been wound up; I should expect to receive a cheque.
My initial disappointment centred on the fact that I'd lost a year's worth of tax-free investment.
Still, the £6,000 or so had turned into £15,000-plus over the years – not great, but not bad. It's been a year now. But I've received nothing – the back offices at Barings and the various advisers I've used cannot trace my investment.
My first point of call was Barings. They've been courteous and helpful. But it seems that they can't find my name on their systems. Nor can they find my National Insurance number.
They say that I must have used an IFA (Barings weren't offering this fund at the time direct to the public as a PEP, so I would have had to). The investment has to be in a nominee (group holding) account.
My second try was the IFAs. I couldn't be sure, but maybe I'd invested via Brooks Macdonald in Park Street, Mayfair. It seems not. Brooks Macdonald outsourced back-office functions for a while to Brewin Dolphin. Again, no luck.
My third try was my bank, Cater Allen Private Bank. I wanted account records for the months of March and April 1998 and 1999. I'm one of those investors who fills the ISA quota just before deadline, I'm afraid. My bank refused to offer records going back more than six years, with apologies for disappointing me.
So what are the possibilities? First, am I poorly organised or a fantasist?
Not well organised, yes. But definitely not a fantasist. I clearly remember doing the research and then investing. More pertinently, I must have had documentation in May 2000 when I spent a day organising my finances.
Second, is the investment held in some IFA nominee account at Barings? Maybe, but Barings say they can't tell me which IFAs have nominee accounts, so I can't chase them. I must have used an IFA, and recollect a conversation where I had to insist several times that this was indeed a long-term investment and that I understood the risks, etc.
Third, have I been hacked? Has someone got my details and had a cheque sent to them? Or has someone intercepted my physical mail and somehow managed to cash a cheque?
The moral is clear: fail to track your investments at your peril. You need to have bits of paper (or at least direct email contact from the investment managers).
It's also a cautionary tale for the long-term investor. Many IFAs changed their back-office functions over the past 20 years. For investors who hold ISAs – typically long-term investments – it's easy to fall through the cracks. And moving house – I've had three addresses in 12 years – doesn't help.
The final moral is the most embarrassing. Yes, saving up for the long term is essential, as I used to state in these pages on a regular basis. But when it comes to administration, readers should do as I say, not do as I do.
Meanwhile, the search for the missing PEP continues…
Martin Baker still believes in long-term saving. He is co-author of a book on the subject with his (much better organised) wife, the fund manager and entrepreneur Nicola Horlick. "Bees and Honey – You and Your Money" is published by Endeavour Press.
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