How Bad Financial Advice Nearly Cost My Clients £50,000 — And What You Should Ask Before You Invest

A true story of how a couple nearly lost their life savings — and how you can avoid the same trap.

We rarely think twice when we hand over our life savings to a trusted adviser. But I want to share a real case, one where a couple nearly lost everything. My aim isn’t to scare you, but to make sure you’re asking the right questions.

The couple, clients of mine, had received an inheritance and had been saving hard. They were living in employer-funded temporary accommodation while working a short-term contract, which meant no rent and a rare window to build up a deposit. It was going to be their first step onto the property ladder when the contract ended.

At the same time, they struck up a friendship with someone local, an independent financial adviser (IFA). After a couple of friendly chats, they agreed to a formal meeting.

They explained they’d saved around £50,000, including the inheritance. They didn’t want it sitting idle in a bank account earning next to nothing (this was 2022, before interest rates rose). But they were crystal clear: this was the only windfall they were ever likely to receive, and they couldn’t afford to take risks. Capital preservation was everything.

So, the IFA produced what’s called a KYC report - Know Your Customer. This isn’t just box-ticking, it’s a regulated risk assessment required by the FCA. Every firm providing investment advice is expected to complete it to determine what kind of products a client should and shouldn’t be offered.

I’ve seen that report. It’s well-branded, detailed, and formally identifies them as “defensively cautious” — very low risk. The IFA worked for a recognisable investment firm. The advice looked legitimate. Everything about the process said: “Trust me.”

Then came the recommendation: a property bond offering a 15% annual return. It was described as “asset-backed” with a corporate trustee to secure the funds. A two-year lock-in, with the option to roll over.

Now, let’s just pause there.

You do not get 15% returns on low-risk products. It doesn’t happen. Even the Vanguard FTSE All-World ETF, which is a household name among investors and holds over 3,500 stocks globally, is considered medium to high risk — and it’s historically delivered around 9% per year. And even that can fluctuate sharply when global markets wobble — say, every time a US president says the word “tariff”.

The question is: how did this slip through the net?

Because here’s what really happened. The adviser knew his firm didn’t offer anything that matched the client’s risk appetite and their hunger for high returns. So he went outside the firm’s regulated investment universe and found something “off book.” A London-based property outfit. No FCA protection. No FSCS coverage. But a big shiny number.

And then he dressed it up under the umbrella of professional advice and used the firm’s branding to deliver it.

It sounded legitimate until you looked closer. The clients were told to transfer funds directly to the bond issuer, not to the IFA’s firm. That bypassed FCA regulation and FSCS protection entirely. It’s a critical detail most people miss but it’s where everything starts to unravel.

You might be wondering: if it was so risky, why didn’t the client realise sooner?

That’s the trick with these investments: they often pay out in the early years. In this case, the couple received their interest payments on time, year after year. It lulled them into a false sense of security.

But fast forward to 2025. They found a house, issued a redemption request to withdraw their capital, and nothing. No payment. No communication. That’s when I got the call.

“Help. I think we’ve lost our life savings.”

What followed was a frantic week of discovery. The product wasn’t regulated. To be fair, their website did say it was a product for sophisticated investors. The directors of the issuing company were under investigation, and the police had issued a statement. The adviser had blurred the line between professional advice and personal recommendation. And the clients were left holding the risk.

In the end, after a lot of correspondence, pressure, and negotiation, the funds were recovered. But it came far too close. And most people in this situation aren’t so lucky.

So what are the lessons?

Five Lessons Every Investor Should Learn

1. A logo doesn’t make it legitimate
Just because an adviser hands you a neatly branded report, complete with charts and a risk profile, doesn’t mean you’re formally under their firm's umbrella.
In fact, in this case, that’s exactly what created the false sense of safety. The client assumed they were getting regulated advice from a reputable firm. What they got was an off-book recommendation dressed up to look official.

✅ Before you trust the paperwork, ask:

• Is this product part of your firm’s regulated offering?
  
• Am I a client of your firm, or just of you personally?
  
• If this goes wrong, is your firm on the hook — or just me?
  

2. “Asset-backed” isn’t a get-out-of-jail-free card
The product in this case talked about being backed by land and property, with fixed returns and a trustee. Sounds safe, right?
But “asset-backed” doesn’t mean low-risk, especially if it’s unregulated. If a company goes under, the paperwork won’t stop the value of the land falling through the floor.

✅ Ask before investing:

• Is this regulated by the FCA?
• Is it covered by the FSCS?
• What happens if the issuer defaults?

3. Good advisers welcome scrutiny
A proper adviser won’t flinch if you ask about regulation, liability, or second opinions.
If they say “this is what I invest in myself,” or wave off questions with “don’t worry, I’ve done the research,” press pause. That’s not reassurance, that’s deflection.

✅ A good adviser encourages questions. A great one invites challenge.

4. Trust the process, not just the person
This case involved a friendly, familiar adviser, someone who felt safe. But when it all came crashing down, it turned out the process wasn’t there.
You wouldn’t sign a property contract without a solicitor. Don’t invest a life-changing sum without understanding who’s accountable.

✅ Real trust in finance = regulated advice + documented process + insurance cover.

5. The best time to ask awkward questions is before the money leaves
Once you’ve transferred your funds, your leverage is gone. Don’t feel bad for asking tough questions up front — it’s how good decisions are made.
A trustworthy adviser won’t just tolerate your scepticism; they’ll earn your confidence by addressing it. 

✅ Always ensure your money is transferred to the investment firm’s own bank account, not a third party. That’s where the FCA regulation and insurance protections apply. In this case, my clients went wrong by paying the money directly to the investment fund, bypassing those safeguards entirely.

If you're unsure whether advice is being given properly or whether your capital is protected, ask. And if it doesn’t feel right, don’t do it.

This case ended well, but only because we acted early, stayed calm, and pushed exactly where it mattered.

If you’re ever in doubt, ask someone who knows how to unpick these situations before they become irreversible.