Just before the GFC I wanted to start investing and I had come across Freeman Fox. I contacted them and I had a broker (financial planner/salesman?) assigned to me who recommended a JP Morgan Structured Product. These are capital protected, hence you get lent the capital it gets invested and you pay the interest.
The SP investments are arranged into an 'asset basket' (the growth you hope will give a return at the end) and a coupon basket (designed to give an annual return to help pay the yearly interest).
I ended up investing in 2 (ASX & Emerging Markets). Due to the way they 'capital protect' the GFC has caused them to be 'cash locked', essentially meaning they will not return a cent.
Now I can handle the 'growth' part not returning anything, but had not really planned on the interest part _never_ to return anything. I (wrongly) assumed that you may have a bad year (or two), but if the market had a good year you would get some sort of return. Not the case.
I am now locked into seeing 20% of my take home pay go down the drain every month. I am locked in for 4yrs and 7yrs. I haven't had a single cent returned ever as part of the 'interest coupon' and am sure the 'asset coupon' will not return any growth. I have been paying these things for 2 years and getting to the end of my rope. (To get out of them would cost upfront the same amount that the interest is over the next 2/5 years).
A friend of mine said I have a case to go to FOS (ombudsman) and/or ASIC as a) I obviously didnt have them explained properly and b) the amount recommened to be invested is way too much and c) the wrong risk category for me. He recommened I inform the broker that I intend to make a formal complaint so that we can come to some resolution which may help me.
Now in one way I feel that I signed up for it, I should be a man and take it on the chin. (I have had to sell my investment property to keep up with living expenses and have been selling other assets e.g. pool table etc). But on the other hand they are 'meant' to be professionals and I feel that I was 'sold' and the broker doesn't give a crap and is now happilly still making his commisions.
What do you think? Should I go to the effort of claiming that I was not dealt with professionally? Remember that if it was 'in the money' I wouldnt be complaining and the same 'strategy/product' bought a year later would be fine?
My main gripe is the interest coupon being cash locked. Like I said I can handle the growth investment being cash locked but didnt realise that the interest coupon also could be affected by one bad year and never make a return (I hadnt really budgeted for 0% return for the life of the investment).
Anyone else in these cash locked structured products?
All comments appreciated...