chris1200
Member of DD Central
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Post by chris1200 on May 4, 2020 14:49:40 GMT
It's not about stupidity to invest ever, it's about prudent risk allocation. There are so many scenarios that could cause this sort of liquidity issue. If anything, it was highly likely that some form of economic crisis would happen sooner or later that would cause such problems - this is what has always happened. So you should always invest anywhere (P2P or otherwise) with the knowledge that, were that to happen, you would be okay. Otherwise you should be de-risking into safer asset classes. Unfortunately, it seems that too many retail customers with little or no understanding of any of this have gone into an asset class (P2P) which is actually quite risky, particularly in term of having your money tied up even if you haven't "lost" it per se. If you have little or no understanding of something you relay on experts you trust, right? Your car needs new brakes, you know what brakes are but you have no understanding how to do it yourself. You go to your local garage which replaces them but do a sloppy job and you end in someone else's car because your brakes failed. Whose fault is it? Yours, trusting the "experts" or the garage for doing a sloppy job? Yes - you speak to a financial advisor. Who would tell you what I just told you.
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alender
Member of DD Central
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Post by alender on May 4, 2020 15:11:51 GMT
The problem with risk assessing AC we were not given 2 vital pieces of information, the way AC would make payments, a pool when I was expecting a queue or even pro rata (which I think is the fairest) and the amount of money promised in future tranches of loans especially as no one could have predicted future market conditions therefore risk. It looks like the pool/queue system will be address when the AA trading starts but the future tranches are a real issue in cash flow to lenders and to risk.
The other is is the LTV which is misleading as this either assumes the value at the start or the end of the project based on values when the loan was taken, so when loans goes into default the actual value is likely to be far less than then one used by AC. I guess if I had done a lot of research I could have found this out so perhaps my fault but I believe this should have been clearly highlighted by AC not deep in the T&Cs and other information on the website with no clear warning.
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dead-money
Rocket to the Moon
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Post by dead-money on May 4, 2020 15:21:17 GMT
It's about asset allocation, P2P and property investment is highly illiquid and shouldn't be a home for house deposits, school fees and other short term funds.
If someone self-certificated as a sophisticated or high-net worth investor and then puts all their short term cash in P2P then not alot of sympathy.
Anyone with more than 10% of their net financial worth in P2P has disregarded FCA guidance.
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alender
Member of DD Central
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Post by alender on May 4, 2020 16:11:06 GMT
It's about asset allocation, P2P and property investment is highly illiquid and shouldn't be a home for house deposits, school fees and other short term funds.
If someone self-certificated as a sophisticated or high-net worth investor and then puts all their short term cash in P2P then not alot of sympathy.
Anyone with more than 10% of their net financial worth in P2P has disregarded FCA guidance.
This is all true but no mater how sophisticated investor you are there was no information about going to a pool or the amount of future loan tranches that AC had made with AA holders funds and very little about the real LTV on the loans so it would have been good if AC gave us some indication of what these are worth for defaults as this is the only time these are relevant, after all are AC not meant to be experts in this area.
Just because you are so a called sophisticated investor (can pass a simple test) this does not make you an expert (I did not think FCA had an expectation it would) on every aspect of AC loans, there has to be a certain amount of trust. Even if you are an expert in every area where AC makes loans you still cannot know how much money AC has promised of AA holders funds, I had no idea it was so high it would swamp capital repayments and there was no mention of the magnitude of this risk anywhere I can find. Before I found this out I was not so concerned about the lock down but of course this only became apparent after the event.
Also I would have expected AC would have done some sort of stress testing and have some plans in place for a financial crisis which was bound to happen sooner or later, but these seem to be lacking.
After all we are retail investors no mater how sophisticated so how much are we expected to know about AC especially when they did not release vital information of the future commitments, given the devastating effect this is having this is something I believe should have given to potential lenders.
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gmitz
Posts: 71
Likes: 22
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Post by gmitz on May 4, 2020 16:13:32 GMT
If you have little or no understanding of something you relay on experts you trust, right? Your car needs new brakes, you know what brakes are but you have no understanding how to do it yourself. You go to your local garage which replaces them but do a sloppy job and you end in someone else's car because your brakes failed. Whose fault is it? Yours, trusting the "experts" or the garage for doing a sloppy job? Yes - you speak to a financial advisor. Who would tell you what I just told you. ….that AC a bunch of morons and if I invest my money with them I am a moron too?
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gmitz
Posts: 71
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Post by gmitz on May 4, 2020 16:40:28 GMT
It's about asset allocation, P2P and property investment is highly illiquid and shouldn't be a home for house deposits, school fees and other short term funds.
If someone self-certificated as a sophisticated or high-net worth investor and then puts all their short term cash in P2P then not alot of sympathy.
Anyone with more than 10% of their net financial worth in P2P has disregarded FCA guidance.
The Access Accounts were sold to us as relatively short term investments, especially the QAA. You tell me, in your understanding, how short is a short investment? Another question, tell me any kind of investment which is inherently liquid. Where else did you invest your other 90% if P2P is a gamble for you? In our case, it's not the investments that liquid or not, it's the provider that makes them so. Disclaimer: Don't follow my advices, I am just a plumber not a financial adviser.
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Post by Harland Kearney on May 4, 2020 17:12:03 GMT
It's about asset allocation, P2P and property investment is highly illiquid and shouldn't be a home for house deposits, school fees and other short term funds.
If someone self-certificated as a sophisticated or high-net worth investor and then puts all their short term cash in P2P then not alot of sympathy.
Anyone with more than 10% of their net financial worth in P2P has disregarded FCA guidance.
The Access Accounts were sold to us as relatively short term investments, especially the QAA. You tell me, in your understanding, how short is a short investment? Another question, tell me any kind of investment which is inherently liquid. Where else did you invest your other 90% if P2P is a gamble for you? In our case, it's not the investments that liquid or not, it's the provider that makes them so. Disclaimer: Don't follow my advices, I am a plumber not a financial adviser. The investment is the keyword, not fixed-term Bank Bond or any other type of derivative that guaranteed that kind of access. AC created a marketed product that attracted a large number of sheepish investors, holding money in the product that shouldn't of been anywhere near it. (no insult to investors, I can see why honestly, I myself have been doing this on and off for many years, I am over exposed to AC by a few % than I would like to be) It was very rosy for a great many years. In many ways RS also created this construct with their "access" account. Which is now appearing to be the slowest paying out account ironically, also the lowest paying interest on the largest risk. They provided liquidity in normal market conditions as advertised, we are no longer in those conditions. Not happy myself either about everything, but not many will be. That is just how it is. The SM is aimed to bring this investment in the current market conditions back to reality. Nothing more, nothing less. Personally I read RS board for many weeks somewhat envy, but now I feel almost happy that AC are making a SM so we can exit if need be and when we want to. Albiet a price, or as it seems currently RS investors are trapped in for as long as AC now, with a even lower interest rate than us for the foreseeble future of this year. Ironic from some of the chanting of praise on this board just 10 days ago about them. When normal conditions reappear, who knows what will happen. I think AC will take a new strategy; if they make AA's into another GBBA wind down that will be extensively damaging to AC for almost ever in my opinion. The GBBA 1 & 2 should never have happened.
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Post by closetotheedge on May 6, 2020 14:23:16 GMT
Anybody still looking to sell at a huge discount now in light of the positive news about CBILS?
I think there may be a few bargains to be had in the first few hours of trading when the facility goes live.
Separate point, much discussion had been about how much is queued to exit. I have always been in the 90 day account since it opened and have always had it queued to exit just to keep my options open. Not with the intention of exiting rather to keep my notice to below the 90 days at any time.
The level of communication and seemingly honest comments from AC has kept me overall positive about the management of the platform and that whilst the situation is fair from okay I believe they are handling it far better than other platforms and will emerge a stronger more respected company.
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savernake
Member of DD Central
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Post by savernake on May 6, 2020 14:39:39 GMT
I'm also feeling a lot more confident in AC following today's announcement. I'm now considering cancelling a chunk of my withdrawal request and re-investing instead when the secondary market opens. If there are going to be double-digit discounts on offer I am willing to buy as I consider the risk of platform failure is now lower than it was a few weeks ago.
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Post by jjogia on May 6, 2020 15:58:26 GMT
Alas my selling discount will reduce now to around 5% after the news on CBILS approval. Still need the money fairly urgently, otherwise would just hold on at this point.
I hope this good news quietens some of the whingers for a while - great job by the Assetz team who have undoubtedly worked tirelessly behind the scenes to give the platform every chance of survival.
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ceejay
Posts: 975
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Post by ceejay on May 8, 2020 9:59:02 GMT
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