Aegon opts for guarantee trio
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Aegon - Investment Control Bond - Secure Income Option
Type: Guarantee option on unit-linked bond
Minimum investment: Lump sum £5,000
Minimum-maximum ages: 18 to 74
Fund links: 58 internal and external funds including four core portfolios and four multi-manager funds
Guarantees: 5% income for up to 20 years, locked in growth at each anniversary, guaranteed death benefit
Allocation rates: 100-104%
Options: Phased investment
Charges: Annual 0.25-1.2% for guarantee depending on funds chosen, fund management charges annual 0.5-2.05% depending on funds chosen, annual 0.5 per cent for bond wrapper plus menu-based charges to cover cost of IFA commission and enhanced allocation rates
Commission: Menu-based initial up to 7%, renewal up to 1%
Tel: 08456 100010
Aegon has added a guaranteed income option to the investment control bond it launched last year.
Informed Choice managing director Martin Bamford says: “This product appears to offer three main benefits; the ability to receive a known level of withdrawals even if the money runs out, receiving back certain levels of ‘locked-in’ capital growth at the end of the term and potentially an enhanced death benefit. It could appeal to investors who are concerned about poor investment returns or market conditions having a detrimental impact on their ability to receive income’ from their investments. “
Considering the less appealing aspects of the product Bamford says: “Some of the benefits are not as attractive as the headlines suggest. For example, growth is only ‘locked-in’ on each anniversary of the policy, which reduces the chance that the highest value during the year will be recorded on that particular date. This rule also applies to paying the highest recorded fund value in the event of death, as it is only the highest recorded fund value on a policy anniversary.” Bamford adds that the charges for the guarantees are expensive, particularly for higher levels of equity exposure.
Bamford says this product is unique, as there are no direct competitors providing the same three guarantees as those offered by this product.
He says: “Advisers will want assurances from Aegon that it is committed to providing these guarantees over the longer term. Investors will be best advised to invest in a suitably diversified range of asset classes, to manage risk properly, and avoid the additional costs associated with the guarantees.”
BROKER RATINGS
Suitability to market: Poor
Flexibility: Average
Charges: Poor
Adviser remuneration: Average
Overall 4/10
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Readers' comments (1)
Phil Green | 20 Aug 2010 8:02 pm
Yet again Mr Bamford fails to get the point and makes technically inaccurate statements, his role as an analyser obviously is a replacement to his role as an IFA. Statements such as there are no direct competitors is incorrect as Metlife has a superior offering and have had the contract for some time. Also his fixation of charges over value and to be fair most clients will pay the 'additional cost' once the benefits are explained and value for money justified. Before commenting I would suggest he does his research to prevent inaccurate analysis of products.
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