A Buckinghamshire IFA has hit out at life offices for failing to give with-profits policyholders the opportunity to benefit from the upswing in the equity markets.
The Finance Clinic director Jonathan Grace believes that companies should have acted faster to reinvest in equities at the end of the downturn.
Grace considers that many with-profits funds have been left in fixed-interest-type investments because they are closed to new business and that the companies have abandoned their investors' assets.
He adds that life offices have been too slow to react to the upturn and have left policyholders' money languishing in bonds and other investments.
His concern is that investors are being charged to move their assets into areas that will not produce anything like the returns they were told they would get when they first invested.
Grace says: “This really is a case of misselling – putting investors into an area that they never intended to invest in. What customers are getting now is a fixed-interest fund at what could not have been a worse time. Customers are not being given the opportunity to ride out the market.”
Friends Provident's with-profits fund has a relatively high equity exposure at 70 per cent. Retail communications manager Jim Murdoch says: “Our investment strategy has not changed significantly in the past year and the firm is still waiting to see whether equities will become less volatile.”