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Discontent grows over with-profits

Discontent among with-profits policyholders over the performance of their investments is increasing, according to the annual survey by Managing Partners Limited.

Sixty-four per cent of investors questioned for the survey say they are unhappy with performance and 25 per cent say they intend to stop investing in with-profits.

The proportion of investors who said they were fairly happy with their policies has fallen to 30 per cent from 37 per cent in last year’s survey. Those who are not very happy rises from 33 to 36 per cent while those who are not at all happy rises from 24 to 28 per cent.

Managing director Jeremy Leach says volatile stockmarkets are making it difficult for with-profits to deliver decent returns. He says: “Investors are leaving with-profits in their droves, especially those who are seeing their endowments fall short of repaying mortgages. This does not mean investors have lost their appetite for the steady, predictable returns that with-profits once offered, it is just that with-profits has failed to deliver. It is no surprise that only 3 per cent of people with these products are very happy with their performance.”

Leach says investors should consider funds that invest in traded life policies which he believes can deliver predictable returns. He says: “Investors and their advisers need to find alternatives to with-profits. From our experience, a growing number are turning to funds investing in traded life policies.”

Hargreaves Lansdown head of pensions research Tom McPhail says with-profits is a diverse market and there is no one size fits all solution.

He says: “With-profits generally has become a toxic soup of misery. There are a few good funds available from providers like Prudential, LV= and Legal & General but there is a mismatch between consumer expectations and performance.”

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