View more on these topics

Equity door slams shut on Standard

It is almost as if Standard Life&#39s with-profits fund is the worst kind of bandwagon-jumping, buy &#39em high and sell &#39em low naive investor.

The life office bet big on equities and lost as the market fell and continued south. In the last two years many life offices, including Standard, were forced sellers of equities.

The FSA then got embroiled in what were obviously bruising negotiations on new reporting requirements questioning Standard&#39s accounting practices, the extent of its guarantees and the practice of factoring in the benefits of mutuality.

And now? Standard&#39s with-profits fund holds around 35 per cent in equities, down from 59 per cent in December last year, according to independent consultant Ned Cazalet, losing millions of pounds of stockmarket gains in just the last few weeks.

Clients, including thousands who moved from Equitable Life on the reasonable recommendation of advisers, may face a future of below-par returns based on this asset allocation – unless bond markets turn 100 years of economic history on its head.

Clearly, the original decision to go big on equities against the grain of market opinion showed that Standard was far too arrogant. This trait was also displayed in arguments about financial strength with analyst Ned Cazalet and in the way it was caught out by regulatory reforms announced more than a year previously.

As for the FSA – many will ask whether it has compounded the insurer&#39s mistakes and cut off Standard&#39s only exit strategy – the stockmarket. Could it have allowed a transition period? Has its woeful performance over Equitable prompted a destructive bout of regulatory paranoia?

Standard Life is wounded but, for the sake of its investors and their advisers, let us hope it can recover.

Recommended

Pru reveals tough year in the UK market

The Prudential has announced a 27 per cent drop in group wide operating profit for 2003 at the same time as some UK with-profits policyholders see a drop in their regular bonuses. Annual bonus rates on its Prudence bond were announced last month to remain unchanged, but the insurer has now revealed that personal pensions […]

Digest

The Treasury and Inland Revenue could be accused of putting out fire with petrol in part of their latest attempt to address the savings ratio through the plan to make shareholders of the nation&#39s babes in arms – the Child Trust Fund. Any product provider wanting a piece of the CTF action has to accept […]

Standard enhanced fund range branded as Sigma

Standard Life is branding its new enhanced range of investment options for pensions and mutual funds as Sigma, with the strapline: “Investment choices that add up to more.” The Sigma range includes funds within a pension wrapper such as the Jupiter distribution fund at 1.5 per cent, Fidelity special situations at 2 per cent and […]

Four new members appointed to Consumer Panel

Four new members have been appointed to the Financial Services Consumer Panel. The FSA has appointed former Barclays Private Banking marketing director Robert Skinner, National Consumer Council Board member Stephen Locke and market researcher Adam Phillips who join from 1 March 2004 and Citizens Advice national head of money issues Nicolas Lord from 1 January […]

Craig Inches – thoughts on how to preserve capital and generate income in an inflationary environment

In this short video, Craig Inches, head of short rates and cash at Royal London Asset Management, offers his thoughts on how to preserve capital and generate income in an inflationary environment. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com