View more on these topics

Free-range finances

I have a great deal of my financial wealth with an insurance company, consisting of an investment bond, unit trusts and an Isa, as well as close to £100,000 of my pension fund. However, I am becoming increasingly concerned about the performance of this company. Can I trust it when it tells me that I should take the long view and that my investments are safe with it?

Insurance companies are having to change with the times. The independent advice sector has come to dominate the distribution of retail financial products, including investment bonds, unit trusts, Isas and pension plans, for very good reasons. Included in these reasons is access to the whole market.

Some insurance companies offer access to a limited range of external fund managers through their investment products although they often try to claim that their limited range is somehow sufficient or better than being able to access the whole market.

A second factor is that many IFAs are now offering independent advice which is separate from the actual financial product. There is a growing demand for this impartial advice and also a growing acceptance that it has to be paid for. Almost every financial journalist or commentator believes that to get impartial, competent advice, you need to pay for it separately from any commission generated by a financial product.

Indeed, the FSA has also recognised this, proposing a separation of advice from sales. There is a strong desire for the intermediary and consumer to determine the price to be paid for advice and implementation without influence from the product manufacturer.

Of course, your current provider may be perfectly satisfactory. It may well argue that it provides you with advice but that is not really why it exists. It exists to sell you financial products. It bundles in an element of advice but that is a small part of the process.

Its advice is about the suitability, given your circumstances, of the products that it wants to sell you. This is evidenced by the way its “advisers” are paid. They are only paid if you buy a product from them. Few, if any, charge for the “advice” if you do not buy a product.

In other words, you can distinguish advisers from salespeople simply by asking: “Do you get paid if I do not buy a financial product?” If the answer is no, they are not advisers, they are salespeople.

You may want to employ an adviser to review your portfolio. It may well be that you do not need to make any changes to it. On the other hand, they may well be able to recommend changes that are in your financial interest.

You point out that you have a great deal of your financial wealth tied up with this insurance company. It is questionable if that is good practice. The financial services sector is a dynamic, frequently changing environment and you may well be missing out on more competitive and more suitable plans if your selected provider does not move with the times.

You are concerned with the performance of this company. By this, I assume you mean the performance of the investment funds rather than the firm itself. Your products and investment funds should reflect your attitude towards investment risk, reward and volatility and should match your financial planning goals and objectives.

You may wish to ask the company for a statement as to how your financial products match up to those factors. This does not have to be in the form of a complaint. You are initially seeking information and it might make sense to get a response from the insurance company before you discuss your requirements with an independent adviser.

A wholly independent, impartial adviser will approach your requirements without an inbuilt bias to convince you to transfer your assets away from the insurance company but to ensure that what you have got and what you might do with it is suitable.

Nick Bamford is managing director of Informed Choice


Barclays selects commodities

Barclays Wealth has brought out the second issue of the commodities select plan, a capital-protected bond linked to a weighted basket of commodities.

Why your clients need some tough love

In any relationship that matters, professional or personal, you should be upfront with someone if you think they’re making a decision or doing something they might later regret. Being honest with someone and having their best interests at heart, however hard the message, is key to building trust in any relationship. So how does this […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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