I recently visited some clients to discuss options for constructing a broadly-based portfolio of investments for mediumto long-term growth but, eventually, for income. Their risk profiles ranged from two to nine on our notional scale of one to 10, so I thought it might be appropriate to consider a with-profits bond for some of the total amount to be invested.
It would also represent an opportunity for me to update myself on the current terms on offer and also to update our standard wordings on with-profits as an investment medium.
Eventually, I arrived at Norwich Union as a good choice for a modest investment of £5,000 and telephoned it for an illustration, emphasising that we wished to sacrifice a bit of the commission normally available to us, with a corresponding uplift for the investor.
I also requested quite specifically as much information as it could supply on current reversionary and terminal bonus levels, current market value reduction provisions and the long-term past performance history of its with-profits bond fund. All reasonable and fairly standard stuff to enable me to present a properly balanced picture to the clients.
We then had a rather lengthy conversation over whether or not the quote should be based on investment into the growth or income version of NU's with-profits fund. “Which is better,” I asked, “given that the clients do not actually require any income for the foreseeable future?” The woman at NU did not seem to know but eventually managed to establish from a colleague that income has to be taken by those who invest in the with-profits income fund. So the question was not remotely relevant to the illustration I was requesting.
And what turned up? Just two bog-standard quotes with no explanation as to why (apparently, there is a choice of two different charging structures), the commission sacrifice completely ignored and no supporting material on NU's current bonus rates, MVRs, past performance or anything much else apart from a ton of standard glossy brochures.
Now, I appreciate that we were all once new to any given job and that no one can know the answers to every question until they have acquired some experience but there is such a thing as training and, if this is NU's best attempt at encouraging IFAs to resume recommending it for with-profits bond business, it needs to ensure its front-line staff are considerably better equipped to handle incoming calls from hard-pressed IFAs from whom it is hoping to secure business.