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IFAs forecast the end of the line for Tep sector…

The death of the Tep market is nigh, according to some of the UK&#39s biggest IFAs, who no longer recommend the products as investment vehicles.

Some have compared estimates on policies with a “game of poker,” with only life office actuaries having any idea as to their real value.

Firms such as Towry Law will not recommend Teps because of the financial headache of plummeting bonus rates and the difficulties of accurately assessing the value of policies.

Falcon Group regional director Chris Wheatley says he has stopped giving advice on Teps and predicts that market-makers will have to merge to survive.

Although the majority of endowment policies have a 10 to 12-year shelf-life, IFAs such as Aurora Financial group director Barry Duffield thinks the whole market will fold more quickly. He says: “I can see the market fizzling out completely.”

Inter-Alliance head of corporate communications Charles Ansdell is less convinced, saying although he thinks the Tep market will inevitably come to an end, while there is still demand for products, the market-makers will not go out of business.

Towry Law product research manager Simon Farrant says: “Clients have lost faith in the products. Valuing them is like playing a poker game. The actuary from the life office is the only one who really has any idea of the growth a policy will generate.”

Wheatley says: “In the last six months there has been a fundamental change in the market – it has clearly reached saturation point.”

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