View more on these topics

Isa in a basket

The Skandia protected multi-manager plan is a capital-protected mini or maxi Isa linked to a basket of four funds – Schroder UK mid 250, Fidelity special situations, Invesco Perpetual corporate bond and Norwich property trust.

Investors will get 100 per cent of the average growth in these funds if they choose 100 per cent capital protection. Alternatively, they can protect 80 per cent of their capital to get 200 per cent of the average growth in the funds.

Looking at how the Isa fits into the market, Palmer says: “Protected Isas are becoming more popular. This Isa provides two options – 100 per cent protected and 80 per cent protected. This fits the market well, giving people a choice of risk.”

Cowell says: “It fits into the market on a me-too basis, trying desperately to put some life into the Isa season. It is a halfway house between pure asset-based exposure and pure guarantee.”

Moorfield says: “It is nothing new. It would suit a client who wants exposure to the upside of equities and protection on the downside.”

Looking at the type of client that the Isa could suit, Cowell says: “Someone who thinks Isas may be a good idea but hasn&#39t a clue why.” Moorfield suggests risk-averse clients.

Palmer says: “Medium-risk clients. For those who want a secure fund and also those who are prepared to take a greater risk in hoping for greater returns.”

Examining the potential marketing opportunities for the product, Moorfield thinks there are none because people are currently put off Isas.

Cowell says: “It may be attractive to investors seeking some asset value growth, but also wanting some downside protection.”

Palmer thinks it could be marketed as an alternative fund for investors who want exposure to the stockmarket but who would lso like protection.

Turning to the positive features of the Isa, Palmer says: “The literature is simple to read and easy for the client to understand. The funds which have been chosen are strong performers.”

Moorfield says: “The fund links are very good and so is the capital protection.”

However, Cowell is very critical and thinks that the Isa has no apparent useful features or strong points.

On the matters of the Isa&#39s investment strategy and investment options, Cowell says: “There are no alternatives so no investment options are available. The investment strategy appears to be diversification through different asset classes in equities, bonds and property. But does anyone think there is really much growth left in bonds or commercial property?” Palmer says: “There is a good, adequate spread of funds using different sectors of investment. Again, this is easily read and understood by clients within the literature.”

Moorfield says: “It is fine. The funds are sound and the client could expect some growth with a capital guarantee.”

Turning to the Isa&#39s disadvantages, Cowell mentions the fixed term of six years and three months, the lack of choice in relation to the investment funds, the lack of an income facility, restricted early encashment and the fact that transfers are only permitted in cash.

Moorfield says: “It is possible that there could be no return on option one and that investors in option two could get less than they invested. There is no scope for fund switching and it has a fixed term.”

Palmer says: “The term of six years and three months is a drawback, as clients tend to look for five years.”

Discussing Skandia&#39s reputation, Moorfield says it is excellent. Cowell says: “It is very good. Skandia is usually in the vanguard of innovation.”

Palmer says: “It was good until three years ago when all investment houses suffered from the stockmarket falls. It is in a good position to move forward when the stockmarket recovers.” He thinks its back-up service is excellent.

Assessing Skandia&#39s past performance, Palmer says: “It has produced and marketed good products in the past and its past performance has been good.”

Moorfield regards Skandia&#39s track record as fine but Cowell believes it is not relevant because Skandia does not normally manage funds. He says the com-pany prefers to delegate fund management to specialist investment houses.

Considering the potential competition for the Isa, Cowell says: “There is a plethora of offers for the unsuspecting punter.” Palmer cites Prudential and HSBC while Moorfield is unsure.

Evaluating the charges, Cowell points out they are implicit and based on the workings of preference shares, making it difficult to judge whether they are reasonable. However, he assumes they are fairly high because the prospectus does not include these details. Palmer feels the £100 charge for transferring to another company seems expensive.

Turning to commission, Cowell thinks the 3 per cent initial commission is industry-standard but complains about the lack of renewal commission. Moorfield and Palmer regard the commission as reasonable.

Casting an eye over the product literature, the panel are positive on the whole. Moorfield thinks it is fine while Palmer says: “It is good, informative and easy to read.”

Cowell is less enthusiastic. He says: “It is fairly low-key with bags of small print.”

Summing up Cowell says: “The Isa&#39s term of six years and three months is a long time in investment terms, especially without the flexibility to change funds.”

Richard Moorfield, partner, James Trickett & Son,David Palmer, IFA, Morgan & Stewart Life& Pensions,David Cowell, investment manager, Andrews Gwynne & Associates


The acid test for tax simplification

Now the initial consultation phase (Simplifying the Taxation of Pensions: Increasing Choice and Flexibility for All) is over, it will be interesting to see if simplification is actually achieved. There is one simple acid test for this. There are numerous practice notes for pensions, primarily they are: •Personal Pension Scheme Guidance Notes IR 76•Occupational Pension […]

OFT urged to see &#39monopolistic nature&#39 of market

The LIA and Aifa are urging the Office of Fair Trading to recognise the “monopolistic nature” of the IFA professional indemnity market and take action to address these competition concerns. The trade bodies say it is essential as part of its review of employer liability insurance that the OFT considers the crisis in the IFA […]


When gauging the question if investor sentiment has changed forever, I received a short-term answer when I attended a Budget presentation lunch event last week. Those of us around the table introduced ourselves and one executive blurted out “I hope you are not going to sell me a pension” to laughter. I was hardly going […]

Kenmir claims PI crisis will force out &#39bad IFAs&#39

The professional indemnity crisis will force “bad IFAs” to fold because they cannot get cover, making it easier for “good IFAs” to find affordable cover, according to FSA head of investment firms David Kenmir. He says in some ways this is a good thing because it will leave a stronger IFA sector which will increase […]

Planning now for the residence nil-rate band

Graeme Robb, senior technical manager at Prudential, writes about the residence nil-rate band and the advice opportunities it presents for you when tax year-end planning with your clients. On our Planning Matters hub, we considered a widow, Margaret, and a married couple, John and Anne, for whom the residence nil-rate band (RNRB) is influencing planning […]


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