JPMORGAN FLEMING ASSET MANAGEMENT
INVESTMENT TRUST PERSONAL PENSION ACCOUNT
Type: Individual personal pension.
Minimum premium: Lump sum £1,000, monthly £100.
Minimum-maximum ages: From birth-74.
Fund links: Cash fund, Fleming managed growth, Fleming claverhouse and Fleming overseas.
Allocation rates: 100 per cent.
Minimum term: One month.
Options: Income drawdown.
Commission: Initial up to 3 per cent, fund based 0.5 per cent.
Tel: 0800 413176.
Margot French, Senior financial planning consultant, F S C. Financial Services,
Bob Lawrence, Director, Duncan Clark IFA,
Alex Benson, Associate, J M Taylor & Associates,
Keith Jarman, Director, Hughes Carne IFA,
Investment options 5.0
Company's reputation 5.7
Past performance 5.7
Product literature 5.7
JP Morgan Fleming Asset Management's investment trust pension account is an individual personal pension that provides investors with access to three of the company's investment trusts and a cash fund.
Looking at how the pension fits into the market, the panel are positive. Jarman says: “It is a useful addition to the range of low charge products.”
Benson says: “It fits very well, especially with the delay in individual pension accounts being launched. A hybrid plan like this from an established fund manager could be the first of many.”
French says: “It is ideal for longer term pension saving. The lower costs fit in well with the new environment. It is an exciting and flexible alternative to traditional plans.”
Lawrence says: “It fits very well. It is a low-charged product in its field for the more sophisticated and more aware client in investment trusts.”
Identifying the type of clients the plan would suit, the panel hold similar views. French says: “Younger clients that are not risk averse, non-working younger spouses, high net worth clients and it could also be a pension for children.”
Jarman says” It is for high net worth individuals who are financially aware and sophisticated. It could also suit those who are not interested in peripheral benefits such as waiver of premium.”
Benson says: “More sophisticated investors or self-employed making one-off or annual contributions.”
Lawrence says: “More sophisticated and experienced investors who are will to take a higher than normal degree of risk.”
Moving onto the marketing opportunities the pension could possible provide, Benson says: “It is something different to talk to clients about especially those who have had experience of investment trusts.”
Jarman says: “The target market is high net worth individuals, high earners and the spouses or children of these clients.”
Lawrence says: “It is targeting experienced investors looking for a pension plan. It could suit a marketing campaign for grandchildren.” French sees it as a niche product.
Pointing out the main useful features and strong points of the plan, Lawrence says: “It invests in investment trusts which in general have achieved better performance than unit trusts and managed funds. It has low charges for this type of plan if commission is not an issue.”
Benson says: “They are the same as any other pension plan but with a different underlying investment.” Jarman and French highlight the low charging structure.
Airing their views on the range of investment options, the panel find a common theme. Benson says: “The investment choice is limited. It would have been good to see a few other investment options.”
Lawrence says: “There are only four choices which is restrictive.”
Jarman says: “There is a limited choice and it is poor on options for consolidating capital gains.”
French says: “It is narrow. You could question that the same fund manager overseas two of the funds.”
Looking at the product literature, Lawrence says: “It is adequate but not exciting.” French thinks it is good, presentable and written in plain English. Benson says: “It is fairly good. It is easy to understand and to follow.”
Discussing the flexibility of the plan, Jarman says: “It is okay but I am not excited by it. It is nothing new.” Benson says: “There is not much to say - it is a personal pension. The minimum premium could be lower to allow greater flexibility.”
French says: “I am concerned about the weekly dealing and there is no apparent commitment to the best execution.” Lawrence says: “It is reasonable. There are no charges for increasing, reducing or making additional contributions. But the investment options are fairly restrictive.”
Turning to the plan's negative features, French says: “JP Morgan Fleming is not yet a household name. Clients need educating on the use of investment trusts. There is a narrow choice of funds and there could be currency fluctuations. The funds available seem to be towards high risk in the risk scale.”
Lawrence says: “It is not stakeholder compliant or stakeholder friendly. It will not accept rebates for contracting out and there are high charges of 0.80 per cent for switching between funds. There is no direct commission payable.”
Jarman says: “The investment choice is limited and there is no protected rights facility.” Benson points to the limited investment choice, the high minimum premium and feels the company is not a well known name in this market.”
Considering the company's reputation, Benson says: “It is an old and traditional company. It is good in some sectors but no so good in others with regards to past performance.”
Lawrence thinks that JP Morgan Fleming is reasonably good and he feels that the trustees - Personal Pension Management (PPM) are average. However, he thinks that the reference to PPM's parent company, Winterthur Life and its merger with the Credit Suisse Group will confuse clients.
Jarman says: “It is okay, it is a good investment house with no black marks. But it is not a household name which means it is less of a comfort zone for the average client.” French thinks its reputation is okay.
Assessing the company's past performance record, the panel are split. Jarman says: “It is okay. Good.” Lawrence feels it is: “Reasonable, but not fantastic.”
Benson reiterates his previous view that it is good in some sectors and not in others.
French takes up Lawrence's theme that the reference to more than one company in the product literature is confusing. She says: “Mergers and acquisitions make past performance a difficult issue to comment upon.”
Looking at the competition the plan is likely to face, Jarman says: “Nearly all stakeholder plans.” Lawrence suggests unit trust based personal pension plans and individual pensions accounts.
Benson says: “Any company that launches an individual pension account in the future and possibly Skandia.”
French says: “I can see no competition, but I have a feeling that as a trend setter, JP Morgan Fleming could have done better.”
Discussing the lack of initial and annual management ocharges, the majority of the panel think along similar lines. Lawrence says: “It is very fair for the type of plan on offer but the cost of advice is in addition.”
Benson thinks it is fair in comparison to similar style pensions but not in comparison to stakeholder and stakeholder friendly pensions.
French takes issue with the charges. She says: ” The reduction in yield does not appear to take into account any IFA commission and is high on the managed fund option. I would have liked to have seen an illustration of the effect of charges on the investment.”
Turning their attention to commission, the Lawrence sums up the situation. He says: “It has to be agreed with the client and is costed as an additional charge.”
French thinks this is fair and adds that her primary concern is giving the best advice to clients. Lawrence concludes by saying the plan will find a market for more sophisticated and experienced investors who are willing to pay a fee for advice.
French adds: “I am concerned about the level of administration service by Personal Pension Management, which is part of Winterthur Life.”