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Laying down WP challenge

Open letter to Equitable chairman Vanni Treves

I have had forwarded to me a copy of the Equitable Life policyholder circular dated February 8. As you can imagine, I am somewhat disappointed by the negative view you have taken of some IFAs&#39 activities and while I cannot speak for the IFA community as a whole, I believe that Torquil Clark is more than able to match the investment proposition that Equitable Life is now putting before its policyholders.

We see an Equitable Life with-profits fund which suffers from the following problems:

By comparison with the rest of the market, you have a very low equity content. As you point out, this has delivered good returns over the last 12 months, but is unlikely to be market-beating investment strategy in the long term.

You have minimal reserves, so any future falls in investment values will lead to more problems in maintaining policy values.

The fund will suffer from a negative cash flow. It is very hard to deliver good investment returns when you are constantly having to sell investments to meet policy redemptions.

You are likely to see a pile of contractual surrenders going through as soon as the uplifts are granted and none of them will be subject to the MVA.

There also remains the possibility of further legal action from groups such as the Late Joiners Action Group.

By comparison, we would like to point out that we can offer investors the choice of transferring into a stakeholder plan if they choose. This means that they will enjoy A maximum annual charge of 1 per cent, no initial charge, a choice of with-profits, if appropriate, trans-parency and simplicity and the reassurance of receiving independent financial advice rather than the blinkered one-size-fits-all approach of Equitable&#39s own salespeople.

So we would like to see if Equitable&#39s with-profits fund can actually deliver. We would like to challenge you to match a pension investment in your with-profits fund with a comparable investment recommended by Torquil Clark. Are you prepared to take up this challenge?

Tom McPhail

Research & media relations,

Torquil Clark,



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