Market value reductions are the biggest barrier to clients who are considering transferring away from with-profits, according to a survey by Skandia.
Results revealed that 68 per cent of the financial advisers questioned said that MVRs are the biggest barrier to clients who want to transfer to other investments and 28 per cent of clients lack understanding of other options available to them.
Skandia warns advisers need to take action to help clients understand the true impact of an MVR.
Skandia head of pensions marketing Nick Bladen says the need for a review of with-profits policies remains paramount and that it presents a huge opportunity for clients and advisers.
He says: “Clients may be overwhelmed by confusing literature on with-profits policies, so there is a real need for expert guidance. The decision to move should never be taken lightly; advisers need to look in depth at the policy and what other options exist, and relate theses to the individual client’s investment objective, timescale and attitude to risk in order to decide whether or not to move.
“Although MVRs are clearly feared by many clients, in reality they are just one part of the puzzle. The role of advice is crucial to help the client assess just how much they impact on the bigger picture and whether the potential gains of moving their money will outweigh any short-term pain.”