National Mutual – Trustee Investment Bond,
Type: Unit linked bond.
Aim: For trustees of pension funds investing for growth.
Minimum investment: Monthly £200, single £10,000.
Fund links: Balanced managed, stockmarket managed, global equity managed, UK equity, UK equity tracker, UK equity select, european equity, european equity tracker, european equity select, north American equity, North American equity tracker, north American equity select, Japanese equity, Japanese equity select, Far East equity, Far East equity select, ethical, fixed interest, safetyfirst, index linked, deposit, property, 2000 retirement, managed, overseas equity.
Allocation rates: Monthly premium 100.4 - 103.9 per cent, single premium
100 - 102 per cent.
Charges: Initial 5 per cent, annual 0.36-1.2 per cent. £50 set up fee.
Switches: First switch free, thereafter £12.
Commission: Initial up to 5 per cent.
Tel: 01462 422 422.
Chris Jordan – Certified Financial Planner, Cavendish Financial Management
Martyn Green – Adviser, MBA Sterling (UK)
Stuart Barker – Financial Planning Manager, Hillier Hopkins
Robert Graham – Associate Partner, Scottish Financial Independent Group
Broker Ratings (ave. marks out of 10):-
Company's reputation: 7.0
Past performance: 5.3
Product literature: 6.8
National Mutual has introduced a trustee investment bond for trustees of
Looking at how well the fund fits into the market, the panel has mixed
feelings. Graham says: “It joins a large number of such bonds currently
available. Its ethical fund link may have special appeal.”
However, Barker has a difference of opinion: “With the complex interplay of charges associated with the plan, it does not hold itself out as being in any way special.”
Jordan adds: “There is a narrow range of direct competitors who have been draining National Mutual's existing Self Invested Personal Pensions and Small Self Administered Schemes,” while Green feels that the bond fits into the market well.
Moving on to the type of client the bond would be suitable for, the panel
feel that it is suitable for trustees of SIPPs and SSASs, but Jordan goes
further in his assessment: “Existing SSAS, SIPP and executive personal
pension schemes who wish to utilise the National Mutual range of insured
funds.” Barker is more specific: “Non-earmarked SSASs and SIPPs might find it useful.”
Turning to marketing opportunities provided by the bond, Graham and Barker are less than enthusiastic. Graham finds it: “Difficult to see any new
opportunities it will provide.” Barker also thinks that it will not open up
any opportunities that did not exist prior to the product's launch.
Jordan feels that it may present some narrow opportunities until the external fund managers are able to turn around a recent poor performance track record, as clients are not over keen on investing in National Mutual funds.
Green, in contrast, sees it as an opportunity, and calls it: “Good reason to
see existing and new corporate clients to review their current pension
Looking at the main useful features and strong points of the bond, Green
picks up on the choice of earmarked or non-earmarked investments, low charges, having an ethical fund and a minimum single premium of £10,000.
The list of advantages that Jordan cites include: “External fund managers,
wide range of passive funds, flexibility to stop and restart contributions
without penalty, full encashment available without penalty. Also the Trustee
Investment Bond is open-ended, it's minimum contributions start at low level of £10,000, and has reasonable annual management charges.”
Both Barker and Graham agree that the annual management charge is favourable, but Graham adds: “Service from National Mutual usually quite
good.” Barker also thinks the fund range is a strong point too.
The panel has a difference of opinion when it comes to the drawbacks of the bond. Graham says: “It seems to offer no special attractions.” Green points out a restriction on fund choice, as there is: “No with profits fund.”
Barker feels that the range of charges linked to the plan would confuse clients, as would the restrictions imposed by the product. Jordan focuses on
the poor past performance of the company's pension funds. He says: “Poor past performance of National Mutual pension funds. There are a wide range of investment opportunities outside of insured funds - trustees may ask
themselves - why bother with Trustee Investment Bond?”
There are varying opinions on the product's flexibility. Jordan enthusiastically says it's: “One of its best features - if not the best.” At the other end of the scale, Barker says: “Worse than bad, but not quite
Occupying the middle ground, Green feels: “Flexibility would be better if
unlimited holiday contributions could be taken.” Graham is more dismissive, saying it is only what you would expect.
On the subject of National Mutual's reputation, Graham thinks that it is good. Green says: “Although a small company, it has a good reputation as a specialist provider of pensions and a good reputation for providing quality
Barker observes different attitudes towards the company. He says: “Amongst the general public, I have yet to witness any name awareness at all. They have an excellent reputation amongst IFA's, although no-one seems clear about why this is.”
Jordan is also impressed by National Mutual's administration and service
record, and feels that it is still regarded as the pensions expert, although
poor past performance has detracted from this.
Continuing on that theme, the panel has mixed opinions when it comes to
past performance. Barker describes it as average, while Green sees the
potential for the trend to be reversed. Green says: “Past performance has
been rather poor, although there is some sub-contracting to external fund
managers which has led to a marked improvement.”
Graham takes the view that the company's performance is: “Good but not
exceptional”. Jordan thinks: “It's not good enough. We're still awaiting
the impact of the external fund managers.”
Turning to products that will provide the main competition, Green feels this
will come from other investment bonds.
However, Graham is more general and says: “Most of the major pension providers” will be in competition with National Mutual. Whereas Barker points to different areas: “Self-investment via unit and/or investment
Jordan thinks competition will come from two areas: “The major pension
providers who already have well established plans and a more consistent
performance record. Primarily other unit trust groups who have a better
past performance pedigree.”
Commenting on whether the charges are fair and reasonable, the majority of
the panel is in agreement. Jordan simply says yes, and that the company is
always competitive in this field particularly on annual management charges.
Graham thinks the charges are very good and Green says that National
Mutual's charging system is fair and simple.
Barker does not agree: “Five per cent bid/offer spread is no longer viable
and should be removed, as should the administration fee. A modest increase
of annual management charge to one per cent (with the abolition of other
charges) would be a satisfactory compensation.”
There is a mixed feeling regarding commission on this product. Jordan agrees that it is fair and reasonable, while Green describes it as: “average for the industry.”
Barker on the other hand is quite scathing: “Commission is never fair nor
The opinions on the product literature are positive. Green says: “Clear
concise and easy to understand.”
Jordan calls it: “Basic but effective”. Barker finds it an enjoyable read, but has an interesting view on the illustration: “It would be better if the
windsurfer were female, noting that most of the brochure's readers are
likely to be male.”
However, Graham is a little less enthusiastic: “Adequate but gives no idea
of any special advantage.”
In summary, Jordan says: “Performance is the key when there is a world of
investment funds to choose from within existing SSASs and SSIPs. Insurance company fund managers still trail behind specialist investment house competitors. Still awaiting improvements in performance from the external fund managers.”