It seems the Pru is trying to tempt investors out of cash and back into with-profits-style investments with the launch of the PruFund investment plan.
Now, I respect Pru as a financial institution. Indeed, it is one of the few with a good level of financial strength behind it. But on this occasion, I must question its sense of timing and lack of sensitivity to existing clients.
The plan looks a good offering – 5 per cent expected growth rate, a smoothing formula to reduce volatility, transparency and no market value reductions. But there are a few things I must question.
First, Pru labels the product: “A plan aimed at revitalising the lump-sum, long-term savings market.” Is this a crusade to turn investors' £s into ££££s or a cynical ploy to lure them into a product that may not be suitable, with high back-end charges?
Second, it boasts: “Say goodbye to MVRs, annual and final bonuses.” A wonderful marketing ploy to attract new investors or an almighty kick in the teeth to existing ones?
Third, it says: “Our aim is to reheat investors' cold feet.” Or should this be a warning that investors should not get their fingers burnt?
The Pru makes a very bold statement in its literature that investors hold £107bn excess cash on deposit and says: “We want to give lump sums the potential to earn a decent return rather than sit on deposit.” But many people hold money on deposit for very good reasons, for example, emergency funds or to pay for a deposit on a house. Or maybe the investor in question has an extremely low-risk profile and, hence, a high allocation to cash.
Matthew Woodbridge is bond & VCT manager at Chelsea Financial Services