View more on these topics

Pru fears over diversification

‘Baby thrown out with bathwater as with-profits reduced’

Prudential managing director (retail life and pensions) Gary Shaughnessy says the reduction of the with-profits market means investors are not getting sufficient diversification in their portfolios.

Speaking at The Savings Market conference in London last week, Shaughnessy said money which would have been invested in with-profits is now going into cash, target return funds and single asset class funds and consumers do not always understand the volatility of investing in these funds.

He said investors have a herd-like mentality, which has seen money pour into prop-erty funds rather than being spread around the various asset classes. According to the IMA, property has been the best-selling fund sector for the past nine months.

Shaughnessy predicts that there will be future growth in the with-profits annuity market and talked about the possibilities of reinventing with-profits products to boost the market’s reputation.

Earlier this month, actuary AKG said the with-profits market is fatally wounded and that advisers will struggle to sell the product.

Communications director Guy Vanner said: “It is so difficult for advisers to sell with-profits because it has such a bad name. Even if the market improves, it is so tainted that people do not want to recommend it. It has not got the ability to come back or ever be like it was.”

But these claims were rejec-ted by Norwich Union and Pru, with Pru saying with-profits bond sales have risen by 29 per cent in the first nine months of the year.

Shaughnessy said: “The reduction of with-profits market means we have seen the baby thrown out with the bath-water. Does the consumer understand the volatility that goes alongside them putting their money into single asset class funds, cash or target return funds?”

Recommended

Standard tops 2005 total in three quarters

Standard Life says strong sales of its Sipp and investment bonds has led to UK life and pension sales in the first nine months of this year exceeding the total volume of sales in 2005.Life and pension business was up by 35 per cent from 684m last year to 921m in the first nine months […]

Capita buys Synaptic Systems

Capita has bought Synaptic Systems in a bid to further extend its reach into research information and software. The deal, for an undisclosed sum, was announced today and is thought to be an ideal fit with Capita’s Enabler initiative, incorporating Webline and Quay Software. Synaptic Systems are currently used by 10,000 IFAs and many product […]

Sales surge for TMB

The Mortgage Business has revealed a dramatic increase in business in the 14 months since it lost its entire senior management team.It has seen applications rise by 90 per cent in the year to October compared with the previous 12 months and the value of those applications has rocketed from 2.5bn to 4.5bn.Completions have jumped […]

Second land fund from Cordea Savills

Cordea Savills, the fund management arm of the Savills property services group is looking to raise £50 for a second serviced land fund.
Like the original fund launched last year, the serviced land fund 2 will trade in land and is available as a limited partnership and exempt unit trust for Sipp and SSAS investors.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com