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Pru plan aims to draw investors back into WP

The Prudential is preparing to launch a combination investment product aimed at attracting investors back to the ailing with-profits market.

The product, consisting of a deposit account with an enhanced interest rate for one year and its Prudence with-profits bond, will be aimed at “giving advisers the opportunity to unlock and regain management of clients&#39 funds that are currently held in bank or building society deposits”.

The new combination plan will be split 70 per cent in the with-profits bond immediately and 30 per cent into a Northern Rock deposit account. Pru is planning to launch it as an onshore product ready for new business on May 6 and is preparing an offshore version for release on May 23.

Although this attempt to ease investors into with-profits is claimed to be unique in the marketplace, IFAs who have previewed the product say it would be easy for them to replicate themselves.

IFAs can earn 3 per cent commission at a fixed rate of 3 per cent on the total investment amount but there is no commission flexibility.

Prudential investment & savings director Hugh McKee says: “The market&#39s appetite for lower-risk investment products has increased and the combination plan addresses the desire of customers to have access to a secure and easily accessible savings plan while still allowing them to experience the potential of growth and income offered by a with-profits-based product.”

Towry Law product res-earch manager Simon Farrant says: “In terms of its objective benefits, there is nothing wrong with it but a skilled IFA could recreate its effects by merely rebating some commission to enhance the interest rate on their client&#39s bank account, which is basically what this product does.”

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