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Rockingham in Rita risk row

Advisers have raised concerns that Rockingham Retirement has understated the risks of traded life settlements in its Sipp marketing literature.

Rockingham’s Rita product is structured as a Sipp with a 10-year fixed term investing in a UK-based cash deposit account, Prudential’s with-profits trustee investment plan and life settlement fund paying fixed interest, the ARM assured income plan.

Rockingham’s literature says: “There is a small element of risk but the level of risk is probably significantly less than the risks you have taken in the past with your pension fund and the rewards are quite significant.”

Yet ARM states on its own website that participation in the ARM assured income plan may involve “substantial risks”.

AWD Chase de Vere senior manager Jason Walker says: “By using a phrase such as ’small risk’, the connotation is not fair when you look at the life settlement market as there are certainly liquidity issues that could cause big issues for someone drawing down a pension in the future.”

Vintage Financial director Geoff Hartnell says: “Traded life settlements have been raised to medium risk as a result of liquidity concerns in the secondhand market.”

Rockingham director of corporate communications Laura Goodman says: “Whenever our clients express an interest in Rita, or ask for a quotation, they are given an ARM risk factsheet, explaining the full risks, as outlined within the factsheet.”


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There are 20 comments at the moment, we would love to hear your opinion too.

  1. Rockingham rate life settlements as a 3 out of 10 risk alongside AAA rated Corporate Bonds and below Cautious Managed funds. The product has early encashment penalties, is potentially illiquid and could see returns diminish in the future as we have seen with many other so called new investment solutions. Some advisers may consider a very small percentage of a client’s portfolio suitable for an investment of this type, but Rockingham’s heavy reliance on it to bump up prospective investment returns and make their proposition more attractive is extremely worrying. I have seen quotes where they propose to use 99% of clients Drawdown monies in a life settlement fund and have quoted 10.25% investment returns with illustrations showing that clients can take maximum GAD income and expect to see a growth in their fund value. The FSA have been aware of this for several months, but as usual have done nothing to prevent a problem from escalating before it becomes a major problem. Perhaps this article will now cause the FSA to act.

  2. This looks like something the FSA need to act on, as it potentially affects 000’s of clients & millions in money. But they will probably choose to close down a 1 man band mortgage broker for falsifying income on his own re-mortgage(not that this is acceptable, but it is a matter of priority)!

  3. I have also seen one of their “non-compliant” illustrations – one of my clients approached them and then asked me to provide the same product. I tried to explain to them that investing 100% of your SIPP into USP with one investment class, especially one which is unregulated, was nowhere near in accordance with their risk profile. As I “couldn’t offer” what they were looking for, they are now clients of Rockingham na dlikely to suffer the same outcome as the Keydata clients. How Rockingham get away with issuing non-compliant illustrations is beyond me?

  4. Steven Kessler 8th March 2010 at 2:21 pm

    As a U.S. based advisor on Life Settlements, I would not include the use of Life Settlement in any form of retirement plan. With proper planning and policy selection, I believe that the major risks associated with this asset class- including life extension risk, and maintaining sufficient to pay policy premiums, insurance carrier financial stability, etc. can be significantly mitigated. However, the one caveat remaining is that Life Settlements are still for the most part an illiquid form of asset. For that reason, I would not include them or recommend their use in any form of retirement plan or other investment vehicle where liquidity and interim income distributions are required.

    While I strongly believe in this asset class, I caution all investors that investments in Life Settlements should only be made with the clear understanding and expectation that the policies will be held until maturity (receipt of policy death benefits) before distributions (return of principal and income) can reasonably be achieved.

  5. Mr G R Harland 19th May 2010 at 10:07 pm

    I’ve just received a drawdown plan proposal from Rockingham. Yes they do still use ARM life settlement as part of their proposal but my plan only looks to use about 50% in ARM supported by 22% in Prudential and 25% in Metlife and 3% in a Barclays Cash account. Having read through all the fact sheets provided by Rockingham I’m fully aware of the risks involved and was actually considering asking Rockingham to increase my investment stake in the ARM product. I hope and expect to maintain my investment until maturity and look forward to an investment pot equal to my current stake.

  6. Does Mr G R Harland work for Rockingham?

    Is he aware of the considerable exposure to Keydata that many Rockingham cients ended up with?

    Go away and play with the traffic.

  7. So, Simon Kershaw & Associates will not give any reasoned argument with evidence to prove their argument, they will tell you to ‘Go away and play with the traffic’. Bet you’re real popular. And you wonder why IFA’s have the reputation that you have when you come out with ignorant, childish remarks like that one?

  8. To Anon, Simon can be a bit brash at times, but it’s not surprising when firms are getting bills for Keydata’s collapse when many never used them.
    I have heard of people transferring ALL their pension pot supposedly without any advice from an IFA in to pensions holding 100% in life settlemenments with Keydata. As a non advised sale, if it is found by the FOS that advice was in fact given despite statements to the contrary, is it likely the firm that gave the “non advice” will still be there to meet any legal claim (unlimited) or an FOS claim (limited to £100k usually) or an FSCS claim if they do ceae to trade (don’t forget you’ll only get 50K)? If it falls to the FSCS, then Simon and I could find ourselves having to put our hands in our pockets yet again for deals we had NO involvement in, so perhaps you’ll forgive Simon’s bought of unprofessionalism, we all get annoyed at times and in Blogs it’s sometimes good to hear the strangth of feeling.

    To Mr Harland, can you just verify your true existance as like Simon I do wonder if you and anon 11.04 are plants……

  9. I invested most of my pension with Rockingham in 2007. They recommended and sold us a Key Data Secure Income Plan. It ended up, unknown to us, as a Lifemark Bond, which is now in default. Some 30,000 of us look like we will lose about £500million. Need I say more?

  10. AKA Anon at 11.04 20th May 2010 at 1:04 pm

    Thanks for your comments. I offer absolutely no defence for Rockingham and have no relationship with them whatsoever. (Or indeed with Mr Harland). The only reason I chose to comment was because I was quite frankly staggered that a ‘proffesional’ would make the remark that he did, especially when that person is, unlike myself, in a position where he can quote his name.
    If that is how he wants his Company to be perceived though, then I guess that is entirely his choice! I know where I won’t be going when I switch advisors next month.

    Will keep my nose out in future…. 🙂

  11. Simon Kershaw 20th May 2010 at 3:45 pm

    Thanks Phil. At least my language has moderated if not my outrage.

    AKA ANON. I comment, as is my right, under my own name, not hiding behind anonymity.

    I recently paid an unjust fee levied by the FSCS. This was due largely to the failure of Keydata, a life settlement fund provider masquerading as an adviser.

    Rockingham Retirement was one of the largest investors (of client money) in Keydata funds. Do you detect a pattern yet???

    I have no wish for another FSCS levy to cover a SIPP provider failure which turns out to be an “adviser”.

    It is common for cynical plants to post anonymously on these blogs.

    Grow a thicker skin.

  12. Mr G R Harland 21st May 2010 at 5:26 pm

    Not amused but I realise some peoples inability to articulate their argument. However,  I find Mr simon Kershaw’s comment totally unacceptable. I do not or never have had anything to do with Rockingham Retirments. I simply asked them for a drawdown plan and as part of my research I came across this web site that was referencing Rockinghams over reliance on one specific product. I’d just received my quote so I thought I’d provide an update on what to me seems like a balanced well distributed quote from Rockingham. We’re all well aware of what happens when financial products go wrong and individuals loose out, and yes if we had a crystal ball we’d avoid them. However nothing in this life is a 100% cast iron certainty with the exception of the ultimate death. If Mr Kershaw is so concerned about Rockingham and their drawdown why couldn’t he provide a clear argument that detailed his concerns. No! I initially get questioned about my status with regards to Rockingham and then get the comment “Go away and play with the traffic” I find this totally offensive and I expect a public apology from Mr Kershaw soonest.

  13. To Mr Harland – I have posted this anon for a reason, i.e. this is NOT to criticise Rockingham as I have NO knowledge of them whatsoever, other than the fact it appears they reccomended large investments of people’s pension monies in Keydata SLS plans which are now a bit of a problem.
    But if as you imply you have done all this research, you will already have read comments on Citywire like this here as well as the comments made by Peter Smith of the FSA.
    There is nothing specifically wring with life settlements in my view, but they are just ONE asset class with their own little quirks and problems and if you are talking about a significant retirement pot, do you really want to be putting all your eggs in one basket after reading what the FSA have to say on the issue?

  14. Simon Kershaw 21st May 2010 at 6:20 pm

    Mr Harland,

    May I sincerely offer my apologies for doubting your credentials and my suggestion that you find entertainment with moving vehicles.

  15. Have you read todays MM Mr Harland?

  16. I can’t help feeling that Simon did a Sunday Times in May and apologised entirely unnecessarily. You cannot make a reasoned argument against a statement which is bereft of reason, any more than you can have a wrestling match with a man with no arms.

    What response can you give to meaningless handwaving of the “Well nothing in life is certain” variety? Short of a basic lecture on the concept of risk and reward and that not all risks are the same, which no-one on this website should really need, nothing.

  17. I really must have had a bad day when I “apologised” to “Mr Harland”.

    I suppose I may have given him the benefit of the doubt and classified him as deluded but genuine.

    I was right the first time.


  18. Looks like Rockinghams permissions have been withdrawn. Well there’s a surprise!

  19. I have invested the whole of my pension fund in the ARM product on the advice of Rockingham. I was told that there were risks but they were minimal.Where do I go from here because reading the above has concerned me because I will have to rely on this pension. Where will I get advice?

  20. Our lawyer friends appear to be all over Rockingham today. Would anyone know why?

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