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Smooth talkers debate the prospects for with-profits

Proactive IFAs could replace with-profits, claimed Skandia UK co-founder Paul Bradshaw at a debate last week where Standard Life&#39s David Hare said the product is here to stay although it may be altered in the future.

The two were debating the future of with-profits at an event hosted in London by the Financial Services Forum with Money Marketing. Standard&#39s head of with-profits communications Hare declared the vehicle remains a good investment.

He was opposed by Bradshaw, who said smoothing works against the consumer. He pointed out that until 2000, all smoothing by life offices was downward.

Hare asserted that smooth managed funds have a strong future. He said that with-profits offered pooled disinvestment risk protection and that historical data showed smoothing has worked and continues to do so.

IFAs actively managing client portfolios can better replicate the safety features of with-profits, said Bradshaw, adding that advisers are wrong to put money in funds where it is simply swallowed up in replenishing reserves.

He added that with-profits is a tarnished brand – to which IFA Advisory & Brokerage Services chief executive Gareth Marr replied that the whole of financial services is tarnished.

Hare said Bradshaw&#39s criticisms are aimed at historical practices that no longer occurred. He said he was disappointed by the way that rival companies briefed against each other and said that he had seen emails undermining his own company sent to IFAs.

Bradshaw said: “IFAs need to move from being product conduits to asset allocators. The message from with-profits offices is &#39We short-changed your parents, now give us your money&#39.”

Hare said: “With-profits has served people well in the past. It has evolved to smooth managed funds and it is a good option that would be foolish to ignore.”

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