View more on these topics

Terminal decline of with-profits

On September 1, we requested a fund value on a client’s Standard Life pension plan.

On September 16, we phoned to check another detail on the same plan and found that the fund had gone down by 9 per cent. The reason, we were told, was terminal bonuses had been reduced and so our client’s fund was 9 per cent lower than a fortnight previously.

I do understand the general reasons for this and the fact that, as each year goes by, we lose the benefit of a good investment year from 20-25 years ago, thus reducing the average return over the full term.

My client, however, is confused that, as investment markets improve, his with-profits fund declines.

Trying to explain the intricacies of these products to a typical client is nigh on impossible, particularly as they were sold as “low-risk” and “steady-return” investments.

Over the next decade, terminal bonuses are likely to fall much further as the benefit of the 1980s’ returns fall out of the equation for more recent investors.

The faster that the last with-profits policy matures and this industry is freed from these non-transparent, complex and unwieldy products that puts all the power in the hands of the insurance companies and none to the customer, the better it will be for all of us.

My main concern now is that despite all the obvious reasons why a with-profits policy should never be written again, a few providers still continue to promote it.

Even more frightening is the thought that there may be some advisers still recommending it.

Chris Petrie

Christopher Charles Financial Services,

Northampton

Recommended

Blood on the trackers

Trackers with initial charges have been responding to Fidelity’s suggestion that investors are overpaying for their funds. Fidelity listed seven tracker funds with initial charges in its announcement last week that it is to drop the annual management charge on its Moneybuilder tracker to 0.1 per cent, dropping its total expense ratio to 0.3 per […]

Where there’s a will, there’s business potential

Just Wills is setting up a new business development scheme for advisers looking to integrate will-writing and estate planning. For wills with a recommended retail price of 565, the firm claims that IFAs could potentially earn an extra 102,000 a year by writing 20 wills a month. Just Wills says minimum gross profits of 75 […]

Naismith poses tough questions

The Government has to ask itself serious questions about its pension plans, such as whether the target of 60 per cent private provision is right, says Scottish Widows head of pensions market development Ian Naismith. Speaking at a fringe event at the LibDem conference, Naismith said that the Government’s response to the Turner report must […]

The need for knowledge

In today’s age of technology, there is a vast amount of information available to clients on the worldwide web. If the general consumer needs to get information on any financial product or service, they can do so at the touch of a button. This has in turn meant that access to financial products and information […]

Phone - thumbnail

Pension Wise — now taking calls…

Those with decent-length memories will recall that in the 2014 Budget statement George Osborne announced the new (and entirely unexpected) pension freedoms. The new rules come fully into force in less than two weeks.

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