I have clients who just over five years ago jointly invested 100,000 with ABC Insurance. They have taken no withdrawals and the bond is now worth 140,000, representing compound annual growth of almost 7 per cent.My clients have been pleased with the performance of their holding. The male is a higher-rate taxpayer but his wife is a long way under the threshold. My male client therefore decides to assign his part-ownership of the bond to his wife, which can be effected with no tax charge. His wife subsequently surrenders the bond, realising 140,000. Because my clients have been pleased with the performance of their bond and because they believe it will continue to form an appropriate part of their overall portfolio, they ask my advice as to a suitable reinvestment. I suggest XYZ Insurance, which will give them a unit allocation of 103.5 per cent and will make available to me initial commission of 4.75 per cent plus ongoing annual trail commission of 0.5 per cent. I recommend that my clients should proceed while pointing out that they must be prepared to consider that their money is locked in for five years because of the potential imposition of steadily reducing early surrender penalties during this period. These do not apply to regular withdrawals up to a yearly maximum of 7.5 per cent. When arranging the new bond, I elect trail commission, which will cover my future costs in properly offering an ongoing service to my clients, but only take 2.5 per cent initial commission, instructing the insurer to reinvest, at source, the available balance of 2.25 per cent. As a result of all of the above, my clients have a new investment bond, which is virtually identical to the one they surrendered. However, the immediate gross value of the bond is 148,050 and I have therefore been able to create, for my clients, real additional value of 8,050, while generating turnover for my firm of 2,500. The new bond does not have a bid/offer spread and my clients, who have other money and investments which they can readily access on a penalty-free basis are prepared to accept the five-year lock-in. They consider this to be the “price they pay” for the uplift in value of over 8,000. Now who loses out of this? Certainly not my clients. On the contrary, they gain. Me? No, I gain. The first loser is, of course, ABC Insurance and potentially, in the longer term, XYZ Insurance as well. However, I do not work for either of these companies but for my clients. Should I be concerned by the fact that I know this series of transactions is not, in the greater sense, good for the industry? Alternatively, should I take the view that if insurance companies are prepared to let this sort of thing happen, it is not down to me to adopt a holier than thou approach? Additionally, if the initial assignment and subsequent surrender of the original bond had not been instigated by my clients but had been put in hand as a result of my suggestion, does this make any difference?