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Wentworth Rose tells clients to cash in bonuses

IFA Wentworth Rose is reviewing all its clients&#39 with-profits bonds and advising some to realise their investments in order to crystallise bonuses where life offices are not applying market value reductions and surrender penalties.

IFAs across the board are reviewing their stance on with-profits as concerns over the financial strength of life offices mount. Inter-Alliance this week said it would restrict with-profits bond business to Norwich Union, Standard Life and Clerical Medical. Hargreaves Lansdown created a storm last month by putting the sale of with-profits on hold while other firms are watching developments.

Wentworth Rose chief executive Philip Rose says he has a duty to inform clients as the risk profile of their with-profits investments change. He says the risk of such investments is increasing as terminal bonuses come under threat because of poor stockmarkets.

Rose says: “There is a lot of sense in crystallising a bonus – a bonus is not a real value until you realise it. A with-profits policy goes from a low-risk product to a higher-risk product over its lifetime as the terminal bonuses build up. But this is not a blanket sell-now letter we are sending out.”

Towry Law head of specialist advisory services Simon Farrant says: “Financial strength is the single most important factor to consider. We use companies like NU and Axa before they closed to new business and have avoided weaker offices like Friends Provident.”

Tenet director Geoffrey Clarkson says: “Strong companies are still relatively strong but we are always alert as to whether weaklings might be picked off.”


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