Well, you stick to your view Peter and I will stick to mine because my with-profits funds have done very well for the majority of my clients over the last 10 years in fulfilling their function to protect capital and provide income.
Commission is a cheap- shot reason for condemning with-profits bonds. If the maximum commission agreement had been brought in, after all the work that we did in getting industry consensus on it, then perhaps Peter would not be able to make the comments he does.
But then again, if the Government had not insisted on moving with-profits funds from equities at the bottom of the market and into bonds to satisfy a greedy Chancellor and a misdirected FSA, then with-profits funds would have performed even better than they have. Indeed, to be as resilient as they have been has been the measure of their success rather than their failure. If there is a reason for doing with-profits bonds now, it is because the time for asset allocation is actually upon us. Not in 2003, when people were trying to make names for themselves and would have done better leaving with-profits funds where they were, invested in markets that were going to perform, we are now entering a period where people should be exposed to a wide variety of investment media, including a hefty proportion, as Peter implies, in equities. With-profits fund managers take note.
Perhaps if Peter Hargreaves and his cohort could remove £7.4bn of equity money from the markets, as Standard Life fund managers did in 2003, without causing so much as a ripple in the international equity field, then his criticism would be justified.
It was achieved with salaried long-term fund managers, not short-term bonus-propelled individuals who switch investments at the drop of a hat and call themselves successful when they make -10 per cent instead of the market average of -22 per cent.
Throw your rocks somewhere else, Peter, your article is way off beam and if you do not believe it, I have the figures to prove it.
Chartered financial planner