Home >
IFAs want to steer clear of with profits funds
Nearly 80 per cent of advisers would not recommend with profits based investments to clients, according to Managing Partners Limited.
Research from the boutique fund manager revealed that just 2 per cent of IFAs had a very positive view of with profits, with more than two out of five advisers viewing the investment option negatively.
Only 12 per cent of advisers said they would recommend the product to a client, with just over one in two advisers saying they had tried to find their client an alternative investment which contained many of the characteristics of with profit-based funds.
Jeremy Leach, managing director of MPL, said: "With profits investments have steadily failed to deliver returns over the last number of years, much to the despair of many investors.
"Investors unaware of an alternative investment to with profits have increasingly become dissatisfied and resigned over their policy performance. Added to this, exit penalties of up to 20 per cent are being applied to policyholders on encashment of their plans, adding further distress to investors."
Jason Whitcombe, director of London-based Evolve Financial Planning, said: "The theory behind with profits funds is not a bad one – the long-term benefit of asset backed and stockmarket investment but without the volatility and with an element of downside protection.
"The reality, however, is different because these are such opaque investments. They are opaque in their charging structure and they are opaque in the way insurance companies calculate bonuses and market value reduction penalties."
Simon Webster, managing director of Kent-based IFA Facts & Figures Financial Planners, said: "In 30 years I have never advised clients to invest in with profits."