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Growing dissatisfaction toward with profit investments means 2.4m people are set to pull out of the sector, research from Managing Partners has revealed.

The survey, conducted among 2115 people, found 64 per cent of investors were unhappy with the current performance of their with profits investments, with just more than one quarter, or 28 per cent, describing themselves as "very unhappy". Despite this, 65 per cent of those surveyed intend to carry on investing in them although one quarter, - representing 2.4 m people - will stop as a result.

Compared with last year, the number of dissatisfied investors has increased with those saying they are "very unhappy" rising from 24 to 28 per cent.

Jeremy Leach, managing director of Managing Partners, said a volatile market had made decent returns almost impossible to achieve and had lead to investors leaving the sector in droves.

He said: "Investors are leaving in their droves, especially those people who are seeing their endowments fall short of repaying investors' mortgages.

"This does not mean investers have lost their appetite for the sector, it just means with profits have failed to deliver. It is no surprise that only 3 per cent of people with these products are very happy with the performance."

Mike Pendergast, IFA for Cheshire-based Zen Financial Services, said the majority of with profit investments had not recovered from the dip in 2002 and had low returns as a consequence.

He said: "About three or four years ago there was a dip in returns and the vast majority has not recovered. Penalties for cashing in early used to exist but in the last few years they have either been removed or modified. This very fact may work against the with profit providers as people are not as penalised as they used to be."

Rebecca Taylor, managing director for Peterborough-based Dunham Financial Services, said she had found with profits had proven to be unsuitable for the needs of her clients in the last few years.

She said: "Asset allocation for this product used to be nearly 95 per cent equity-based, however this has since dropped to 35 per cent. While the latter was rather high, to change the product to a mainly cash or bondholding is non-sensical. Many clients choose with profits for growth and a cash option does not give this.

"With profits are not a bad investment but may not correspond to a client's wish list."