OpinionOct 9 2013

Could with-profits be making a comeback?

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Aviva’s Portfolio Level Bond has turned £10,000 into £10,819 in one year £11,915 in five years and £17,604 in 10 years; steady but not spectacular.

With-profits is not for everyone – and certainly not for the massive numbers who were sold it in the 1980s and 1990s.

But a steady, balanced investment with as little risk as possible will undoubtedly fit the bill for some.


Borrow more and save less

Chancellor George Osborne wants to work towards a fiscal surplus in the next parliament.

If only he would give savers the same opportunity. Instead the Help to Buy schemes have forced savings rates to a new low.

Financial data firm Moneyfacts says the average two-year fixed cash Isa rate crashed from 3.34 per cent in September 2011 to just 1.82 per cent in August this year.

Meanwhile the average two-year fixed mortgage dropped from 3.69 per cent to 2.56 per cent in just one year.

Strange is it not that while saying the government wants to borrow less and save more, he is encouraging consumers to borrow more and save less?

But perhaps, not so strange.

In the government’s eyes savers are hoarders who sit on their money, while borrowers are the great knights spending in the high street, DIY stores and reinvigorating the building industry.

I suppose it has never occurred to them that savers’ money is invested too – in lending to those selfsame borrowers.

Building societies need to think carefully about their strategies. Money might be cheaper from the government right now, but it will not be there forever.

By alienating their core savers they are encouraging them to seek alternative homes for their money, such as shares and bonds, and it might be that once they are comfortable with those, they will never come back.


The truth can hurt

A colleague was having lunch with a financial adviser last week. The adviser expressed his deep concern that he and others will be facing difficult conversations with their clients in the coming months on platform charging.

“Well”, replied my bouncy friend, “if you’d been open with your clients about the level of charges and the real cost of investing in the first place then you wouldn’t be having to have this conversation now, would you?”