With-profits funds have acquired a bad name over the past decade or so following the mortgage endowment mis-selling saga. This followed the sale of mortgage products based on with-profits funds, that promised to pay off one's mortgage and provide a nice bonus at the end of it.
For many people this worked, but the market got carried away and invested too heavily in equities.
Once the stock market turned, many investments turned sour and the products failed. A big part of the problem was the fact that the way the products were managed was opaque: the smoothing process, the way annual bonuses were paid, charges and even the value of a client's policy.
Also the application of Market Value Adjusters when the underlying assets did not perform in the way in which clients had initially been led to believe, led many to think they had nothing to offer.
But the advent of pension freedoms have given them new impetus, at the large scale end, and the likes of Prudential have adapted their funds to make them more transparent, by offering a unitised product and clear guidelines on what the anticipated growth rate is.
Also the friendly societies are active in promoting their with-profits funds, by saying how they allocate more profits to the final pot due to being mutual, and offering low cost, tax-free products.
With-profits funds are unlikely to match their 1980s and 1990s heyday, but they are not bound to be written off just yet.
This guide will look at how with-profits funds work and whether there is a future for them, as well as how insurance companies have found a new way to market with-profits. It also asks, what do advisers think of these products?
The guide is worth an indicative 60 minutes of CPD.
Contributors to this guide: Alistair Cunningham of Wingate Financial Planning; Nick Bamford of Informed Choice; Bruce Dodd of Tilney; Paul Fidell of Prudential; AKG; Scott Eason of Barnett Waddingham; Martin Shaw of the Assocation of Financial Mutuals; Mark Stone of Whitechurch Financial Consultants; Andrew Burke and Kevin Arnott of Phoenix Group; Sean McCann of NFU Mutual; Libbi Martin of Shepherds Friendly; Brian Murray of Royal London.
Melanie Tringham is deputy features editor of FTAdviser.com and Financial Adviser