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Norwich Union Portfolio Step-down: any good for income for a 63-yr-old?
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I'd like to test the thoughts of one IFA with MSEs. He has recommended a Norwich Union Portfolio Bond (Step-down Option).
His proposal is to leave about £20k for cash spending and invest c£80k for growth. He said that if the bond is set up correctly, investing across the four asset classes, then there would be no need to review any more frequently than annually.
I don't know in detail how he proposes to split the investments but he seemed keen on the NU Property Series 4 (Life Fund) as one option. He said that he would look to split the rest between external funds within the NU wrapper.
Although we have previously rejected IFAs who have recommended single-vehicle solutions (given that the SC Mutual Bond put all her eggs in one basket), this nevertheless seems more interesting, because the annual charges are fairly low (about 1%) and the allocation rate is high - about £108k based on investment of £100k based on extra allocation and some foregoing of IFA's commission.
Previously, providers recommended to us by IFAs offering high allocation rates such as Skandia Canada Life, have also come with high charges - is this NU product really better or have I got the wrong end of the stick?
As I said in an earlier post, we're getting wildly different answers from different IFAs. It's hard to arbitrate between them. I've had annuities plugged, one IFA focused on distribution bonds, some have vaguely recommended a single Bond which (as a previous response to my posts noted) seems to be a repeat of what my mother was originally missold. Others have suggested offshore investments. We can't see the wood for the trees!
This bond, however, seems to have low charges and to have a good allocation rate. Could it be a better option?
She isn't too worried by early exit penalties since like I say, the money is primarily for income and she has a few thou for emergency use.
As ever, thoughts are welcome and appreciated from anybody, particularly those in the trade.
Finding an IFA we have confidence in is proving very difficult and we really need to get the money working.
My mother has just followed her IFA's advice and has gone with the norwich union portfolio step down. Can anyone tell me - is her money safe? She has invested £70,000. Will she get this back? I'm a bit concerned for her. I know there are penalties for taking it out early.0 -
The Norwich Union portfolio bond is just a tax wrapper. A container for investments. Investments that offer guaranteed options, low risk through to high risk.My mother has just followed her IFA's advice and has gone with the norwich union portfolio step down. Can anyone tell me - is her money safe?
depends on the investment funds chosen. You dont mention what they are.She has invested £70,000. Will she get this back?
Why would you want to take it out early?I'm a bit concerned for her. I know there are penalties for taking it out early.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
depends on the investment funds chosen. You dont mention what they are.
Why would you want to take it out early?
Thank you so much for replying, my mother is so concerned at the moment and I really don't fully understand any of it. It reads like a manual.
First off she won't take it out early, unless it's looking like that 70,000 is rapidly disappearing. As I said I don't fully understand it but i presume that won't happen?
The investment funds on the policy - the only information on any of the documents are as follows -:
W-P inflation protected guarantee S4
With profit IPG
is that information what you need? I've read the booklets inside and out and I still have no idea. The bank manager claimed her money would be guaranteed - I don't really think this makes either of us feel better.
Thank you again, I really appreciate it - you are an absolute star for helping me!0 -
Does she take an income from the bond?Trying to keep it simple...
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EdInvestor wrote: »Does she take an income from the bond?
No, she's planning to leave it untouched for 6 years.0 -
That makes it less likely to go down in value dramatically, but you must expect it to decline over the next year or two, reflecting the fall in all markets over the period. A With profits fund investment like this should smooth the decline a bit, but can't stop it completely.
Of course after that it should go up again as markets recover. A six-year view should be fine.
It would of course be better if the money was invested directly in unit trusts rather than within an expensive investment bond where she is paying unnecessary tax as well (usually) as higher charges.
The bank manager claimed her money would be guaranteed
If she does experience losses, this would be grounds for a mis-selling complaint based on the fact the product would not match her attitude to risk.Trying to keep it simple...0 -
My mother has just followed her IFA's advice and has gone with the norwich union portfolio step down.The bank manager claimed her money would be guaranteed - I don't really think this makes either of us feel better.
Thos two statements contradict one another. Did you see an IFA or a "financial adviser" at a bank?EdInvestor wrote:It would of course be better if the money was invested directly in unit trusts rather than within an expensive investment bond where she is paying unnecessary tax as well (usually) as higher charges.
Depends on what basis the bond was arranged.0 -
EdInvestor wrote: »That makes it less likely to go down in value dramatically, but you must expect it to decline over the next year or two, reflecting the fall in all markets over the period. A With profits fund investment like this should smooth the decline a bit, but can't stop it completely.
Of course after that it should go up again as markets recover. A six-year view should be fine.
It would of course be better if the money was invested directly in unit trusts rather than within an expensive investment bond where she is paying unnecessary tax as well (usually) as higher charges.
If she does experience losses, this would be grounds for a mis-selling complaint based on the fact the product would not match her attitude to risk.
Thank you so much for all of that. To be honest I really feel she was misled entirely with this product. I have sought advice and came away knowing exactly what I have invested in/bought etc. The booklets were even highlighted at relevant points. He just seemed to send her away with several documents and pieces of paper all adding up to not a great deal! I eventually found something on the last page in the fine print. Literally the fine print - how on earth was my mother to find that!?
Thank you all for your help and advice - I was so worried for her and she was on the phone while I was typing some of this, seriously panicked!
:T :T0 -
The WP inflation proof guarantee fund is a cracking little fund. Especially if you managed to get hold of the RPI version that replaced around February with a CPI version.
This is a with profits fund but NU are good on that front (probably only one of two who are). It has 100% capital guarantee after the 5th anniversary. No MVR possible after the 5th anniversary and no exit charges after the 5th anniversary. Not only that, on final encashment whenever that may be (and anytime after the 5th annivesrary), it will pay out the higher of the investment returns or RPI or CPI (depending on what version you have).
This particular fund is not available in unit trust form and even with the guarantee, is typically cheaper over 10 years than most unit trusts.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Sorry to resurrect an older thread rather than start a new one. I have just received a letter from NU as my Portfolio Step down Option ( Guaranteed Fund) is soon to reach its 5th anniversary. It has made next to nothing, about £330 more than my original investment. A few months ago I could hardly wait to cash it in as the stock market had fallen but savings rates were so good. Now with all the recent rate drops savings don't seem such a good idea. I am no longer a higher rate tax payer and with the new rules IHT is not an issue. Should I keep this investment going? To my surprise I've been offered a further 5 yr guarantee and there are no more early exit charges and management charges are slightly reduced, so it seems to have a lot going for it in these difficult times. I'd value any opinions.0
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