AVIVA's MVR ate my profit
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Ellengb you have probably found by now that when we laymen ask questions about financial matters on this forum we are frequently answered by the professionals with scorn rather than sympathy.
They will frequently point out those clauses in the fine print we thought we understood but too much later found we didn't.
Their replies may be factually correct but often they suggest we should have known better when we picked whatever poorly performing product we are complaining about.
They will say Caveat Emptor.
Watch this space - I can sense some flack coming my way soon.
It is flak, not flack - the word is originally German. (Sorry - an opportunity to demonstrate that I DO understand the English language better than Darkpool appears to think).
However, the point is that, since the OP says they were advised then either the concept WAS explained to them by the adviser or it wasn't.
If it was, then they made an informed decision to take the risk of an MVR and, whilst it is unfortunate, they have no grounds for complaint - as Jem16 has said, if it was not a risk they wanted to carry then they should have told the adviser so at the time.
If it wasn't then they have grounds for complaint against the adviser (or the firm they represented). If the adviser represented Aviva then it would have to answer for the adviser's failure to ensure the OP was aware of the risk but not for applying the MVR per se.0 -
but i think the point being made is that the stockmarket is high just now. so why apply a MVR? the ftse100 has an all time high of 7000, it's about 6000 now. yet aviva consider this "poor market conditions"
Why do you think the stockmarket is high?
The UK all companies sector has only grown by 13.34% over 5 years. The Aviva WP has grown by 19.59%. The OP withdraw 4% of the fund in year 1 and is showing a 10% gain. So, the Aviva WP fund net of MVR has performed better than UK Equity.the selling point of these policys is the smoothing out, yet if you want your money back they claw back your annual bonuses? how can that be considered fair? unless you think the ftse is displaying "poor market conditions" at the moment?
The smoothing is certainly a benefit for those that are looking for long term holding without the volatility to the value. Typically they are designed for longer terms which is why there is usually a 10 year MVR free exit point.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 -
magpiecottage wrote: »With hindsight, perhaps but if you know how to plan your finances with the benefit of hindsight I suggest you buy a ticket for next week's lottery.
i agree hindight is a wonderfull thing, but i think an awareness of charges is nearly as good.
i think MVRs are used in these situations as the fees/ charges are so high.
if someone was selling a house/ car and the buyer dropped the price by 10% below the agreed value you would sue the buyer. yet insurance companies reduce the values of policys by 10% and people are defending the practice.0 -
Why do you think the stockmarket is high?
The UK all companies sector has only grown by 13.34% over 5 years. The Aviva WP has grown by 19.59%. The OP withdraw 4% of the fund in year 1 and is showing a 10% gain. So, the Aviva WP fund net of MVR has performed better than UK Equity.
The smoothing is certainly a benefit for those that are looking for long term holding without the volatility to the value. Typically they are designed for longer terms which is why there is usually a 10 year MVR free exit point.
the ftse100 is 14% of it's all time high. i would say that is relatively high
so what has the ftse100 done over the last 5 years? i think it's done better than the all share? how about all the dividends over the last 5 years?
but there is no smoothing if you don't actually get the annual bonuses. they could add a million pound bonus each year, but it doesn't actually mean anything if they just say "sorry guv, the market is 14% below it's all time high so we've reduced your policy"0 -
magpiecottage wrote: »It is flak, not flack - the word is originally German. (Sorry - an opportunity to demonstrate that I DO understand the English language better than Darkpool appears to think).
I spelt Flak as Flack using the alternative spelling as found in the Oxford English Dictionary to see if I could catch any of the usual suspects being pedantic.
http://www.oxforddictionaries.com/search?searchType=dictionary&isWritersAndEditors=true&searchUri=All&q=flack&_searchBtn=Search&contentVersion=WORLDmagpiecottage wrote: »However, the point is that, since the OP says they were advised then either the concept WAS explained to them by the adviser or it wasn't.
The point of my post was to draw attention to the fact that replies by the professionals often have the tone of deriding the laymen, especially the way they use the QUOTE to pick over and highlight what they seem to believe are stupid or naive questions or statements.
There is no need to do this, the professionals could consider the tone of their posts and show some compassion in their replies.0 -
the ftse100 is 14% of it's all time high. i would say that is relatively high
It's previous all time high is irrelevant though as it wasnt at the high point at the start of the period in question and it isnt now.so what has the ftse100 done over the last 5 years? i think it's done better than the all share? how about all the dividends over the last 5 years?
The UK sector average is where you find all the FTSE trackers. It includes distributions. Hence why i used the sector average rather than use the FTSE100 itself.but there is no smoothing if you don't actually get the annual bonuses. they could add a million pound bonus each year, but it doesn't actually mean anything if they just say "sorry guv, the market is 14% below it's all time high so we've reduced your policy"
That isnt how it works though. So, if it doesnt work that way and isnt meant to work that way then there is little point complaining that it isnt working that way.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 -
It's previous all time high is irrelevant though as it wasnt at the high point at the start of the period in question and it isnt now.
The UK sector average is where you find all the FTSE trackers. It includes distributions. Hence why i used the sector average rather than use the FTSE100 itself.
That isnt how it works though. So, if it doesnt work that way and isnt meant to work that way then there is little point complaining that it isnt working that way.
5 years ago the ftse100 was at 6000, today it is at 6000. yet a MVR still applies?
so basically the annual bonus is plucked out of thin air by aviva? it has no relationship to what the policy is actually worth? so all the talk of "smoothing" returns is basically a lie? i'm just glad i don't have any of these investments.
imho these investments are designed to mislead the investor. as a matter of interest what are the total fees paid to an IFA for a 15k investment bond? i would guess about 5k?0 -
rather supports the need for MVR otherwise what pays for the guarantees in the fund?5 years ago the ftse100 was at 6000, today it is at 6000. yet a MVR still applies?
I'd be amazed if it's above £1k. Probably a lot less.as a matter of interest what are the total fees paid to an IFA for a 15k investment bond? i would guess about 5k?0 -
Jem16 seems to be misrepresenting what I write.
Perhaps you could explain in what way you think I am misrepresenting what you say?The Ombudsman record calls and would not waste limited resources writing to companies with a complaint.
Yes the FOS will investigate complaints where they think the investor has not been told about the possibility of an MVR being apllied - this doesn't seem to apply to you.as a matter of interest what are the total fees paid to an IFA for a 15k investment bond? i would guess about 5k?
Even on maximum initial commission of 7%/8% it would be £1050/£1200 so nowhere near £5k.0 -
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