Pru endowment - urgent help needed!!

Dick_here

EdInvestor wrote: »

My experience of endowments is that many people were aware that the surplus was not guaranteed but was a likely extra benefit of the endowment. What people weren't aware of was that the endowment might fall short of paying off the mortgage. This is where the misselling arises, as they would not have taken out the policies if they thought this was the case as they did not accept this risk.

I'd say that's about right, Ed. Endowments were sold on the dream of a nice lump sum after the mortgage was paid off, the only debate at the time was how much that was likely to be and how much inflation would have eroded its value. Not even paying off the mortgage was not mentioned by most salesmen, IMHO, not because of any fraudulent intent but simply because it never occurred to them either that that was even a possibility. It was a case of 'this is what a policy taken out 25 years ago would be paying out today' and it didn't occur to them that that could go down.

This, to me, is where the mis-selling claims distinction - they can only be based upon being misled at he time and not upon poor performance of the policy since - become very blurred.

EdInvestor

!!!!!!_here wrote: »

It was a case of 'this is what a policy taken out 25 years ago would be paying out today' and it didn't occur to them that that could go down.

This, to me, is where the mis-selling claims distinction - they can only be based upon being misled at he time and not upon poor performance of the policy since - become very blurred.

The salesmen were certainly aware the policy was not guaranteed to pay off the mortgage. The fact they didn't mention it to the punters, and that this was misselling because it was an unacceptable risk seems quite clear to me.

Dick_here

EdInvestor wrote: »

The salesmen were certainly aware the policy was not guaranteed to pay off the mortgage. The fact they didn't mention it to the punters, and that this was misselling because it was an unacceptable risk seems quite clear to me.

This is where I disagree, I doubt this was the case. They were not trained or certified as they are today, therefore they assumed (the majority of them, I suspect) that policies would always pay out that much or more, simply because bonuses were increased each year throughout the eighties. The insurance companies are to blame, yes, but not the salesmen.

dunstonh

I'm with !!!!!! on this. They didn't think they would fail as they never had. They became complacent. Quite a normal human trait. The longer it goes on without the risk showing any signs of danger the more risk the person will take. Buy to lets are a modern day version of endowments where people chose to ignore the risks. Don't ignore consumer greed either. Given the choice of a cheaper monthly payment with an endowment and the potential for lump sum surplus against a higher monthly payment with no potential but guarantee to repay the mortgage, a good number would still go with endowment because of the lower payments and the potential (which up to the late 90s showed no sign of failing to hit target).

The skills and knowledge of the advisers back then was limited. As was their training which was almost a case of reading a manual over the weekend, shadow someone for a while and then off you go (until almost mid 90s). They were spoon fed propaganda from their employer highlighting all the positives and none of the negatives. I've been there and can tell you that many fall for it and become brainwashed to believe everything their employer tells them. The lucky ones spot it and get out.

That doesn't excuse anything but the blame doesn't just lie at the doors of one particular group.

EdInvestor

Perhaps you can now see why so many people are sceptical about the laughable idea that advisors can be compared with solicitors in terms of the standard of their "professsional advice". :rolleyes:

Dick_here

EdInvestor wrote: »

Perhaps you can now see why so many people are sceptical about the laughable idea that advisors can be compared with solicitors in terms of the standard of their "professsional advice". :rolleyes:

You're implicitly getting people to compare solicitors today with advisors 20 years ago though, which is hardly fair.

dunstonh

Ed doesnt know the meaning of fair.

I dont think anyone is comparing advisers with solicitors. The only ones that can are chartered financial planners.