MGM ASSURANCE - CELEBRATION BOND I

dean_ham

Hi everyone. Has anyone had any experience with this company?

In april 2003 I invested £10,000 into this policy.
In april 2004 i had a statement saying the total value was £10,265*
*(exit charges may be applied on early surrender or to reflect market conditions)

http://www.mgm-assurance.co.uk

I have visited the website above and it is very difficult to find what my investment is actually worth at the moment?

Would you recommend me keeping the money in here or investing it elsewhere as £265 doesnt seem alot on a £10k investment?

Thanks

dean_ham

Just phoned them up,

My policy value is £10,400
BUT a 10% penalty fee will be charged if i take the money out!!!

so after a year and half its now worth £9,400

Looks like at the rate its going im going to have to keep this going for 3 years just to break even at 10k

dean_ham

And ive just read through everything that was given to me and there is no mention of a 10% penalty fee when taking the money out.... I am sooo gutted to put it simply

dunstonh

The advisor that sold you this product gives you a key features document and illustration which details the exit charges over the first 5 years.

dean_ham

Thanks for the reply...

Yes he did, here is a pic of it.....



But my investment hasnt grown by 6% like HE said it would, its grown by 2.65%?

DD what would you be your advice to me? get all the money out in april 2005 and cut my losses and leave with roughly £9500-9600 and invest it elsewhere at 5-7% guaranteed.....

I was 17 at the time of putting this money in and i need all the money i can get as im planning on taking it out roughly april 2007 - dec 2007 as thats when im planning on moving out and getting my own place.


Also there is NO mention of a percentage (10) deduction to get out the only mention of deduction was in £'s on that table in the picture above...

dunstonh

I have just looked up the MGM celebration bond.  Launched in June 2002, it is a unitised with profit bond.  It has an exit penalty of 9% in year one reducing by 2% per policy year (9/7/5/3/1/0) until penalty free in year 6.  There are other fund links available within the bond.  There is a market value reduction which may be applied.

I am going to assume with profits bond rather than a unit linked fund - can you confirm that it is WP or what fund it is invested in?

MGM are rated B- (which isnt very good for a with profits company).

Their reversionary bonus rate in 2002 was 4.5%, 2003 = 3.3% and 2004 = 3%.  This is before charges and the plan does have annual management charges and a monthly admin fee.  

Can i ask if you purchased from an IFA or an MGM advisor?   If MGM advisor, then fair enough as that is all they have to offer.  If an IFA, then it would be interesting to see their justification as nothing jumps out at me as to why I would pick MGM in place of much stronger providers.

I cannot advise you to leave it or take it out as that would be classed as making a formal recommendation which i would be liable for.  I dont know enough about you or your plan to make a recommendation.  

If you were told it would make 6% a year then that it is incorrect and you have grounds to make a complaint.    Even the strongest with profits funds are not making 6% a year (although they are getting close again).   There are no guarantees on the bond either on rate of return or capital unless you die.  

dean_ham

"I have just looked up the MGM celebration bond. Launched in June 2002, it is a unitised with profit bond. It has an exit penalty of 9% in year one reducing by 2% per policy year (9/7/5/3/1/0) until penalty free in year 6. There are other fund links available within the bond. There is a market value reduction which may be applied.
"

Can i ask where did you get this information from.
Im a year and a half into my policy so why did the woman on the phone say it would be a 10% penalty?.

"I am going to assume with profits bond rather than a unit linked fund - can you confirm that it is WP or what fund it is invested in? "

I have invested in a bonus growth fund, a unitised with-profits fund.

"Their reversionary bonus rate in 2002 was 4.5%, 2003 = 3.3% and 2004 = 3%. This is before charges and the plan does have annual management charges and a monthly admin fee. "

So there is a good chance that the % will be lower by every year..... How can i check what sort of % the fund is getting at the moment?

"Can i ask if you purchased from an IFA or an MGM advisor? If MGM advisor, then fair enough as that is all they have to offer. If an IFA, then it would be interesting to see their justification as nothing jumps out at me as to why I would pick MGM in place of much stronger providers.
"

This is the story, asked my mother wheres the best place to invest the £10k, she took my to the building society and asked in there, the building society recommended me to see a MR Harry, went to see him he said for me to invest my 10k into the celebration bond, i told him that i would be investing it for 4, 5 years max and he came up with some impressive figures, from what i can remember between £13k and 16k depending on how the market would pan out. I personally still wasnt sure but then he pulled out his briefcase and said it was a Very good policy to invest in, he showed me a peice of paper showing he had invested £20k the year before and now was worth £21.3k.
So i thought to myself well if hes investing in this it must be good, so i did.

I am not sure if he is an IFA, looking back the only products that looked on offer were MGM so he must have been an MGM advisor, not totally sure though.

"I cannot advise you to leave it or take it out as that would be classed as making a formal recommendation which i would be liable for. I dont know enough about you or your plan to make a recommendation.
"

I can see where your coming from,
The plan i have at the moment is to cut my losses and take away £9500, meaning ive lost £500 over the last year and a half.
Invest it elsewhere as im sure i can find a better policy that the one that im presently in
I dont need access to this money till i will be looking for my first house which sould be in 2 - 3 years time and i would use this money for a deposit for a mortgage etc etc.

"If you were told it would make 6% a year then that it is incorrect and you have grounds to make a complaint. Even the strongest with profits funds are not making 6% a year (although they are getting close again). There are no guarantees on the bond either on rate of return or capital unless you die. "

The figures that were thrown at me were when he was trying to sell this policy to me was 6% mostly but he did mention "if the policy made 8% over 5 years you would make xxxx amount"
From the figures you just gave me there is no way it would get to 8%
He also mentioned 4% at the lower end of what to expect from my policy....
If i knew back then what i knew of them figures you just gave me i would have never got involved with this policy :-[ :-[ :-[ :'( :'( :'( :'( :'(

dunstonh

Can i ask where did you get this information from.
Im a year and a half into my policy so why did the woman on the phone say it would be a 10% penalty?.

I pay for research software which gives me details of the plans offered by all the providers in the UK.

It could be that you have the 7% surrender penalty and a 3% market value reduction.

So there is a good chance that the % will be lower by every year..... How can i check what sort of % the fund is getting at the moment?

You can ask them but its currently 3%.

I am not sure if he is an IFA, looking back the only products that looked on offer were MGM so he must have been an MGM advisor, not totally sure though.

Probably tied salesman then. I cant see many IFAs picking MGM in 2002 as with profits bond provider.

The figures that were thrown at me were when he was trying to sell this policy to me was 6% mostly but he did mention "if the policy made 8% over 5 years you would make xxxx amount"
From the figures you just gave me there is no way it would get to 8%
He also mentioned 4% at the lower end of what to expect from my policy....

4%, 6% and 8% are the industry standard illustration figures. Cant tell the future as that is a crystal ball job. However, i would suggest that the 4% figure is prudent.

I am sending you a private message on a couple of other points which may prefer to answer by PM due to privacy.

deemy2004

Hi everyone. Has anyone had any experience with this company?

In april 2003 I invested £10,000 into this policy.
In april 2004 i had a statement saying the total value was £10,265*
*(exit charges may be applied on early surrender or to reflect market conditions)

http://www.mgm-assurance.co.uk

I have visited the website above and it is very difficult to find what my investment is actually worth at the moment?

Would you recommend me keeping the money in here or investing it elsewhere as £265 doesnt seem alot on a £10k investment?

Thanks

Ive looked at their site and they list unit trusts, so which funds is your celebration bond invested in ?

Thats how you will be able to work out its value.

I don't know how much charges theyve taken out but 4% when the markets up over 30% is pretty crap,

cheerfulcat

Hello, deanham,

This is a perfect example of why I detest financial products. The lifeco has to get its profits before you do, on your money. That's why you are being penalised.

In a similar situation I cashed in a w/p bond and took the hit and I'm happy that I did, having made good the loss myself. Bear in mind that the fund will be "smoothing" the profits , too; holding back any profits in a good year to make up for losses in a bad one.

If you are only investing for a short time, high interest accounts are the way to go.

HTH

Cheerfulcat

dean_ham

Thanks for the replies....

Bearing in mind that there is a good chance that i will be taking the money out roughly sept 2007-march 2008 what would you lot do in my situation?