Where to put my money?

demotw

uih039 wrote: »

Ok, let's talk about this.


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I said “Guaranteed Equity Bonds”

You said “Defined Investment Bonds”

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I said “You get a proportion of any rise in the market”

You said “It pays a fixed rate of ….providing the FTSE is at least at the same level as now”

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I said “…but are protected if it drops”

You said “…capital is protected”

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I said “You don’t get dividend income”

You did not comment on this, but I’m sure it is true for this product. The current yield on the FTSE ALL-SHARE is between 4% and 5% so this is foregone by choosing this Barclays product compared to buying a FTSE tracker.

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I said “Your gains are capped”

You said “It’s a capital protected bond and will pay a fixed rate…” so if the FTSE goes up by 100% over the period of the Bond, you still only get 4/5/6% per year.

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Now, I would suggest that the only material difference between us is that I guessed that the product pays a proportion of any FTSE rise. So, for example, if the FTSE rises 20% then you get 15%. In fact, the return is fixed at 4/5/6% per year. I accept this is different to my description but I feel my comments were correct in all other regards. In my opinion this is a poor product. The additional interest over other fixed rate investments which are not reliant on a rise in the FTSE is not worth the risk.

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Now, let’s turn to Barclays Financial Planning Service (let’s call it BFPS).

I believe that BFPS advisers are limited to a specified number of providers. They are given a list by their Head Office. When I use the term “...tied to their products only”, I did not mean only Barclays products and I admit I could have been more clear on this. I mean that BFPS advisers have a finite list of products they are allowed to consider on behalf of the client. IFAs have an unlimited list of many thousands of products.

However, I am not naïve enough to suppose that IFAs are not influenced by the level of commission on each product but at least they have an open book to start with.

As an example, would a BFPS adviser be permitted by internal policy to recommend a Royal Bank of Scotland fund?

I’m enjoying this debate but I readily admit I am not an expert and just commenting on my general knowledge of the market.

I do hope an IFA comes on this thread to add to the debate.

Andrew.

when i said wrong i was refering to the "own products" and stating they are not limited to barclays. I probably could have been a bit clearer on this as well.