aviva - reattribution offer

dunstonh

speaking as a scottish mutual then abbey then resolution then ignis ( I think, but I have lost count of who is currently mismanaging my money ) customer whose unit linked policy has been red for some time and probably will be forever more ( barring a remarkable growth ) unit linked has proved to be just as disastrous as a normal endowment.

Unit linked means you have access from usually around 20-2000 funds. If you pick just one fund then you are hedging your bets on just that one area being best for the whole period. Chances are you will pick wrong. For example, Large Caps have been pretty awful for the last 10 years. So, if your are in a FTSE100 tracker or a large cap dominated fund then you would have had awful performance. The 10 years previous you would have done really well. Unit linked gives you a choice to build a diverse portfolio which you can rebalance and switch as you like. Pick one fund, fo nothing and hope for the best and you will usually end up failing to get a decent return.

You may call yours disastrous but how many times have you rebalanced your unit linked funds? I bet none.

Unit linked has been great for me and I with 15 years of investing I am running into double digits as an average annual return. Your problem is probably one of lazy investing with no servicing of the funds. A problem that affects so many people.

peterbaker

dunstonh wrote: »

...You may call yours disastrous but how many times have you rebalanced your unit linked funds? I bet none.

....

Your problem is probably one of lazy investing with no servicing of the funds. A problem that affects so many people.

I am going off you a bit, dear dunstonh! (I don't suppose you will lose much sleep over it )

I think you have allowed your perception of what a customer needs to be affected by ideas like SIPS where the canny investor who very much wants to do so, is very much permitted to get involved in control of his own investments.

I haven't counted how many times you have alluded to "lazy investing" in this forum, but this is the second time I have seen it recently because you indicated I was guilty of it the last time I saw it.

I won't allow you to blanket this concept over those of us who have lived to see our pockets rifled in so many ways after we trusted big companies to look after our money long term i.e. not to blunder into losing it hand over fist, and then not once but several times in the last two decades.

So before throwing the blame on us the customers, how about a comment about the lazy flamin' so-called fund managers and their failures? From the outset, the whole concept of unit-linked investing was sold on the basis of spread and balance of risk and now you are suggesting that any failure in that regard is down to the lazy investor not doing the job himself?? Are you on something this evening that is affecting your normal balanced reasoning? :rolleyes:

dunstonh

how about a comment about the lazy flamin' so-called fund managers and their failures?

What failures? If you invest in a UK Equity fund and UK Equities are having a bad time then the fund manager cannot change that. The remit of the fund is to invest in UK Equities. It cant suddenly invest in Asian stocks or go fully into cash just because they are better.

From the outset, the whole concept of unit-linked investing was sold on the basis of spread and balance of risk and now you are suggesting that any failure in that regard is down to the lazy investor not doing the job himself??

I have never seen unit linked funds sold on that basis. Unit Trusts do reduce the risk compared to a single share but they are focused on the objectives of the fund. That objective could be low risk through to very high risk. The spread is not normally balanced but focused on that objective of that fund. Of course you could buy a balanced managed fund but. They take some of decisions away from you but they are rarely the best option and I wouldnt want my money in one.

now you are suggesting that any failure in that regard is down to the lazy investor not doing the job himself??

That is the way it is. Either you pay someone to build the portfolio and rebalance it or you do it yourself. If you use a tied insurance agent/bank sales rep they dont have the remit to do it for you. Transactional IFAs tend not to do it either although servicing IFAs will. Discretionary investment managers will do it as a matter of course. However, if you pick a UK Equity fund you will remain in a UK Equity fund until you do something to change that. If you pick say 10% into 10 funds then over time they will go out of sync and you need to bring them back in sync again (10% into 10 was just an example, you wouldnt normally build a portfolio on that basis). Either you take on that responsibility or pay someone else to do it or you take your chances with a jack of all trades (master of none) fund.

Most lazy investing is single fund hit and hopes or random selections left to their own devices. They will rarely do well.

jamesd

bluffer wrote: »

speaking as a scottish mutual then abbey then resolution then ignis (...) customer whose unit linked policy has been red for some time and probably will be forever more ( barring a remarkable growth ) unit linked has proved to be just as disastrous as a normal endowment.

Do you have any other fund options? Default choices can be less good than those selected by people who know what they are doing, which means you or someone advising you, since the insurance company won't do that.

peterbaker wrote: »

I haven't counted how many times you have alluded to "lazy investing" in this forum, but this is the second time I have seen it recently because you indicated I was guilty of it the last time I saw it.

Uneducated may be a better way of putting it. But if people don't want to learn they are likely to do less well than those who either do learn or who pay someone else to do the work.

peterbaker

jamesd wrote: »

Uneducated may be a better way of putting it. But if people don't want to learn they are likely to do less well than those who either do learn or who pay someone else to do the work.

Now hang on there just a minute jamesd, not so fast.

1) Why do I have to learn to manage investments when someone already told me they'll do it as part of the deal? And
2) Why would I still be paying any management charge on my unit-linked investment even when there is no IFA receiving a fee or a commission? Do tell me it is not just an industry habit to make me do that?

What exactly is being managed if it isn't my funds as proportional part of the overall unit-linked fund I'm invested in?

Basically the modus operandi of the whole industry seems to be that one busted promise follows another, and the only ways to win through are:
(a) to get lucky, or
(b) to learn like Pavlov's dog as I guess jamesd advocates. Or perhaps he is simply describing survival of the fittest? or
(c) to appoint a trusted IFA like dunstonh to be overseer. Or maybe other ways are
(d) to become an insider, or
(e) to litigate as an individual or as a group to enforce a contract or to uphold an abused principle or to annihilate an unfair contract term.

Unless as first and foremost in any deal you have bought people who you can trust for the long haul, it can and almost always is a nasty business.

dunstonh

1) Why do I have to learn to manage investments when someone already told me they'll do it as part of the deal?

You dont have to learn if you dont want to. You can pay someone to do it for you.

2) Why would I still be paying any management charge on my unit-linked investment even when there is no IFA receiving a fee or a commission? Do tell me it is not just an industry habit to make me do that?

The unit linked investment is managed by the fund manager. However, he has no remit to tell you how much you should hold in his unit linked fund or any other unit linked fund. Or what investment strategy you should be using for your wider portfolio.

What exactly is being managed if it isn't my funds as proportional part of the overall unit-linked fund I'm invested in?

Picking the UK Equity fund again as example. The manager is managing the investments within that UK Equity fund. He cant invest outside of that remit.

A proper investment portfolio will typically have a minimum of 8 funds (one for each of the major sectors - UK, N America, Europe etc). The amount you allocate to each fund will depend on your risk profile and the investment strategy being used. Over time they will go out of sync and the asset allocations change with the economic cycle (the ones I use are updated quarterly). So, they need changing. None of that will happen unless you do it yourself or you use a servicing IFA.

If you dont want that, then there are balanced managed funds or cautious managed funds which are the simple option but they are rarely the best option. They typically control the asset allocations within the fund and reinvest into other "internal" funds that provider offers. The advantage is simplicity and theoretical management of the asset allocation but the problems with this are a) internal funds rarely give above average performance. Many are passive trackers or managed by computer or by either new recruits or cheap managers b) there is no automatic risk reduction as you get closer to your maturity point (unless you happen to select a contract that does it at contract level).

A tied agent cannot portfolio plan. So, you shouldnt expect a tied agent to give you proper investment advice. Yet look how many people use tied agents for investments. Transactional IFAs can portfolio plan but by definition they work on a transactional basis and will not provide servicing. So, their advice may be geared to the more simplistic options. Servicing IFAs can and will provide that servicing but that means paying for it (although it is often no more expensive than a transactional IFA and can actually be cheaper). If you DIY, then you take on all the responsibility to manage your investments.

From a personal point of view, I give people the choice if they want servicing or not. Those that want servicing get built a portfolio that is better quality than those that dont. Those that dont want servicing will end up in the simple option unless they say they are going to control the investments themselves. That complies with MiFID rules but is also common sense. Whilst a better quality portfolio is expected to outperform the simple options, if left alone to its own devices, over time, it will go out of sync and start to suffer greater volatility than the risk profile of the individual and that will either mean a complaint comes in future and/or the person will pull out of an investment at the wrong time for the wrong reasons creating a short term loss (from a previous higher value).

So, where you buy and who you use is critical with investment business.

jamesd

peterbaker wrote: »

1) Why do I have to learn to manage investments when someone already told me they'll do it as part of the deal?

If you hire a professional and tell them that they have discretionary authority to move your money between different funds, and pay for that service, then they will. An insurance company or individual fund manager generally won't, because that isn't the service they are selling.

peterbaker wrote: »

2) Why would I still be paying any management charge on my unit-linked investment even when there is no IFA receiving a fee or a commission? Do tell me it is not just an industry habit to make me do that?

It's not just an industry habit to make you do that. As with many consumer products, if you go directly to the maker you'll get the full list price, even though there are discounts available if you go elsewhere. A consumer who doesn't know better can ask here and be told how to get better deals, can learn on their own or can not learn and pay the highest available price for the product they are buying.

There will still be some management charge but it's often possible to get a 50% or greater discount on it, particularly if the investment size is quite large.

peterbaker wrote: »

What exactly is being managed if it isn't my funds as proportional part of the overall unit-linked fund I'm invested in?

Your funds within the remit of that particular fund are being managed. But the fund manager is not given authority by you to sell your holding in their fund and buy another one instead. Except for some multi-manager funds like the Jupiter Merlin range, which hold other funds and do this changing of funds as part of their remit and what they charge for.

peterbaker wrote: »

the only ways to win through are:
(b) to learn like Pavlov's dog as I guess jamesd advocates. Or perhaps he is simply describing survival of the fittest? or
(c) to appoint a trusted IFA like dunstonh to be overseer. Or maybe other ways are

b is to learn what you're doing and how to buy without paying full list price. If you don't want do that, then c can save you a lot of money and/or get better results than trying to do it yourself. But of course you need to buy the services of this professional well and different ones have different skills and prices, so you still can't avoid the need to try to be a good shopper.

peterbaker

Thanks fellas, but maybe now we'd better get back to the sticky subject of Aviva's retribution.

What did their customers do to deserve it?

catie911

Hi there, first post ever from this confused Aviva customer who's only sin seems to be being gullible..

Having applied some serious thought to this I finally made the decision to hang on in there as my small policy does not mature until 2022 and they're only offering me the very minimum now. Phew! I thought, now that's dealt with..

But hang on a minute - what's this in my inbox this morning from Aviva?

"WE'RE NOW ABLE TO ACCEPT VOTES INTO SEPTEMBER
More than 75% of our eligible policyholders have now voted in our reattribution, with the huge majority (96%) so far voting YES to accept our offer. If you've already voted, thank you.

We don't want any of our eligible policyholders to miss out, so we've made arrangements so we can accept and process votes received into September.

We're on track to ask the High Court to approve our plans in mid-September. If we get the approvals needed, we expect the reattribution and fund transfer to be completed on 1 October 2009. If we don't have your vote before the reattribution takes place, you won't be able to take part in the reattribution or receive a payment.

So, if you've still to vote you need to act now to get your vote in. We ask that you get your vote to us by 21 September 2009 so we have time to register it."

I'm a complete financial novice and I would like to believe Aviva's "we're just thinking of you" blurb but my inner cynic is shouting at me to watch my back.

If it's all going as well as they say why have they just moved the goal posts? Obviously they were not comfortable with the take up and it seems to me they're a little anxious. I'm

Also today I've received the 'Red Alert' letter about my endowment, which is not news - and thanks to all you lovely money saving experts I've already moved to repayment so my mortgage doesn't depend on it any more, but I have a quick question - how can I find out what the growth was last year? They've provided detail about the projected shortfall (over 30% of the target amount) assuming investments grow at 4%, 6% and 8% each year but this means nothing to me unless I have a rough idea how it performed last year.

dunstonh

they're only offering me the very minimum now.

If you are only getting the minimum then any future distribution that may appear in 20 years time is likely to be below or near to minimum as well.

Obviously they were not comfortable with the take up and it seems to me they're a little anxious.

The take up is fine but they have a requirement to contact those to remind them

how can I find out what the growth was last year?

look at last years statement and see how much it dropped in value.

assuming investments grow at 4%, 6% and 8% each year but this means nothing to me unless I have a rough idea how it performed last year.

They mean nothing anyway as investments never perform at 4, 6 & 8%. They will have years of gains which could be in double digits and years of losses. The last decade has had two major stockmarket crashes and we are back to around 1999 prices on the stockmarket. Property has had near 50% drops on commercial property as well over the last two years. Fixed interest took a 20% hit last year but has recovered since then. Even cash took a hit last year.