Stocks and shares ISA - keep or close?

turbobob

LittleMissAspie wrote: »

On the statement it has cash-in values for his Platinum Plus part, will this include or exclude the MVR he has to pay? The MVR is 20-25% for the years he was paying in, so will this ever expire like the cash-in charge does?
http://www.co-operativeinvestments.co.uk/cfscombi/pdf/MKT539A_WEB_Platinum_Plus_flier.pdf

The flyer you've linked to explains them quite well. Anyway, MVR's on with profits are not a penalty like the cash in charge. They are needed because of the way with profits investments work.

With profits investments increase through the addition of bonuses. Behind the scenes, they are normally invested in a fund which is made up of mixed assets (shares, property, fixed interest securities etc). This fund goes up and down in line with the market value of the investments it holds.

If the investment returns are not sufficient to support the bonuses that have been added to the policy, then you will have an MVR applied. If MVR were not applied, you'd be taking more than your fair share of the investment - leaving less for those still in the fund. It would essentially be a ponzi scheme.

If investments recover sufficiently then the MVR should be removed, in time. It might take a while considering the severity of whats happened over the last year or so..

dunstonh

LittleMissAspie wrote: »

The Co-op ones are independent:
http://www.cfsifa.co.uk/servlet/Satellite?cid=1195554489128&pagename=CBFAr%2FPage%2FtplCBFArStandard

That's why we went to the Co-op.

So, they have the co-op as an employer and they sold co-op products. Doesnt really sound independent.

Whilst it is allowed within the rules, large employers that are banks or insurance companies do tend to put rules in place on their advisers that true independents would not have. Plus, being employed in a salesforce with targets and sales managers just does not fit with getting independent advice.

jamesd

LittleMissAspie wrote: »

The Co-op ones are independent:
http://www.cfsifa.co.uk/servlet/Satellite?cid=1195554489128&pagename=CBFAr%2FPage%2FtplCBFArStandard

That's why we went to the Co-op.

They only sold you products from their own company. They clearly did not provide you with choices from the whole market, independent of who they work for. So far as I can see from how they acted in your case the claim to be independent is simply pretence, not fact, and they acted as tied sales person would act.

If you want independent you'd buy via a place like Hargreaves Lansdown. They have a few of their own products but provide access to a very broad range of others.

LittleMissAspie wrote: »

Like what overflow is, or the difference between single premium investment and regular premium investment. I assume by investment they mean payment to the account.

Overflow is money paid in that is greater than the annual ISA allowance. SO pay in 3,600 (or 7200 if no cash ISA is being used) and there would be no overflow. Pay in 10,000 and there would be 6,400 overflow above the 3,600 limit.

There's no difference between regular or single or many single payments except that they give slightly different MVRs.

Investment is money paid into the account.

LittleMissAspie wrote: »

On the statement it has cash-in values for his Platinum Plus part, will this include or exclude the MVR he has to pay? The MVR is 20-25% for the years he was paying in, so will this ever expire like the cash-in charge does?
http://www.co-operativeinvestments.co.uk/cfscombi/pdf/MKT539A_WEB_Platinum_Plus_flier.pdf

It will eventually go away but it's not worth waiting for it to go away because all it is doing is telling you the truth about how the investments have done.

Platinum Plus works a bit like a scam, though it isn't one. What they and other with profits funds do is pretend that the value increases all the time so it looks nice and steady and safe and avoids worrying people. If people want to take money out they have to tell the truth about how the investments have performed. They do that with the MVR, which is really the "tell me the truth" value. That's why you see bigger MVRs for money put in when stock markets were higher than they are today - the money put in has bought investments that have a lower value today.

Normal unit trusts don't hide the daily variation in value. That makes them look more risky to people who don't like ups and downs. But all that's happening is that the numbers are being fudged to make the with profits look more even.

So, just think of MVR as "true value today". Compare those with the true values that unit trusts and other investments report all the time.

The cash in charge is how the co-op charges for the initial sale. They assume that you'll keep the product for a while and add a bit to the annual charge to cover it. If you don't keep it as long as they expect then they can't get back the initial commission cost from the annual charges, so they charge you when you take the money out instead. Normal places just charge you up front and use the normal annual charge for the investment.

For a competitive normal place like Hargreaves Lansdown you'll see three main values: the initial charge by the fund management company, the refund of that by Hargreaves Lansdown and the annual charge by the fund management company, which pays 0.5% (usually) from that to Hargreaves Lansdown. Because HL is competitive you'll normally see that all or almost all of the initial charge is returned to you and that's done just by buying more units for the money, as if the charge didn't really exist.

The annual charges won't show up on your statements, they are built in to the change in value of the fund and are taken out of that in small pieces every day based on the value that day, then their bit is paid to HL once a month. If you are using the HL Vantage ISA you can see these payments because part of them is paid to you and shows up in their Loyalty Bonus - that's an account that is used to hold these rebated annual commissions. You can ask them to pay you that money or to put it into your investments, they do that only when you ask, not automatically. The normal dividend payments or interest payments from investments can be put back into them automatically, or kept inside the ISA as cash to be invested later, or paid out to you, whichever you prefer, and you can change that at any time.

The co-op deal isn't cheap, it just defers the initial charge to when you take the money out, while HL isn't deferring, it really is cheap.

sons_2

LittleMissAspie wrote: »

The Co-op ones are independent:
http://www.cfsifa.co.uk/servlet/Satellite?cid=1195554489128&pagename=CBFAr%2FPage%2FtplCBFArStandard

That's why we went to the Co-op.

I am sorry to say that you most probably haven't seen a Co-op independent financial adviser, this role does exist in the co-op but they are IFA's. You will have seen a Co-op financial adviser who are tied financial advisers that can only advise on Co-op products. Both roles exist within the co-op, historically the IFA's employed by the bank and the tied adviser employed by CIS. To end up with their with-profits ISA you will have seen the tied, no question on this. This will also most prob have an MVR (Market Value Reduction) at the moment.

sons_2

He has a Platinum Plus ISA, Platinum Plus overflow and what else? You imply there are several funds? Also when was it started?

sons_2

jamesd wrote: »

They only sold you products from their own company. They clearly did not provide you with choices from the whole market, independent of who they work for. So far as I can see from how they acted in your case the claim to be independent is simply pretence, not fact, and they acted as tied sales person would act.

As I stated the Co-op have a few different types of adviser, the largest group is tied advisers that only offer co-op products, the 2nd is Bank advisers who once again only offer Co-op products and the third is Co-op IFA's.

They need to find the business card or anything the adviser gave them at the time, I would suggest it doesn't have the word Independent anywhere near it.

sons_2

dunstonh wrote: »

Its not difficult but you either have to have the time to research it yourself or use your adviser to give you the basics in simple language and leave the rest to them. In this case, it appears that you havent used an IFA but a tied sales rep of the co-op. Its never a good idea to see a sales rep (products more expensive, limited choice and sales targets and pressure to see 3-5 people a day can mean they aim to get in and out quickly and dont spend the time with you that you need).

The concept is good but you do need to understand it. Otherwise you make decisions which may or may not be right (pot luck).

Spot on with every word.