PEP suitable for an elderly lady?

france4u

My 80 yr old relative has signed up to a halifax PEP for a large sum of money over 100k. Cautious managed fund. I have sat down with her and she hasn't got a clue what she has signed up for and didn't understand that her initial investment isn't guaranteed - (although she would have given the impression at the time of the interview she understood what was been said to her.) She gets very confused. We still have time left in the 30days cancellation period. My argument is that this is a long term investment plan and wholly inappropriate for someone of my mothers age to take out now especially in the current climate. The plan illustration demonstrates an averaged annual return of 6 % which I think is optimistic. She may live and I hope she does until she is 90+ and then maybe a long term investment would come into its own. I think she should cancel and look at the 3 yrfixed rate bonds offered by other providers. (She has other sound investments - ISAs and a fixed rate bond etc) What is the opinion of other people with regard to PEPs been sold to elderly people (noting that it is cautious fund investment with 50% in corporate bonds and gilts and the rest in equities) ?

jem16

My answer would be to cancel it immediately - not because of her age but because it is an investment through the Halifax which have some of the worst performing funds around.

As to investing at her age there can be many reasons when it would be sound to do so such as mitigating care home fees (as long as it's documented as something else), mitigating extra tax that would be due if over the age related allowances.

I would recommend seeing an IFA and not a tied adviser from a bank offering a limited amount of poorly performing funds.

pressuredrop_2

As I said tother day to the salesperson in the bank, trying to flog me summat and earn a few quid in commission:

"I don't buy investment products from a bank."

Yup, I would cancel....., today.

Annisele

I don't have a problem in principle with investment products being sold to elderly people. (Do you fancy telling Warren Buffett - age 79 - that he shouldn't be investing )

However, I do have a problem with people being sold things that they don't understand. It's also pretty rare for banks to have the best products.

If she does cancel then she might lose some money, if the underlying investments have fallen since she first investment. However - it still might be worth cancelling it, and then asking an IFA for an opinion.

france4u

Thanks for all your comments. Unfortunately I fear the dip in the stock market over the last couple of days could leave a chunk gone since she signed up 2 weeks ago. But as a long standing customer who has a substantial amount with them I would hope that they would see fit to return the full amount especially as she didn't understand what the implications were. (TCF and all that). I didn't really want the responsibility of financial decision making on behalf of somebody else but seems its come my way!

Stavros_3

If there is a cooling off period, you say 30 days, maybe the 100k has not yet been invested. I agree 200% with the comments of Jem, PPP (Pish- poor- Performance) Also at the age of 80 if she is wanting to invest I'd strongly advise that she does it through an IFA with family members present, and only invest with a cautious risk profile (at the very most).

Edited to say, maybe fixed term savings accounts might be better as you say, better still spend the !!!!!!

opinions4u

Age doesn't come in to it - it's the suitability of the investment for the individual.

1) There should be a clear written explanation as to why the product and investment mix is suitable.
2) The buyer should have a grasp of this in the days following purchase. If they haven't, then the sale cannot really be called compliant (although it may still be appropriate).
3) The product is probably a PIP and not a PEP.

I would suggest:

- making an appointment with the adviser to re-explain the reasons for the sale.
- then deciding whether or not to exercise the cancellation rights.
- if you feel that the sale was inappropriate, then you should complain and ask for any loss to be made good.

pressuredrop_2

opinions4u wrote: »

Age doesn't come in to it - it's the suitability of the investment for the individual.

The OP's relative sounds like a cash on deposit person to me. And they buy an investment product for £100K. Or rather, they are sold an investment product for £100K.

I could be wrong.

I don't think I am.

france4u

Yes, sorry, it is a PIP. Relative certainly does not have an understanding of what they have signed up for. I have arranged a meeting in a couple of days to discuss face to face with adviser (or should I say seller). We'll see what transpires.
Thanks again

dunstonh

At that age, you usually find people wanting capital guarantees as they are concerned about their lack of time left potentially (capital guarantee on death is quite common). i.e. you cant leave it long term as you may not have long term left!

Investing isn't wrong at that age but its less likely unless its an experienced investor or someone with a specific objective and understands what they are doing and uses suitable products to achieve that. Halifax products are basic and low quality.

Oldbiggles

dunstonh wrote: »

At that age, you usually find people wanting capital guarantees as they are concerned about their lack of time left potentially (capital guarantee on death is quite common). i.e. you cant leave it long term as you may not have long term left!

Investing isn't wrong at that age but its less likely unless its an experienced investor or someone with a specific objective and understands what they are doing and uses suitable products to achieve that. Halifax products are basic and low quality.

What exactly is a 'Capital guarantee on death' and how does it work?