Investment in Generali Vision Plan - cut my losses or hang on?

Caher

Hello,

I have been working in Switzerland for 3 years and have the same plan. At no time did the 'IFA' make it clear to me that the first 19 months were forfeit if you surrender early. It means i have lost this amount.

Further11

I am an IFA in Mexico and have clients in plans such as Generali's Vision program, similar to Friends Provident, etc., as well as structured products, and the like. First off: we always make a full declaration of terms, costs, initial period and the relevance of same. With these plans, one can choose from a huge variety of funds; bond, equity, commodities, etc. One can further elect currency, country or region of exposure as well as industry groups and equity capitalization. Yes, we offer fund advice and also listen carefully to the client - not one has exactly the same make up as any other. You like gold: should you invest in a just gold, precious metals, or mining shares? On such as this we offer the benefit of our research. These are generally long term plans. If you are going to get upset with month to month, or even annual performance, these last few years (2012 no exception), will likely cause upset given many funds' performance. I have traded for a global bank, which required we tally our positions (long and short) on an hourly basis and do a daily P&L. However, long term investing is a different game. Within Vision and similar, you have the option of low risk, limited yield funds or more aggressive funds, or, as we normally recommend, a mix. As a point of note, as a firm, we try very hard to limit our forecasting. There is always someone, out of tens of thousands, who got the last big move right, and he or she becomes flavor of the month on all the financial chat shows. What we generally look for are diverse portfolios based on the client's expressed needs and preferences. Indeed, against our suggestion, we recently had a client who insisted on a Euro denominated plan. Note, in the fall of 2010, most all forecasters said that Euro:dollar would go to parity in 2011. Only now do we see it slip to below 1.30. Our strategy, in conjunction with dollar cost averaging, provides long term security. A point of note and OF GREAT IMPORTANCE: we invest almost all through the Channel Islands, where the investor is 100% guaranteed (no limit) against loss should the financial institution fail. The banks are required to have trusts to ensure that there is money available. This is somewhat better protection than that offered in the Isle of Man (also very good). It is far better than that offered by the Feds., which is both limited and only applied to cash deposits, and not investment products like mutual funds. At the end of the day: my advice is buyer beware, and make 100% sure that you know into what you are putting your hard earned money. Unless they are a true insider, i.e. a criminal, your adviser doesn't have access to that much more information than you, just the time to dedicate to reviewing it, and a willingness to pay for certain services. The old adage of sell in May and go away has once again been borne out in, in spades thanks to Europe and lackluster economic data in the States. While, as noted, we limit our forecasting; we do have suggestions. Equities are down, secure (!) bond yields at an all time low, and commodity prices sliding - what to do? It is difficult to see an end in sight of Europe's woes. It will no doubt print more money as a band-aid, but what may result is the awful specter of stagflation. For currency, the dollar reigns. While the US recovery has been somewhat anemic, corporate America is in quite good shape. Look for value and dividends in equities. Property markets have almost certainly stabilized and again for longer term, property should do quite well. The next boom? Some years off! If you are confident of your needs, understand both the product you are choosing, AND into which funds your money is going; then such as a Vision platform can make a lot of sense and we remain confident that we shall meet the educational and retirement goals of our clients who chose them.

GDB2222

Look, Mr IFA in Mexico, it makes zero sense for the client to pay charges like these. There are other plans that do not have these charges, eg unit trusts. They may not have the same flexibility, but they don't have the same extortionate charges. Just stick your money in a tracker fund, and indeed let dollar averaging help you out.

Aegis

GDB2222 wrote: »

Look, Mr IFA in Mexico, it makes zero sense for the client to pay charges like these. There are other plans that do not have these charges, eg unit trusts. They may not have the same flexibility, but they don't have the same extortionate charges. Just stick your money in a tracker fund, and indeed let dollar averaging help you out.

For the record you can get completely unfettered offshore bonds for under 0.2% with no up front charges. Not all such bonds are a rip off, but they are unfortunately quite easy to manipulate into sounding cheaper than they are due to the huge flexibility on initial and annual pricing.

Personally I think that an offshore bond should have exactly two charges. An initial charge, paid to the IFA and explicitly deducted from the investment amount, and an annual charge which is pre-determined over the life of the bond. Any talk of establishment charges, early exit penalties, allocation rates, etc, generally means that something is going on to manipulate the charges to make them less transparent.

If in doubt, don't accept a bond with an exit penalty unless you have a very very good reason to trust the person arranging it for you.

tristanx

I've also been duped by a Generali IFA.

Questions:
- Has anyone led their Generali plan to its maturity and gotten money back? Did you get back more than what was put in?
- Has anyone broken their Generali contract early and gotten money back? Even if less than what was put in?

fyilma

Sorry, not aware of anyone letting their Vision plan run to maturity and cannot see on any other notice boards, which is rather damning.

I was able to renegotiate the payment terms with Generali and pay a reduced premium, as it was so obviously mis-sold as a flexible savings plan...yeah right. Generali are in my opinion knowingly selling this product through IFA's which are giving incorrect advice. Generali must be making a killing on this product.

If your Vision was sold through Generali Guernsey, your best bet is to complain to the Guernsey Financial Services Regulator (the GFSC) which is responsible for Generali. The offshore centres are coming under pressure to bring their houses into order and it does them no favour whatsoever to be used for selling such products, which Generali could not sell in the UK.

The GFSC contact details are as follows:
Guernsey Financial Services Commission
P.O. Box 128
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 3HQ

You can also Google GSFC for more details.

I hope this helps.

eastwest101

fyilma,
That's great to hear that you were able to re-negotiate with Generali. Did you with their Guernsey office - or through the closest local one ?
I'm in a similar situation - having just realized the scope of charges and initial period. I've had upped my premium amounts twice in the last 2 years from prompting from my IFA about the "bonus" that would be given from Generali. No mention at all of that extra premium going into a whole new Initial period and in fact no proper explanation of the initial period at all.
So I'm currently weighing my options - between going direct to Generali or taking a complaint to the FSA here in Japan. I would be interested to know the details on the negotiation you had with Generali. Did that involve freeing up some of that initial period money ? or just a reduction in the ongoing feeds to match a reduced premium amount ?

fyilma

Hi Eastwest101. Sorry to hear about your position. Like many, I was attracted by the introductory bonus encouraging me to commit higher initial premiums only to find out that the much vaunted 'flexible premiums' (as described in the Vision brochure) are not flexible when you wish to reduce them.

My negotiations were with Generali Guernsey via my IFA. My contract was rewritten so I basically do not need to pay any further premium for a period (as I am in surplus based on my high original premiums) and then when I start paying again, it is at the reduced rate. No cash was therefore freed up but my monthly premiums are now at a level I can afford.

I would suggest you raise with Generali in the first instance. If you do not have any success, then raise with the GFSC and also the Japanese FSA. The GFSC has strict controls around its insurance licensees which Generali is required to strictly comply with, so you should look to make sure that you were provided with all necessary documentation, that the product sold was reasonable for your needs, you were advised of cooling off period etc. My own negotiations with Generali were strengthened by what I considered admin failures by my IFA and Generali.

The GFSC has to look very carefully at this product as the GFSC regulatory systems and its previously highlighted weaknesses (no Ombudsman, high legal costs) is allowing a product to be sold that the the UK regulator long sinced banned. It really is a disgrace.

I hope this assists.

pjacko159

Hi Guys.
Cant believe some of the comments on here. Did nobody read the plan details?
The account is very very good if you use it for hwat its designed for. Yes, there is a 2% Admin charge for everything you put into the account which stays at that level even if you reduce premiums. = choose an investment amount you can maintain and keep saving and the 5% loyalty bonus covers that easy!!!
There are $4.5 per month for some other fee = covered by the extra allocation! Just dont save less than $300!!! (cause it doesnt apply)

And then there is the real fee, the 1.5%!!! But come on, have you guys looked at the funds!?!?!?!?!?! There are funds that have done 20% per year for many years.

First state china
JPM Thailand
JPM Europe equity (10%)
Invesco bond C

Basically, the charges do not determine the success or quality of the account, the selection of funds do.

Of course this account is more expensive than usual accounts in the UK or USA, but then again you dont have access to these funds!!! This account is for long term investors, not people who want to take money out or stop making payments because they want a new car!

I just finished a 15 year account and averaged 8.5% return net

mairoo wrote: »

Hi,

I'm in quite a lot of confusion at the moment and thought I'd come on here to get some advice. I'm a UK expatriate living in China.

In 2006 I was advised by someone calling themselves an expat IFA (not in China) to invest in a Vision Plan with Generali. I have recently spoken to an IFA in the UK and have been told that this is not a great situation to be in. Having done futher research, this seems to be entirely accurate and I am kicking myself for not having done a Google search 6 years ago.

The situation is this:

I have invested £24,400 at a rate of £400 a month.
The current plan value is £24,692.60.
The current surrender value is £16,895.76.

The shortfall on the current surrender value is because if I end the plan now, I will still have to pay the admin fees for the rest of the policy (until 2031 - 25 years). These amount to 1.5% of the total premiums paid plus 1.5% of the of the units allocated to the plan.

It seems that I have four options:

1. Keep paying the premiums and hope that in 25 years' time the investment has been worth it (and that Generali don't go bankrupt or something as the fund is not FSA-regulated and not covered in any way).

2. Drop premiums to the minimum £100, although the fees will still be paid based on premiums of £400.

3. Stop paying premiums altogether, in which case fees will continue to be paid based on £400.

4. Cut my losses (£7504.24 on the premiums paid in so far) and reinvest.

The UK-based IFA is suggesting that I invest in offshore bonds through an FSA-regulated platform. I am currently in a position where I can invest more - probably £600 or £700 a month.

I'd be really grateful for any advice anyone can provide. I feel like a mug for having taken the original advice and now want to try to get as many different opinions as possible!

Many many thanks.

mairoo

pjacko159

The costs are really clear.
you have to pay a 2% admin fee on everything you put into the account. This charge is only effective if you stop paying because in year 10 they give you a boinus of 5% of everything you put into the account. (Also after year 10 this chargegoes down to 0.3%)
Then you have an annual charge of 1.5% on the total, which considering the funds you have availabel seems to be reasonable. Just try to invest in high quality aggressive funds and leave it there for the long term, that way it is easy to make money and you give the bonuses time to kick in!

GDB2222 wrote: »

It strikes me that you have already paid most of the costs of the Generali scheme, one way or another. You need to ask yourself what the costs are on any new money you put in. That may be very low. I couldn't tell from your description. You also need to know what the alternatives are, eg what is the cost of the offshore bonds you are now being touted? Otherwise, it's out of the frying pan and into the fire for you!

Generali is a major insurance company that's been around for a very long time, so I'm not sure why you think they are likely to go bust?

If you intend to return to the UK, you should think about a UK-based index tracker unit trust, as some of these have charges of well under 0.5%. Even if this is not the most tax-efficient for you, the much lower charges may make it worthwhile.