Pension Rip-Off

Gettingeven

Hmmm, I also a somewhat dismayed by the self-annointed finance gurus on here who think that they know better.

I can understand his concerns, as, rightly or wrongly, the financial services industry is seen as one which benefits those who work in it rather than its customers.

How many of the IFAs posting on here were responsible for selling low cost endowments by the shed-load back in the 80s and 90s? I don't expect to see too many hands raised, do you? How many have sold investment bonds paying commissions of 7% of the amount invested to the adviser, as opposed to the lower commission rates earned via unit trusts and investment trusts?

I can assure you that nearly all will claim, "not me guv!"

atush

Stop blaming the car Ed, start putting diesel in your car.

dunstonh

Hmmm, I also a somewhat dismayed by the self-annointed finance gurus on here who think that they know better.

Perhaps because they do know better. (not aimed at the knowledgeable amateurs).

I am somewhat dismayed by people who clearly do not understand the subject going off on a rant and calling rip off or scam when it is their own failure to understand that is the issue. There are plenty of issues that could be dealt with or need looking at but this thread was started as a rant against pensions when it is actually against a type of investment fund and a fund that the OP does not understand. Everyone seems to be getting blamed for that other than the OP.

How many of the IFAs posting on here were responsible for selling low cost endowments by the shed-load back in the 80s and 90s?

Statistically not that many. By the time IFAs came into existence, endomwents were already in decline. Sure, some did them but using the endowment argument with hindsight is silly. The Consumers Association (Which?) recommended endowments. As did the media. Had this site existed at the time, it would have a best buy endowment section as well. There were errors with endowments but playing hindsight just shows a lack of knowledge.

How many have sold investment bonds paying commissions of 7% of the amount invested to the adviser, as opposed to the lower commission rates earned via unit trusts and investment trusts?

Do you understand the commission system? Clearly not from that example.

JoeCrystal

dunstonh wrote: »

Statistically not that many. By the time IFAs came into existence, endomwents were already in decline. Sure, some did them but using the endowment argument with hindsight is silly. The Consumers Association (Which?) recommended endowments. As did the media. Had this site existed at the time, it would have a best buy endowment section as well. There were errors with endowments but playing hindsight just shows a lack of knowledge.

That is pretty good point, in fact I would argue that the internet and indeed, this forum actually helped many in looking for good answers on savings, investments, pensions and many other subjects.

As matter of fact, if this forum does not exist, it is very likely I will not consider putting money into pension since I did not really get the light bulb moment for saving up for retirement until I joined back in 2009.

To be fair, from looking at the fund graph compared to other index such as FTSE100 and others, it is look very stable, doing job as it meant to do, maintaining value of the fund relative to other investments.

Cheers

Joe

Gettingeven

dunstonh wrote: »

Perhaps because they do know better. (not aimed at the knowledgeable amateurs).

Statistically not that many. By the time IFAs came into existence, endomwents were already in decline. Sure, some did them but using the endowment argument with hindsight is silly. The Consumers Association (Which?) recommended endowments. As did the media. Had this site existed at the time, it would have a best buy endowment section as well. There were errors with endowments but playing hindsight just shows a lack of knowledge.

Do you understand the commission system? Clearly not from that example.

Yes, right. Of course, that is also a poor argument as most IFAs were once commission hungry tied agents and company reps, and you know full well that that is what I meant. Today's sanctamonious IFAs were yesterday's commission driven company salesmen. They had to start somewhere. Only the job title has really changed.

To say that it doesn't matter anymore is really rather silly, as the motive for being 'in the job' remains the same. How many 'advisers' in the 80s and 90s put it like this...."Right, this capital repayment mortgage will definitely repay your mortgage in 25 years time, and this low cost endowment mortgage may not, and you could be left with a considerable shortfall if the stock market doesn't perform". Very few, I'm sure you would agree.

I clearly do understand the commission system. What part of my bond commission argument do you not understand, then?

fairleads

http://www.guardian.co.uk/business/2009/jan/21/standard-life-toxic-mortgages

Even IFAs were up in arms about the performance of this fund, which begs a question or two about the sincerity (yet again) of some of the posters here on this thread. Further, the only reference to this fund on the SL web is - standard life managed cash pension fund. So how about an apology to the OP, or at the least, acknowledge the veracity of his or her post.

EdGasket

The article mentioned by fairleads was to do with SL's 'Sterling' fund which they did mostly compensate investors for eventually. After that debacle, they then touted the 'Managed Cash' fund I referred to as the more stable 'Safe Haven' in times of troubled markets. It might be more stable but still regularly losing money.
I think, without specialist knowledge, it is not unreasonable to expect a 'professionally managed' cash fund to exceed the returns I could get myself in the high street. Furthermore it is not unreasonable to expect the 'professional managers' to cut their fees where they cannot provide a decent return on a cash investment. I read that the Managed Cash fund had £770million invested in it so what are the managers doing for their £7.7 million of fees on this fund? I think they need to get off their backside, take a walk up the high street and invest in a few building society accounts!

Gettingeven

EdGasket wrote: »

The article mentioned by fairleads was to do with SL's 'Sterling' fund which they did mostly compensate investors for eventually. After that debacle, they then touted the 'Managed Cash' fund I referred to as the more stable 'Safe Haven' in times of troubled markets. It might be more stable but still regularly losing money.
I think, without specialist knowledge, it is not unreasonable to expect a 'professionally managed' cash fund to exceed the returns I could get myself in the high street. Furthermore it is not unreasonable to expect the 'professional managers' to cut their fees where they cannot provide a decent return on a cash investment. I read that the Managed Cash fund had £770million invested in it so what are the managers doing for their £7.7 million of fees on this fund? I think they need to get off their backside, take a walk up the high street and invest in a few building society accounts!

To be fair, Ed, the cash held in such funds by the likes of Standard Life, is held very short term. The high rates at building societies are usually only offered to savers who are prepared to leave the money untouched at a fixed rate for 3, 4 or even 5 years. I dare say if Standard Life offered its money market fund for a 5 year fixed term it would receive a much higher rate, but you wouldn't be able to access your money at short notice then, would you!

Having said that, I did find this article about such funds on a google earlier...

http://blogs.telegraph.co.uk/finance/ianmcowie/100010233/rotten-returns-prompt-fund-manager-to-cut-charges/

EdGasket

I can easily get 2.5% on cash with instant access from National Savings and a number of high street accounts; not difficult. The only 'cash' pension options available from SL are their 'toxic assets' Sterling fund or the Managed Cash which is losing money. Is it too much to ask these 'managers' to invest in something safe that at least provides a positive return however meagre? If the terms of the fund don't allow for investment in say building society accounts then they should buck their ideas up and change those terms. Sun Life had a Building Society pension fund. Why should I have to take unwanted investment risk as the only hope of covering pension management charges and actually getting some return on my money?

Gettingeven

EdGasket wrote: »

I can easily get 2.5% on cash with instant access from National Savings and a number of high street accounts; not difficult. The only 'cash' pension options available from SL are their 'toxic assets' Sterling fund or the Managed Cash which is losing money. Is it too much to ask these 'managers' to invest in something safe that at least provides a positive return however meagre? If the terms of the fund don't allow for investment in say building society accounts then they should buck their ideas up and change those terms. Sun Life had a Building Society pension fund. Why should I have to take unwanted investment risk as the only hope of covering pension management charges and actually getting some return on my money?

No, you can't get 2.50% instant access via National Savings unless it's in a National Savings ISA, and you know there is a limit on how much you can invest in that. A bog standard national savings investment a/c is paying 0.30% on balances over £25k.

You should accept that very short term money receives very little interest, but I totally agree with your stance on the charges levied on such funds, which is why I posted that link earlier.