With Profit Bonds

whiteflag_3

Perhaps a new thread on commission/fees etc would be a good idea !

As usual there seems to be a misunderstanding by some posters of the relationship between commission and product charges and advice.

Whose got a starter for 10?

keithwales

Whiteflag,

Yea but...
I see what you mean, I just don't think such a thread would run very far.

Also are you going to limit this to Financial services?

How much does a dealer make on car sales/ warranties / servicing?
How much profit does anyone make from providing a service or supplying goods?

Do we really need to know?

Shouldn't we instead focus on the quality of the service provided or goods supplied?
I know, then it's not really Money Saving is it.

Two phrases spring to mind:-

Penny wise, pound foolish.
Pay peanuts get monkeys.

Sorry my mind is wandering again!!!

whiteflag_3

keithwales wrote:

Whiteflag,

Yea but...
I see what you mean, I just don't think such a thread would run very far.

Also are you going to limit this to Financial services?

How much does a dealer make on car sales/ warranties / servicing?
How much profit does anyone make from providing a service or supplying goods?

Do we really need to know?

Shouldn't we instead focus on the quality of the service provided or goods supplied?
I know, then it's not really Money Saving is it.

Two phrases spring to mind:-

Penny wise, pound foolish.
Pay peanuts get monkeys.

Sorry my mind is wandering again!!!

I agree, it seems to me that quality of service has been totally overlooked in the debate on this thread!

ReportInvestor

dunstonh wrote:

The consumer is not directly paying it though.

Using the Standard Life example earlier in the thread, the reduction in yield was 0.3% over 10 years. So the policyholder is losing 0.3% p.a.

If standard life want to pay the IFA 0.5% fund based trail and a few percent up front, what does it matter? The important bit is the 0.3% RIY.

Can dh let us have a current list of those insurers/policies where the shareholders or members take less on their new business than they pay to IFAs?

Maybe it could feature in the financial press? "Free money from the Financial Services Industry".

And Martin could promote it on ITV in a new series.

dunstonh

Can dh let us have a current list of those insurers/policies where the shareholders or members take less on their new business than they pay to IFAs?

Norwich Union, Clerical Medical, Legal and General, Scottish Widows, Friends Provident and just about all the others on a variety of different classes of business.

Its nothing new and no-one would be interested because it comes down to the economics and a "seen" requirement to have a good and improving market share to satisfy shareholders. Providers will buy business at times by subsidising certain classes of business from the more profitable areas. It occurs in a number of retail areas where some things are sold at a loss. Often referred to as loss leaders.

Some financial services products do not make a profit for 15 years. If the money is taken out before then, provider faces a loss on paper.

ReportInvestor

Can you give us a current product example?

That still leaves a very high average fee for IFAs on WP Bonds across all providers. Unless WP Bonds as a product were / are loss leaders for the whole industry.

ceebee_2

needmoney wrote:

As a financially ignorant housewife in Sept 2002 I put quite a substantial amount into a with profits bond with SL on the advice of an IFA.

Because of all the confusion with SL regarding demutalisation I really am at a loss to know how I stand i.e should I stay or should I go. I feel there must be a better deal for my money but am at a loss to work it all out and am loathe to go to another advisor as I've been told that bonds are the lowest of the low and he gave me that advice so once bitten twice shy.


Does anyone have any advice for me I would appreciate it very much. I'm told there's no such thing as a stupid question here and forgive if this question has been asked but I did a search and nothing came up, thanks in advance for any replies.

It does seem as though all the experts have wandered off in their own dreamworlds and should be reminded of the original topic initiated by 'needmoney'. Four sheets of internal comment/argument between the experts is not conducive to encouraging 'posts'.
We appreciate that there may be fine points of difference among the experts but those arguments do not, IMHO, belong in a general thread. It does appear that any post involving annuities, bonds, income drawdown, etc., eventually devolve into a slanging match.
Please desist and try to address your comments to the uninformed participants.
Having said all that, I find that the direct advice given on these threads is invariably useful and informative.

EdInvestor

ceebee wrote:

It does seem as though all the experts have wandered off in their own dreamworlds and should be reminded of the original topic initiated by 'needmoney'. Four sheets of internal comment/argument between the experts is not conducive to encouraging 'posts'.

This is a 2 year old thread of course, and the OP's question was answered at the time.

dunstonh

ReportInvestor wrote:

Can you give us a current product example?

That still leaves a very high average fee for IFAs on WP Bonds across all providers. Unless WP Bonds as a product were / are loss leaders for the whole industry.

NU's investment bond offer (which closed on 18th December) had enhanced allocation rates based on the size of the contribution. It got further a further increased rate of 1% if you already had an NU investment. With a bit of commission gifting but still taking a small amount plus 0.5% you could get a negative reduction in yield over 5 years.

The problem you have is that the pricing of the products varies massively. You can get some dirt cheap bonds and some very very expensive ones. To assume that there are all the same is incorrect. It is also wrong to assume that commission is the driver on costs. A number of the cheaper ones pay more commission than the expensive ones.

I will remark that I am referring to investment bonds as a product. I am not referring to with profit bonds. I can only find 5 conventional with profit bonds left and they are all with friendly societies. The rest would in be investment bonds with a with a unitised with profits fund available within their fund range.