St James Place International Investment Bond

Cintrapark

ok, thanks.

Aegis

marathonic wrote: »

Regarding the argument about there being no need for exit fee's in today's investment world, I disagree completely.

My comment should be read in the context of offshore bonds, which is ultimately just an administrative wrapper for investments with a pretty easy set of calculations to carry out on surrender.

It all depends on the product. A lot of investment products require forex transactions and, in the case of some bonds (especially those where capital is protected), the trading of options is also required.

For example, there are products available where your initial capital is protected for 3 years and, should it rise, you get a return of a certain percentage of a stock market index over that three years.

If such a product were purchased for the S&P 500, the company will typically put enough of your initial investment into a fixed term deposit account so that, including interest, your initial capital is returned at the end of the fixed term (of course, you lose to inflation). The remaining funds are typically used to purchase enough Options to gain the required exposure to the stock market - with the remaining going towards fees for the company.

How can a company that sets up the above possibly agree to no exit costs if the investor decides to pull out in a few months time? They'd lose both trading costs and interest on the deposits as well as forex costs on the portion they had to exchange to US dollars.

The issue is that this isn't one of those types of product. It's simply a structure which costs a few hundred pounds a year to run profitably and has absolutely no need for a 7% exit penalty except that it protects the salesman against a customer finding a better deal and moving their money.

This is a throwback to the days of the 7% commission bond, which should have been consigned to the history books with the advent of RDR. SJP as a "vertically integrated firm" appear to be able to flout the very spirit of RDR by still offering the exact same commission-based product that the FSA set out to eliminate.

A decent independent adviser would have to run an analysis of such structures available on the whole market and would need to justify the costs to a potential investor. SJP seem to be able to get away with just picking one of the most restrictive and expensive products on the market and pushing it onto their clients.