ISA transfer

Jim02

Hi,

I have an ISA with Family Assurance. It was originally going to be used to pay off my mortgage, but is no longer required for that purpose.

It's a 'Family Equity' ISA, and the balance is currently about ²/₃ what I've paid into it, which I'm not happy about.

Is it worth keeping in the hope of at least recouping my investment, or would I be better off transferring it elsewhere? If so, where? If I transfer it to another ISA, would that count as a contribution?

Any and all help appreciated!

Thanks

Jim

dunstonh

Your options are:

1 - encash (and any re-investment is treated as a new ISA)
2 - switch to an alternative fund or funds with that provider
3 - transfer to another provider or funds supermarket.

On paper you currently have a loss but that would be expected if you invested anytime before the last 2 years and were invested in equities. If you were not happy to accept the volatility you should have chosen a lower risk fund.

As for what you should do in the future, that is up to. It really depends on what your view of investment risk is and the availabilty of funds and the charges based on the above 3 options.

Jim02

So you wouldn't advise just leaving it alone?

I was sold this (originally a PEP) by a financial advisor when I bought my first house; I wasn't made aware it was so risky. Do I have a potential case for mis-selling, do you think?

dunstonh

Its very easy to blame the advisor. I am assuming it was a tied advisor as i cannot see an IFA recommending an ISA with them. A tied advisor is not allowed to recommend the fund. You have to choose the investment fund after being given the choice available from the tied agent. The tied advisor should give you guidence as to which is suitable for your risk attitude. An IFA has to recommend the funds. Its one of the key differences between tied (and multi tied) and IFAs.

Now whether you feel that you have grounds to complain is up to you. I suggest you take a look at the suitability letter (called a reason why letter a few years back) and see what is put in there. Also check the risk rating that is shown.

Leaving it in the same fund is an option but i never recommend one fund investments with any provider. You can still have one ISA with one provider (or fund supermarket as the case is nowadays) and have multiple funds. This way you spread the risk across the areas.

You say Family Equity ISA. A quick check shows 5 funds available with them. Which fund are you invested in?

Jim02

My fund is the Family UK Balanced I.

My financial advisor was working for GAN at the time; she had advised some friends of mine and they recommended her. At the time of application she said she was confident that the fund would maintain an 8% year-on-year growth. It's currently worth less than half the predicted value. It would be interesting to see how other funds have fared over the same duration (June '96 to date) -- it may strengthen any case I make for mis-management. Does anybody know where this information might be available on-line?

The fund has been steadily picking up over the last few months or so, and I'm tempted to keep it going at least until I've made my money back. I suppose the best thing to do is just keep an eye on it, I was just interested in hearing what others would do in my situation!

One last thing -- my existing ISA is a shares-based mini ISA. As I understand, that doesn't prevent me from opening another mini cash ISA with another provider? Can someone confirm that my thinking is basically correct!?

Thanks

Jim

dunstonh

ISAs are done on a tax year basis. So the slate is wiped clean every April and you get brand new limits all over again irrespective of what ISA allowances you used in the past or what the balance is now.

The performance of the fund is a virtual mirror of the balanced managed sector average. This is what you expect of funds from an insurer/friendly society.

It hasnt performed as well as Newton, New Star or Schroders (for example) but you wouldnt have known that at the time. Future performance is unknown but i would rather trust a fund managed by a fund manager who specialises in fund management. I dont know if those three i mention are the top performers (as i'm not going to do full research at this time) but they are three names an IFA would normally look at for quick and dirty stats.

All balanced managed funds (and most UK equity funds) have increased over the last 6 months.