Tax Exempt Savings Plans [TESPs]

jimjames

masonic wrote: »

I think colsten makes a very good point in the post above - in the past it appears that this information is not being provided on the forum when requested. I too am interested in finding out more detail about these products so that I can evaluate exactly what is on offer. I have deliberately gone out in search of information and have come up lacking. I can see no reason why sharing this information on the forum would harm anyone if these products genuinely offer something of value.

While no-one is under any obligation to provide any info at all here, it does seem odd that the promoters of such savings plans aren't able to suggest who they might be suitable for.

For the investments I use I'm more than happy to recommend them to others, to explain to them why I think they are suitable and more importantly why they may not be suitable for some.

jimjames

masonic wrote: »

If you are investing in products that do guarantee to return all of your capital, then the risk is of course much lower, and perhaps the investment would be subject to some form of FSCS protection should the society fail. That's certainly worth checking, especially in light of a certain credit union that's the topic of another thread and is currently struggling to survive.

Apart from charges I think my biggest issue with these types of plans are the complete lack of flexibility and massive costs to get out.

People complain about HL's exit charges but these are in another league altogether.

Want your money in the first couple of years? I don't think you'll see much back with some providers.

Want to stop? Not possible without cancelling.

Want to increase payments? Not possible with most.

I'm used to products such as investment trust savings schemes and S&S ISAs where I can vary payments at will, stop and start as I want and to access my money when I want. The reason I struggle to understand who these plans are suitable for is that I can't imagine who would not want the option to do any these things over a 10 year period.

planteria

colsten wrote: »

why would you think anyone on here would expect you to feel obliged to provide misinformation to anyone? I certainly wouldn't.

...That's excellent. Can I please request information which enables me to make my own decision, on the forum, not via PM. Thank you in advance.

i was referring to a comment above, as you will see. and i was referring to making information available to anyone that requested it, which would come from the Friendly Society, for them to make their own decisions.

planteria

masonic wrote: »

The 'low risk' claims were being made about the underlying investments and sector in the statements I was reading and while true in the context of the stockmarket at large, it was a rather misleading statement to make in the absence of that context. This was not in reference to a product that guaranteed to return all of the capital invested, I hasten to add.

ok. the Friendly Society plans i have are all guaranteed to return in excess of the capital invested. so yes, "risk is of course much lower"

masonic wrote: »

Well, in essence the monthly payment amount is immaterial to the effective rate of return....

agreed. it is 1 year's bonus. the bonus was not guaranteed and is not guaranteed in subsequent years either. but my capital, and all bonuses already added, are. and the society has paid a bonus every year since the 1800s.

masonic wrote: »

I think colsten makes a very good point in the post above - in the past it appears that this information is not being provided on the forum when requested. I too am interested in finding out more detail about these products so that I can evaluate exactly what is on offer. I have deliberately gone out in search of information and have come up lacking. I can see no reason why sharing this information on the forum would harm anyone if these products genuinely offer something of value.

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and fair enough re. further flex with other products, jim. i can see myself that i will use next year's ISA allowance, but then may invest less than this in the following tax year. i will see how things go, and other commitments, and i agree that flexibility is important. one of the things that make the commitment to a TESP possible for many people is that the investment/month is low, but yes, realistically an investor needs to be willing to commit to the term. for so doing, they can generate a return on funds not yet invested. and to get beyond the £25/month limit they need to look at a other Friendly Society products..bigger commitment, but bigger bonuses on funds not yet invested. and at that point, i agree, thinking about the future, possible changes in circumstances, and other investment options, all come into play.

ratechaser

planteria wrote: »

that was good going.. and i know there are people here who are with Foresters, but i had a look at them and chose to invest elsewhere. i'm not sure whether previous guarantees have held the fund back..but either way, i think there are better options.

Well, it would have been even better were it not for the fact that I was a poor student back then so only went for the lowest £4.50/month policy. If I'd maxed out at £18/month (which was the limit at the time), I'd be on course for about a £28k payout in a couple of years!! But back then, 12% was good but not stellar, so I didn't realise just what I was passing up...

With the Foresters though (and there are 2 lots, this was the former 'Ancient Order of...'), I used to be pretty active in their social/court scene (think masonic if you like, but while there was regalia, titles and handshakes, it was nothing 'secretive'!), and I suspect what held them back was just how late they were to the party in terms of incorporating as a genuine business. There was far too much nostalgia for the old days where anyone could sell a penny policy to anyone else - the organisation failed to appreciate the changing regulatory landscape, and was for some time a bloated fragmented admin heavy entity that was not geared up to sell in the new world...

masonic

planteria wrote: »

agreed. it is 1 year's bonus. the bonus was not guaranteed and is not guaranteed in subsequent years either. but my capital, and all bonuses already added, are. and the society has paid a bonus every year since the 1800s.

So you effectively have no visibility of future bonus levels, or how they are determined (e.g. what underlying investments they depend on and what expenses are deducted)?

I'm sure you can understand why not knowing would be unsatisfactory. There are horror stories like the one posted by MCGONIS earlier in this thread, £112 return over 10 years on a total commitment of £2,400 would be a disaster as far as I'm concerned! Any reasonable person would need to have some visibility into these products and how they work to have any confidence that they could avoid falling into a similar situation.

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planteria

masonic wrote: »

So you effectively have no visibility of future bonus levels, or how they are determined (e.g. what underlying investments they depend on and what expenses are deducted)?

I'm sure you can understand why not knowing would be unsatisfactory...

no, i don't. it is a plan which is invested in a with-profits fund that has paid a bonus every year since the mid-1800s but the bonuses are dependent upon the performance of the fund. i understand the make up of the fund, but, as you would expect, it changes over time.

odd that some of your post was removed:think:

colsten

planteria wrote: »

i was referring to a comment above, as you will see. and i was referring to making information available to anyone that requested it, which would come from the Friendly Society, for them to make their own decisions.

planteria, can you clarify please. Is the information you can provide the same information I can get from the Friendly Society directly, or is it additional information. If the latter, please can you provide the additional information. Many thanks

masonic

planteria wrote: »

no, i don't. it is a plan which is invested in a with-profits fund that has paid a bonus every year since the mid-1800s but the bonuses are dependent upon the performance of the fund. i understand the make up of the fund, but, as you would expect, it changes over time.

I think you are being slightly disingenuous if you are claiming that you don't understand why not knowing about the underlying investments or expenses would be unsatisfactory for a potential investor trying to make an informed investment decision in relation to one of these products. It would also be rather evasive to imply that changes to the investments over time would make that information not worth knowing, if that was your intent.

These products are being sold direct to consumers and via unregulated intermediaries. Customers are not generally being invested as a result of financial advice (and an IFA posted earlier in the thread that advisors had been warned off this type of product because of high charges and consequent risk of misselling claims). Customers therefore need to do their own research, just as they would when selecting any other investment product.

Before any informed decision to invest could be made, it would be necessary to evaluate the underlying investment strategy, composition of the fund, effect of expenses and fees deducted from the bonus pot etc. That is the information that I would like to see.

There have been some posts by people describing some of these products as extremely poor. There can be no doubt that at least some of them are, but I am at least for now open to the possibility that not all of them are. As an advocate of these products, don't you know enough to provide me with the information that I need?

odd that some of your post was removed:think:

I quoted part of your post, which was also deleted. It seems the discussion strayed into perilous territory, which is a shame because I was interested in your response to my question, but if we are not allowed to discuss that particular topic...

planteria

masonic wrote: »

I think you are being slightly disingenuous if you are claiming that you don't understand why not knowing about the underlying investments or expenses would be unsatisfactory for a potential investor trying to make an informed investment decision in relation to one of these products. It would also be rather evasive to imply that changes to the investments over time would make that information not worth knowing, if that was your intent.

no, that is not what i have claimed. i understand the make up of the fund, as can anyone else when choosing whether to invest in it. the bonuses are dependent upon the performance of the fund, so "no, i don't" know them in advance, as with most investments.

masonic wrote: »

These products are being sold direct to consumers and via unregulated intermediaries. Customers are not generally being invested as a result of financial advice...

i am a member of five Friendly Societies. the one with which i have most invested, and with which i have engaged most, has members introduced by both unregulated 'Introducers' and also regulated IFAs who are certainly providing advice.

and ok, yes, i see that there are some parts of both of our posts that have been removed.