Ten year saving plans

innovate

planteria wrote: »

overly harsh, i feel. if prepared to commit to invest for a fixed term the charges are irrelevant and good returns can be achieved, including on money not yet invested:)

It isn't overly harsh what jimjames said, it's simply the plain truth. Whilst you seem to have your rose-tinted "friendlies are good at all cost" glasses on once more, and make ridiculous claims such as charges don't matter on fixed term investments.

jimjames

planteria wrote: »

overly harsh, i feel. if prepared to commit to invest for a fixed term the charges are irrelevant and good returns can be achieved, including on money not yet invested:)

I'm glad for their sake they can still find customers like you who don't care that they are being ripped off and could get far better products elsewhere.

Despite all the previous requests I still don't recall being shown anything that demonstrates how a Friendly soc plan is better than a S&S ISA or other savings plans?

atush

Plus, inflexible, ill liquid

dunstonh

Here are some snippets from the compliance bulletin warning IFAs (that use that compliance company) of the issues of friendly society plans:

Friendly Society Savings Plans and Endowment Savings Plans have both suffered declines in sales in recent years and
many providers have now pulled out of the market for these products. We no longer provide research for these
products in most instances and we are aware that very few of them are sold, but, of those that are sold, a large
proportion are considered as bad advice/mis-sold. This is usually because there are other more suitable investment options available.

The product literature for Friendly Society Savings Plans and Endowment Savings Plans focuses heavily on the tax-free
benefits of the plans and, while tax-free returns are undoubtedly likely to be attractive to most investors, you also need
to consider the effect that product charges have on potential returns. High charges on products can often negate the
benefits of their tax-free returns, particularly for those clients who would not be eligible to pay tax on returns anyway.

The high charges in place on Friendly Society and Endowment savings plans have a significant effect on the reduction in
yield. Also, for those plans that have an underlying with-profits investment, it is not easy for clients to understand how
much they have actually been charged

, it is highly likely that alternative products, including some deposit-based plans, may equal or out-perform plans such
as these.

Also, although Friendly Society and Endowment savings plans have guaranteed maturity values, the client will suffer
a loss in capital if the policy is surrendered early. Some deposit-based products (e.g. cash ISAs) offer equal, or greater,
opportunities for growth while not featuring this same ‘risk’.

if you are using the fact that the products feature tax benefits as part of your reasoning for recommending
either product then you need to:
–Adequately discount alternative investment products, such as cash ISAs and stocks & shares ISAs, which have similar
tax benefits
–Provide a reasonable and balanced account of both the charges and the tax status of the plan and compare this with
other tax efficient vehicles. You should also provide a summary of the client’s likely tax position at maturity

Our file-checking and complaint-handling experience has found that Friendly Society and Endowment savings plans are
rarely found to be the best financial solution to meet clients’ needs. In light of these concerns, all such cases written
from 30 August 2011 onwards are.... (goes on to indicate an internal compliance process to help ensure that if you do want to avoid mis-sale what the adviser should do - although the wording is such that they would not be expecting advisers to actually go through that process and the expectation is that they would not succeed in getting them justified).

jamesd

Aidanjm wrote: »

After receiving a leaflet through the post I have been thinking more and more about starting a ten yr savings plan then will try and start another one every 5 years for next 3 terms i.e. 15 years. ... Anyone know of pitfalls or whether they are worth it

They aren't worth it. A government should do the best thing for investors and abolish them for all new sales. At the moment they are a trap for the unwary and uninformed.

Aidanjm

Right folks. Mind made up. No 10 yr friendly society savings plan for me.

I am however very grateful so many people have taken part in the discussion :T

patientperson

innovate wrote: »

http://www.candidmoney.com/askjustin/862/scottish-friendly-moneybuilder-worthwhile

Thanks innovate for the link to this site which is new to me.

planteria

all i can say is that i am happy to invest in Kingston Unity, Sheffield Mutual and Healthy Investment, at £10/£5/month, know that i will get my capital back, that the bonuses that have already been applied will not be taken away, so i am guaranteed growth already, with bonuses being applied to money i haven't even parted with for several years, all for just committing to keep investing for a 10 year term. it's a one-way bet, even if small, alongside my ISA and SIPP.

the fact that my payments are covered by bank incentives for which I qualify by making the payments, making my little investments effectively free of charge, makes it a no brainer for me.

and if any of the above were to demutualise/merge and pay a windfall it would be a very welcome bonus.

good luck to Aidanjm with his investments:)

innovate

Not sure how much you have actually read of this thread. Aidanjm was considering an ISA with a Friendly, not just one of your beloved TESPs.

You might be happy with your investments but you have consistently failed to explain how they are better than an ISA and/or a SIPP. In fact, at one stage you conceded that these TESPs are only of use to people who had maxed their ISAs. So it is very confusing why you would have recommended to Aidanjm to go for an ISA with endowment policies.

I think Aidanjm has made a great decision not to go with a "friendly" ISA. The arguments against it are overwhelming.

jimjames

planteria wrote: »

all i can say is that i know that i will get my capital back.

it's a one-way bet, even if small, alongside my ISA and SIPP.

On that basis you might as well put your money in a bank account.

You know you will get your money back and it is a one way bet. Likelihood is you would get more back from a savings account than the return after charges from a friendly plan.