Norwich Union Portfolio Step-down: any good for income for a 63-yr-old?

EdInvestor

Hello munk

munk wrote: »

Personally I feel that generally he's given a decent unbiased opinion of what options are available and the arguments seem to erupt mainly due to his disagreements with EdInvestor in which he's clearly passionate! Whilst EdInvestor provides a well thought out, calculated and intelligent response on these forums, generally it appears to be the case that the response are irrationally negative towards a certain type of product - IB bonds.

I've not noticed you around in other forums on MSE, so I imagine you may be unaware that there is quite a long list of investment products of which I disapprove in general - there is always the occasional exception of course.

Along with investment bonds and offshore bonds, the list includes endowments, with profits products, especially annuities,Guaranteed Equity Bonds, multimanager funds and hybrid SIPPs to list but a few.

Most of these products have been constructed in order to charge people more money for investing and to conceal that fact within layers of complexity and small print.

Most people will do much better if they keep it simple.

EdInvestor

munk wrote: »

Yes but the point here is that dunstonh hasn't touted directly for business, hasn't said 'I advise you to invest in xyz product'

That's not of course the way it's done.

Posting negative posts like you do here against IFAs can only make things worse - persuading people that IFAs are *generally* a bad thing and that they should instead just go and invest via the tied agents or direct with the provider.

Nobody on this forum suggests this.What they do suggest is either investing direct in the underlying asset ( ie shares or gilts) or, if using a collective product ( unit trust or fund) go to a discount broker who will rebate the charges, such as https://www.h-l.co.uk.

dunstonh

Along with investment bonds and offshore bonds, the list includes endowments, with profits products, especially annuities,Guaranteed Equity Bonds, multimanager funds and hybrid SIPPs to list but a few.

Endowments - obsolete so you wont get new business there
with profits - minority need nowadays with only NU and Pru offering viable funds
Annuities - pros and cons. Suits some, not others
GEBS - awful product. Havent seen a good one since the mid 90s.
MM Funds - not a fan of MoM funds but FoFs can be useful for those with small amounts.
Hybrid SIPPS - there is no logical reason to dislike these. They can offer the unit trust funds/pension funds often cheaper than SIPPs and as over 90% of SIPPs post A day are invested in funds, they are a valid option for those that want just funds.
onshore investment bonds - can save tens, if not hundreds of thousands of pounds in tax and can be very cheap to set up with modern bonds.
offshore bonds - again, can save similar tax and benefits from gross roll up. Plus due to amounts that typically go into offshore bonds, you can buy funds cheaper than retail.

Ed, you have too many blind spots and no experience of circumstances where minority products may be best advice. You assume everyone is like you and that they should go with direct investment/unit trust. Even if it costs them more in charges and tax.

EdInvestor

dunstonh wrote: »

Ed, you have too many blind spots and no experience of circumstances where minority products may be best advice.

Virtually all the above are minority products being sold to the majority, and that indeed is exactly the problem.

dunstonh

Virtually all the above are minority products being sold to the majority, and that indeed is exactly the problem.

So why are you blaming the product?

If that is the case, you should add SIPPs to the list as they should be a minority product.

If someone uses a baseball bat to smash a window, do you criticise the baseball bat or the person?

EdInvestor

dunstonh wrote: »

So why are you blaming the product?

There's not a lot of point in blaming the advisors.It doesn't help people to tell if they are being ripped off - one advisor comes across much the same as another.Better to explain the nature of the products and why they amy be unsuitable; then if someone tries to sell them one, they will at least be alert to a potential problem.

If that is the case, you should add SIPPs to the list as they should be a minority product.

I totally disagree with that very old fashioned (not to say elitist) view: IMHO everyone should be able to invest direct, and also have access to the best quality pooled products which are only obtainable in SIPPS.IMHO it's the personal pensions and stakeholders that should be the phased out ( and when the NPSS comes in, I'm sure that's what will happen).

jamesd

EdInvestor, no problem to explain why they might not be suitable, but it's a good thing to do it with accurate reasons. That's really the core of the problem with the way you criticise them.

EdInvestor

jamesd wrote: »

EdInvestor, no problem to explain why they might not be suitable, but it's a good thing to do it with accurate reasons. That's really the core of the problem with the way you criticise them.

Right, let's get accurate

The core problem with investment bonds is their shockingly high charges as detailed on this site provided by the official regulator:

http://www.fsa.gov.uk/tables

If you invest 25k in an investment bond over 10 years, the effect of the charges on your returns will range from a minimum of 3,740 to a maximum of a totally disgraceful 10,100 pounds.

I leave it to other posters to decide why industry people are so keen on defending these pernicious products.It seems to be quite easy to figure out what their reason might be.

munk

How about another angle then - what other options are there for avoiding IHT other than investing in an investment bond under trust? This seems to be one of the main reasons for investing in IBs (although if there are other alternatives I'd be muchly obliged to know ).

Also, out of (ok thinly veiled) curiosity, what's to stop someone from just giving all their money (inheritance) away (before dying obviously) without declaring it as gifts or PETs or w/e - just a sense of social conscience or are the chances of being caught by HMRC especially high?

jem16

EdInvestor wrote: »

Right, let's get accurate

The core problem with investment bonds is their shockingly high charges as detailed on this site provided by the official regulator:

http://www.fsa.gov.uk/tables

You have already been told that the FSA tables are only a guide. They assume maximum commission and no initial allocation.

If you invest 25k in an investment bond over 10 years, the effect of the charges on your returns will range from a minimum of 3,740 to a maximum of a totally disgraceful 10,100 pounds.

I leave it to other posters to decide why industry people are so keen on defending these pernicious products.It seems to be quite easy to figure out what their reason might be.

Once again you miss out ( or conveniently ignore ) the fact that IFAs here make it very clear that an IB is suitable usually only for higher amounts such as £100k plus. With that amount your initial allocation can be as high as 108% which goes a long way to bringing those charges down below a conventional unit trust investment.

I have an IB for £100k for IHT and higher tax reasons. When I added £40k to my investment recently I was specifically told by my IFA that an IB would not be suitable this time because of the lower amount even though my circumstances are exactly the same. My £40k was put into unit trusts.