Endowment - poor performance

dunstonh

Actually, what's really annoying about this one is that in the last 12 months its value has increased only by just over £1500, when stock markets have gone up considerably.

Developed markets have gone up. Emerging have been poor and bonds have been off the boil. Cautious and low risk multi-asset funds have not had a good year.

makemineadouble

Could I ask whether this payout of 23.5K includes any top-up payment as part of a mortgage endowment promise?

GingerBob_3

makemineadouble wrote: »

Could I ask whether this payout of 23.5K includes any top-up payment as part of a mortgage endowment promise?

No, it doesn't.

It does include the estimated terminal bonus (i.e. a £1500 increase over the last 12 months, including the terminal bonus)

BillJones

GingerBob wrote: »

I have an endowment policy maturing next month. It's run for 25 years, costing £50 pm and is paying out about £23.5k. I rate that as exceptionally poor performance - I've complained, for all the good that will do.

Ball park - what would you expect £50 pm to achieve over 25 years (stock market investment, mainly)? Thanks.

What have you complained about? The company providing the endowment do not control the level of the stock market.

A complaint based on performance is pointless.

GingerBob_3

BillJones wrote: »

A complaint based on performance is pointless.

I know, but they invited me to complain. Nothing ventured, nothing gained. You would do the same, wouldn't you?

missingtowindward

Hi Ginger,

I'm completely sympathetic with your observations regarding Aviva and their determined attitude to to see off their customers. For the last 10 years or more my Aviva policies have been awarded a maximum annual bonus of 0.25%. That apparently is a fair share of the annual profits for the 'with profits' customers!

As 2014 draws to a close the stock market is approaching an all time high, the value of gilts and bonds are through the roof and property values are at record levels. Yet Aviva can only manage to distribute 0.25% of not very much as an annual bonus!

It begs the question as to who is getting the profits in such a healthy market because the 'with profits' customers are clearly not.

I wonder whether it constitutes a breach of contract because in the early days Norwich Union/Aviva product guides clearly stated that the 'with profits' customers were to be given their 'fair share' of the fund year on year through to maturity and the end of the contract.

Just a thought.

dunstonh

As 2014 draws to a close the stock market is approaching an all time high, the value of gilts and bonds are through the roof and property values are at record levels. Yet Aviva can only manage to distribute 0.25% of not very much as an annual bonus!

You wouldnt expect a high annual bonus. The returns are better reflected in the final bonus.

I wonder whether it constitutes a breach of contract because in the early days Norwich Union/Aviva product guides clearly stated that the 'with profits' customers were to be given their 'fair share' of the fund year on year through to maturity and the end of the contract.

Perhaps you should look at both bonuses rather than just the lower one.

Trapdoor

dunstonh wrote: »

You wouldnt expect a high annual bonus. The returns are better reflected in the final bonus.

Why? Only to the benefit of the provider because annual bonuses are locked and cumulative and once applied cannot be taken away. Whereas a final bonus is all 'smoke and mirrors' and can be (is?) manipulated to the benefit of the provider without recourse for complaint.

dunstonh wrote: »

Perhaps you should look at both bonuses rather than just the lower one.

with Aviva, you cannot 'look' at both bonuses because the only one that is a given and is available prior to the maturity of the policy are the accrued annual bonuses. Aviva will not give you even a projection of the terminal bonus - believe me I have tried to get some idea for ours out of Aviva which matures in 2 years time, and they claim they cannot (will not) quote it, even based on current performance.

For someone who claims to be a financial advisor Dunstonh, you seem to be very much a champion for the Endowment industry which has been shown time and again to be a shady and untrustworthy industry, both at the 'Financial Advisor level' (mis-selling) and now the backbone of the industry (annual and terminal bonus downsizing).

Hardly any wonder is it that we customers are disillusioned with the whole thing but as a rule are locked in to dreadfully performing 'investment' products which we see continuing to perform atrociously whilst every other area that our funds are supposed to be invested in are doing marvellously well - either it is institutionalised poor fund management (in which case we should be compensated) or it is some kind of 'fraud' where the policy holders are not being told the truth about why our endowments are performing so badly because the companies are deliberately shafting us. Oh, and of course using the term 'levelling' to justify their actions. Levelling seems to be 'markets fall, your investment falls, markets rise, your investment treads water'. And don't get me started on orphaned funds that the distribution to policy holders never materialised did it?

The industry has got away with far too much, and is STILL getting away with far too much by lowering annual bonuses to an insulting level with the 'promise' (no, it's not even that is it?) of a better terminal bonus.

I have to await mine to mature in 2 years or lose the 'mortgage promise', and ill be glad to see the back of Aviva. Glad my mortgage was paid off a few years ago without having to need the endowment, but feel sorry for those that have to rely on it to pay off their mortgage. And no, I didn't claim for mis-selling as the FA who sold me mine was (at the time) a friend.

dunstonh

Why? Only to the benefit of the provider because annual bonuses are locked and cumulative and once applied cannot be taken away. Whereas a final bonus is all 'smoke and mirrors' and can be (is?) manipulated to the benefit of the provider without recourse for complaint.

The annual bonus is indeed guaranteed whereas the final can go down as well as up. Just the markets do.

If you have evidence to support your allegations of manipulation then you should report it to the FCA.

with Aviva, you cannot 'look' at both bonuses because the only one that is a given and is available prior to the maturity of the policy are the accrued annual bonuses.

Aviva supply both. Some older plans may only show annual on some documentation but the actual figures are available on request to Aviva or via IFAs.

Aviva will not give you even a projection of the terminal bonus - believe me I have tried to get some idea for ours out of Aviva which matures in 2 years time, and they claim they cannot (will not) quote it, even based on current performance.

They cant do this as no such thing is possible.

For someone who claims to be a financial advisor Dunstonh, you seem to be very much a champion for the Endowment industry which has been shown time and again to be a shady and untrustworthy industry, both at the 'Financial Advisor level' (mis-selling) and now the backbone of the industry (annual and terminal bonus downsizing).

I never realised that having knowledge in an area means that you become a champion for a specific part of that business area.

Hardly any wonder is it that we customers are disillusioned with the whole thing but as a rule are locked in to dreadfully performing 'investment' products which we see continuing to perform atrociously whilst every other area that our funds are supposed to be invested in are doing marvellously well

Generally they are not poor performing. It is more case that they are not performing in line with expectations that were set in an era where even basic investments had higher returns.

Sirlaughalot

The FCA are indeed in the process of a far reaching investigation concerning these type of investments and it has been on going for about 12 months now.
In my case i`m hoping there will be good news regarding the matter of closed funds within my endowment policy i have with Royal London.

Regards the terminal bonus which i have in the make up of the policy (which has no penalties) does anyone no how these are calculated? Does the value of the terminal bonus increase exponentially nearer the end of the policy?

Thanks