Has my late mother been ripped off by 2% charges

dunstonh

Regarding it being better  than being in a bank, this might not be true because she would have to pay the charges even when the funds made a lost. 

You do realise that a bank account typically has higher charges than investments.  In most periods, the implicit charges on savings account are higher than the explicit charges on investments.   
Loss periods have been short term for over a decade and its a been a strong growth period.  It is highly unlikely it would have been better in a bank.

Just because the charges are 2% does not mean it hasn't returned more than your trackers.  It may have done.  It may not have done.

After 12 or so years I think the amount left is basically what she put in.

It shouldn't be unless she has been drawing from it.

 and I suppose I trusted the company because of their link with the union. 

oh dear.  In the cases I have come across, unions take a cut of the fees and that is in part why the fees are a bit higher. And its an expensive distribution channel as the person setting it up is rarely local.  Plus, where the union has their own white labelled products, they are frequently obsolete and expensive.

Billycock

22225 said:

Thank you all. Regarding it being better  than being in a bank, this might not be true because she would have to pay the charges even when the funds made a lost. I think she must have being paying hundreds of pounds a month. After 12 or so years I think the amount left is basically what she put in. Anyway, I take all your points, buyer beware etc. At the time she did it I didnt know anything about investments at all and I suppose I trusted the company because of their link with the union. Thank you everyone for your replies and have a nice day.

So, weren't you yourself aware of your mothers charges from the onset?

Malthusian

22225 said:

Thank you all. Regarding it being better  than being in a bank, this might not be true because she would have to pay the charges even when the funds made a lost.

If you invest £10,000 in a fund and it falls to £8,000, would you prefer the manager to a) keep managing the funds until the markets recover and they go back to £10,000 and continue growing, or b) stop charging you, wind up the fund and return your £8,000, resulting in a permanent loss? (And you can't reinvest the £8,000 with another manager because you'd have to pay them charges.)

After 12 or so years I think the amount left is basically what she put in.

Either the money has been managed exceptionally badly or she was taking money out. Or she was so risk-averse that they essentially buried the money in a hole in the ground at her insistence (but that is even rarer).

22225

Billycock said:

22225 said:

Thank you all. Regarding it being better  than being in a bank, this might not be true because she would have to pay the charges even when the funds made a lost. I think she must have being paying hundreds of pounds a month. After 12 or so years I think the amount left is basically what she put in. Anyway, I take all your points, buyer beware etc. At the time she did it I didnt know anything about investments at all and I suppose I trusted the company because of their link with the union. Thank you everyone for your replies and have a nice day.

So, weren't you yourself aware of your mothers charges from the onset?

I am only aware of the charges now. When she took it out I was in my twenties and not living at home. Investments were not something I ever thought about. She just said at the time she was speaking to a man who helped teachers approaching retirement and it had been organised by either the school, LEA, union etc who were holding seminars. So thing like that.  It appeared to have tacit approval of the LEA or union etc. My father had died a few years before and she had an insurance payout to invest as well (it appears now - she didnt go into details about the payout or amount with us as we didnt discuss financial things in our family.)

Thank you posters for educating me. I have a better perspective now.

Thrugelmir

22225 said:

Billycock said:

22225 said:

Thank you all. Regarding it being better  than being in a bank, this might not be true because she would have to pay the charges even when the funds made a lost. I think she must have being paying hundreds of pounds a month. After 12 or so years I think the amount left is basically what she put in. Anyway, I take all your points, buyer beware etc. At the time she did it I didnt know anything about investments at all and I suppose I trusted the company because of their link with the union. Thank you everyone for your replies and have a nice day.

So, weren't you yourself aware of your mothers charges from the onset?

I am only aware of the charges now. When she took it out I was in my twenties and not living at home. 

The fee landscape and the ability to trade investments has changed considerably over the past 50 years. Today is nothing like the past. 

22225

Good evening, I thought I should add that today I found out more about the investments and it appears that they have actually made a good amount of profit. I'm not sure why there was a lack of communication or clarity over this but regarding the performance of the investments I was in error before and they have actually done well. So I was wrong there. 

Thrugelmir

22225 said:

Good evening, I thought I should add that today I found out more about the investments and it appears that they have actually made a good amount of profit. I'm not sure why there was a lack of communication or clarity over this but regarding the performance of the investments I was in error before and they have actually done well. So I was wrong there. 

Thanks for the update.