Norwich Union - Reattribution

brewerdave

dunstonh, you are quite right in principle and the more sophisticated investor realises the fact but the problem is that many people were sold endowment policies in the 70s and 80s on the basis of them being "savings" schemes with high rates of return - I can certainly remember the literature suggesting the purchase of boats,cars , foreign holidays etc with the excess after the mortgage was paid off - I certainly cannot remember the adviser warning us that the value might be less than invested! He was busy telling us about six figure excesses!
In common with many people I received compensation a few years ago albeit not enough to cover the mortgage shortfall but there are still a lot of people out there who are getting very nasty shocks when their policies mature.This isn't so much a lack of common sense more a foolish faith in that generation of "financial advisers"

dunstonh

dunstonh, you are quite right in principle and the more sophisticated investor realises the fact but the problem is that many people were sold endowment policies in the 70s and 80s on the basis of them being "savings" schemes with high rates of return - I can certainly remember the literature suggesting the purchase of boats,cars , foreign holidays etc with the excess after the mortgage was paid off - I certainly cannot remember the adviser warning us that the value might be less than invested! He was busy telling us about six figure excesses!

I understand that. However, you "should" expect the media coverage to report the news and inform. Not play to the negatives all the time (i know, ideal world and that isnt going to happen). Actually, those that bought in the 70s did very well. I remember people in the 90s getting back 2 or 3 times more than the mortgage. It was the complecency of that which didnt help the situation for those buying in the 80s and 90s. However, thats another thread....

I'm not a fan of With Profits and there is plenty to have a go at. However, I wish they would stick to reporting those issues. If someone had a "better" unit linked contract at the same risk level, they would have actually lost more last year. So, why be critical of the product on the basis it made a 10% or so loss when the equivalent sector in unit linked form made a 25% loss.

alared

alared wrote: »

Payouts on plans maturing now are up to a fifth less than a year ago, wiping thousands of pounds off the value of a typical policy.

These are the plain and simple facts,no matter how you try to dress it up,people have LOST a massive chunk out of their "investments" (savings)and would be extremely unlikely to ever "invest" in this type of product again.
Once bitten

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dunstonh

These are the plain and simple facts,no matter how you try to dress it up,people have LOST a massive chunk out of their "investments" (savings)and would be extremely unlikely to ever "invest" in this type of product again.
Once bitten

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The losses are not massive. Around 10% which is nothing

would be extremely unlikely to ever "invest" in this type of product again.

You would be wrong. NU's with profits fund has had so much money new money put into over the last year that they have reduced the terms to make it less attractive for new money so they dont get too much.

For those with modern versions, you would find most are very happy with the returns which have exceeded savings rates.

Your problem alared is that you are not taking into account the 12-15% returns that came in the years before this and failing to take into account averaging. You never look at short term performance on investments and assume that is the norm. Either going up or going down.

alared

Legal & General slashes up to 18% from with-profits bonuses


Legal & General disappointed hundreds of thousands of with-profits policyholders today as it slashed bonus rates in its £24.5 billion fund, in some cases by as much as 18.3 per cent.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5765603.ece

Every day the news about these so called "investments2" gets worse.
People wont get caught again.:mad: :mad: :mad:

dunstonh

Every day the news about these so called "investments2" gets worse.
People wont get caught again.:mad: :mad: :mad:

Apart from the days they get better but you never have posted those.

It must be really bad for those earning 5% net on these investments when their savings rates are so much better around 1-2%.

Its only the terminal bonus that has been reduced. Not the capital or the annual bonuses accured. The terminal bonus is the one affected by the stockmarkets. Of course its going to fluctuate.

alared

dunstonh wrote: »

Apart from the days they get better but you never have posted those.

Show me any that have got better and show me any that haven`t got a MVR imposed.
It`s all bad news day after day with these so called "investments".
These products have had their day and people wont get bit twice.
You don`t "invest" your hard earned to see it drop 25% in a year and that doesn`t take account for a MVR.

These products are all bad news,I`ll gladly post any that actually INCREASE in value but we may have to wait a long time.
Very poor returns indeed.

dunstonh

Show me any that have got better and show me any that haven`t got a MVR imposed.

During the 5 years before this they were giving double digit returns p.a. The drops average it out as has always been the case.

You don`t "invest" your hard earned to see it drop 25% in a year and that doesn`t take account for a MVR.

Yes you do. That is what investing does. It goes up and down. You dont go posting on forums every time it goes down saying its bad and then ignore it when it goes up. That would just be silly.

I have a statement in the post this morning on an NU invesmtent bond in the with profits fund. Value last year was £116,734. Value this year £107,951. Withdrawals in that period £7202.52. That is a very good return on an investment during a period that saw the FTSE drop over 30%.

This person has drawn out over £15,952 since it was invested as a monthly withdrawal and is £7,951 higher in value than when they invested it. Had they been on a savings account they would have got less, depsite the drop. Yes the value was higher last year but investments zig zag. Thats what you accept when you invest.

Now, please can you make an attempt to understand that investments go down as well as up and just because they go down, doesnt make them bad.

alared

dunstonh wrote: »

Now, please can you make an attempt to understand that investments go down as well as up and just because they go down, doesnt make them bad.

Any "investment" that goes down 20/25% in one year is not only bad but disastrous.
You can try to defend these products but the fact is week after week, in the financial press, it`s all bad news about them.
Not only about their products but some of these investment companies are on a sticky wicket as regards their balance sheets.
It`s only a matter of time that one of them (probably L&G) goes cap in hand to the government just like the banks.

dunstonh

Any "investment" that goes down 20/25% in one year is not only bad but disastrous.

No its not. Thats what happens. Medium risk invesmtents have around a 40% loss potential in a 12 month period.

You can try to defend these products but the fact is week after week, in the financial press, it`s all bad news about them.

And when they doubled in 3 years did you see the press criticise them then? No, because the media focuses on bad news. If you rely on your knowledge from the media then you are going to be one jaded individual with a really poor level of knowledge. Also known as the Daily Mail reader.