Company Rep Pushing a Lifetime Isa

Moneybox

Daughter is being advised to open a Lifetime Stocks and Shares Isa by a companies rep. She is only just embarking on her uni studies and may well work / settle  abroad, it’s just too soon to know where life will
lead her so investment in a Lifetime Isa will wait for now until she is more certain.

However the rep is pretty insistent that she should open their stocks and share Lifetime Isa with a small deposit so it is there for her in the future incase rules change.

I am wondering if she would be better with a Stocks or Cash version, and also why the company rep is so persistent. 

Thank you.

TheSpectator

Does your daughter not want free money?

jimjames

Which company rep?

eskbanker

TheSpectator said:

Does your daughter not want free money?

She can have the free money by using a cash LISA, without going down the S&S route apparently favoured by the pushy salesperson!

Hopefully OP will clarify which company it is and the basis on which their daughter is being pressurised by one of their reps.

masonic

Is this company rep authorised to give financial advice?

A cash LISA would be appropriate if your daughter had definite plans to buy her first home in the UK. A S&S LISA is a product that would need a detailed knowledge of your daughters circumstances and aspirations to understand whether or not it would be suitable as a retirement vehicle. Some potential providers don't offer LISAs in part due to concerns around potential mis-selling.

Moneybox

Thank you. Yes I understand the LISA benefits. At this time (18) just about to start a 4 year Uni course there are so many unknowns with regards to what she may want to do next. There is a possibility for example of living abroad where the LISA would only be able to serve as an additional retirement pot.

I get the idea that it’s sensible for children turning 18 to open a LISA incase the product was ever to be removed by government.

As someone just starting her Uni studies she will
not have funds to invest in the LISA for 3-4 years.

I won’t name the financial company as I would view it as enthusiastic / persistent rather than pressure and I wouldn’t complain. 

They don’t offer cash LISAs.

I would imagine she will finish Uni, and then will make a plan. If saving for a house deposit that may be a 5 year saving plan for deposit. Myself for a short term investment I would normally consider Cash rather than stocks which I would only consider if I knew it would be  5-10 year minimum.

Just surprised by the urgency of the rep  to get her to open a stocks shares LISA?

Are there any cons if she were to open a Stocks Share LISA this year and a Cash LISA next year? Would she be able to later pay into either (as long as it wasn’t the same one and the same year)? Would you be able to cash out both at the same time for a house deposit? She could then depending on her situation in 4 years decide if she wanted a short term or a longer term saving option.

Looking at options. Thankyou.

eskbanker

Moneybox said:

Company Rep Pushing a Lifetime Isa

[...]

However the rep is pretty insistent that she should open their stocks and share Lifetime Isa with a small deposit so it is there for her in the future incase rules change.

I am wondering if she would be better with a Stocks or Cash version, and also why the company rep is so persistent. 

Moneybox said:

I won’t name the financial company as I would view it as enthusiastic / persistent rather than pressure and I wouldn’t complain. 

They don’t offer cash LISAs.

You're obviously familiar with the actual level of pressure but it certainly sounds highly inappropriate to me for anyone employed by a regulated financial institution to be trying to strongarm an impressionable youngster into investing with his/her company, who only have a limited product range, so I don't understand the reluctance to name them!

jimjames

Moneybox said:

Just surprised by the urgency of the rep  to get her to open a stocks shares LISA?

Because they want their commission? I can't understand why you wouldn't name them given the details you've provided. It at least will allow others to be aware and also to comment on the pricing structure of the product - not all LISAs are equal so it may be that this is a very expensive product

masonic

Moneybox said:
I won’t name the financial company as I would view it as enthusiastic / persistent rather than pressure and I wouldn’t complain.

It's your prerogative whether or not to name the firm in this thread, but I would urge you to complain to them. From your description it is clear that as well as customers being treated unfairly (your daughter couldn't have been the only one), the firm is being put at risk of consequences by this employee. Unless they are identified and retrained, this could end up costing the firm a lot of money in redress and fines, not to mention harming the individuals who succumb to these tactics.

400ixl

It may be worth her opening a cash LISA and putting a pound in it. That starts the 12 month countdown to when it can be used. Then in the future even if not invested in can put money in and be able to immediately use it with the government bonus.

A provider like Moneybox would be able to do it.

Moneybox

400ixl said:

It may be worth her opening a cash LISA and putting a pound in it. That starts the 12 month countdown to when it can be used. Then in the future even if not invested in can put money in and be able to immediately use it with the government bonus.

A provider like Moneybox would be able to do it.

Thank you. I think I am happier with her doing this. She does have a small savings in a stocks and shares ISA (the old child fund the government set up) and a small savings In premium bonds. I feel it makes sense to put some into cash savings. I don’t want her locking cash away that she may need for her studies or to make those first steps in securing a job she may want such as transport or rent deposit.

This matches better to Martins suggestion of setting one up for a £1 for when they are ready. 

It just didn’t feel right the level of persistence by the rep although unsure if it would be measured as pressure selling? For example when I said that she would need time to think about it he insisted on booking a teams appointment to help her set it up a week later saying that it’s a complicated process and easy to make a mistake and that she could always cancel the appointment if she decided she didn’t want to do it,, no pressure. …. when we said she needed time was told an appointment would be difficult if she left if as we are approaching the end of the tax year and he gets busy. It also now occurs to me he mentioned if she could apply for a student grant from them that not many people apply for. I see this doesn’t sound good reflecting on what was said. 

I will follow up correctly with the company and consider copying in ombudsman if appropriate.

Thank you for the posts. It has helped me decide to recommend that she cancels the appointment and open up a Cash LISA independently.