Did your Advisor tell you Endowments are risky?

Gorgeous_George

I bought an endowment in 1985 and was not told that it may not pay off my mortgage. I understood from my own commonsense, that it might not.

When I bought a car I was not told it might blow a head gasket. I didn't sue the salesman when the head gasket failed.

I bought another endowment in 1999 and this time, I was told it might not achieve its target.

GG

Dick_here

Crazy_Saver wrote: »

Hi !!!!!! here.

Just as a matter of interest, why would you want to claim mis-selling if the policy you sold yourself still looks as if it is going to do the job you intended it to?

As far as I can make out, your policy is not only on track to cover the mortgage but you are also expecting a surplus. Isn't that exactly what you wanted in the first place?

Fair questions.

I'm asking hypothetically only at this stage. Are you able to answer my queries ?

I assume people don't have to wait until their policy actually pays out before deciding whether to claim though. That's the point of the projections surely, and they show a shortfall.

Crazy_Saver

Gorgeous_George wrote: »

I bought an endowment in 1985 and was not told that it may not pay off my mortgage. I understood from my own commonsense, that it might not.

When I bought a car I was not told it might blow a head gasket. I didn't sue the salesman when the head gasket failed.

I bought another endowment in 1999 and this time, I was told it might not achieve its target.

GG

Thanks GG.

You obviously had more common sense than I had all that time ago. I still had my head high in the clouds at that time. I have to admit that I was actually very excited when the FA told us that in 25 years time we would have tens of thousand of pounds to play with. It really never occurred to myself or my then fiance to question this.

I appreciate you comment about buying a car but I can't help feeling that they are two very differen scenarios. I'm sure the majority of people understand that cars can and probably will go wrong as some stage. Do car salesmen imply that the car will be faultless for ever more? If they did, hopefully the consumer would query this fact.

In the 80s and early 90s, consumers weren't as aware of the financial world as they are of the motoring world today.

Your latter point about your 1999 policy reflects the comments made by dunstonh and a few others. Yes by then regulations made sure that advisors were informing consumers of all the possible outcomes. That was the turning point and hopefully it may mean that trust is slowly developing within the financial world again.

Thanks again

Crazy Saver

Gorgeous_George

I was told that my £30K endowment should make £60K. Pay off my mortgage and I'd have £30K left over.

Inflation was high in the early 80's. I estimated that £30K in 1985 would be worth about £3K in 2010 even if the salesman's patter came true.

GG

Crazy_Saver

Gorgeous_George wrote: »

I was told that my £30K endowment should make £60K. Pay off my mortgage and I'd have £30K left over.

Inflation was high in the early 80's. I estimated that £30K in 1985 would be worth about £3K in 2010 even if the salesman's patter came true.

GG

Here I go again, showing my lack of understanding of the financial world of the 80s and 90s - how did you estimate the value of your investment so well GG? Were you already in the financial trade or were you just very good at doing your own research/homework?

If it is the latter, you certainly put me to shame. It would be very easy to put a wise old head on young shoulders but alass at the age of 25 (when we were sold our first policy) and working in the entertainment industry, I had absolutely no understanding of mortgages, endowments or inflation rates. Hence the reason for using a FA.

I do understand your frustration though regarding the lack of research that we as consumers did back then!

Regards

Crazy Saver

dreamylittledream

dunstonh wrote: »

It also has a lot to do with timing. I would estimate that a probable majority of sales pre 94/95 were not quite as compliant as they should have been. 1980s cases had little rules to follow so its hard to say that they were mis-sold although by todays standards they certainly were. Post 95 cases are where compliance departments started realising risk warnings needed to be more prominant and also lower projection rates on illustrations highlighted one example rate which would show a shortfall. So based purely on odds, an older case is more likely to be a mis-sale than younger one.

It is also worth noting that in the 80s and even to mid 90s, endowments had never failed. The media and consumers association were regularly saying endowments were best. Family members were getting big payouts in excess of the amounts needed. Complecency set in as (like property has been in recent times) the mindset was they never failed and always made money.

So, it wouldnt surprise me to see advisers downplaying the level of risk which in itself is not a mis-sale. Chances of the endowments failing at that time were low. Thankfully, we are all better off because the things that made endowments fall short have made us better off in other areas by amounts far greater than a potential endowment shortfall.

True but there is still a plentiful supply of post 95 mis-sales to suggest it can't be quoted as a rule.

Tend to be a greater supply of inappropriate fund choices post 95, then plain key risk issues.

Illustration documents with growth projections don't differentiate between the degree of risk posed by a with profits fund and a world wide equity fund for example.

Crazy_Saver

Hi Guys.

Thanks for all your input, I think we are so lucky to be able to share our views and advice so openly.

If only there were sites like this 20 years ago.

I am still curious to find out if anyone out there is willing to share their experiences with an advisor in the 80s and early 90s who explained everything fully to them.

Thanks Again

Crazy Saver

Trying_to_be_good

Crazy_Saver wrote: »

Thanks Trying to be good.

Can I ask if you were aware because you had already done your research, or did you have a good FA?

Also, and please don't feel obligated to answer, why did you take out an endowment if you were aware it may not reach it's target. Was it more a savings plan than a policy to repay your mortgage?

Thanks again.

Crazy Saver

This was forward planning - so in a way it was a savings plan, in the same way that all endowments are. The idea was (and is) that the endowment would run for 20 years. So when I took out a mortgage 3 years later, I only needed the term of the mortgage to be 17 years,a nd thus saved the final three years of interest.

My Financial Adviser was my Dad - and he's not had a single endowment mis-selling claim against him despite having sold them all through the 80s and 90s. Because he's very good at his job, and tells his clients about the good and bad points of whatever they're interested in. Lucky me! My endowment pays out in 2015, but I'll have paid off as much capital as possible by then, so it will be extra cash when it pays out.

Crazy_Saver

Trying_to_be_good wrote: »

Crazy Saver

My Financial Adviser was my Dad - and he's not had a single endowment mis-selling claim against him despite having sold them all through the 80s and 90s. Because he's very good at his job, and tells his clients about the good and bad points of whatever they're interested in. Lucky me! quote]

Wish he'd been our financial advisor!

Thanks Trying to be good.

dunstonh

There are an awful lot of advisers out there that dont hide from the truth. Both now and back then. Remember you only tend to hear about the negatives.