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The Case for Review

By January 17, 2015 No Comments

The Case for Review

Following my previous notes, reference was made to “The Case for Review”. The purpose of this note is to explain why People need to think about Reviewing any investments and pensions they have, and readdress their appropriateness in a fast changing world.

I suspect this note will resonate with the majority of readers, if our experience holds true.

Banks were once trusted! Clearly the passage of time has taken its toll on the banks with the various scandals they have endured and it has not yet finished. We are currently seeing more huge fines for interest rate manipulations. These are the same banks which sold 1000’s of pension and investment products to their customers.

The banks always had a number of issues. Banks were not generally Independent. They sold either their own products, those of a company within their corporate group or those of a company they were tied to. Equally there was revolving door of advisers, there one minute gone the next.

The current bigger issue for those “sold” products by a bank, is that most of the banks no longer have “Financial Advisers.” One’s who do still offer advice are very selective and may still not be independent. The Banks were hauled over the coals for their aggressive tactics and mis-selling activities, and subsequently closed down most of their financial advice operations.

Where does that leave the client who was sold an investment or pension? Where do they go to? Is their plan still fit for purpose, are they still being charged commission within the product, for an ongoing service they are clearly not getting. These are the questions anyone sold any financial product should be asking. For those who were mis-sold, if they have complained they may have been compensated for poor advice, but equally there is a good chance they are still stuck with the product they were compensated for as they have no one to tell them what to do with it.

In the past most financial products have been “sold”. Especially via banks or direct by Insurance companies. I suspect that 80% of products were sold and 20% where advice was sought pro-actively.

When products were sold to the unsuspecting individual there could have been a range of outcomes. The product may or may not have been appropriate at the point of sale. For those when it was appropriate, the question has to be, are they still appropriate 4, 5 or more years down the line? The world is changing quicker and quicker, and peoples circumstances change, so in most cases the answer is probably no.

What is worrying is that at the point of sale, the product or fund sold is likely to be the “flavour of the month” at that time. Whether that was With Profit funds, Property funds, guaranteed funds, structured products, lifestyle pension funds, emerging market and Chinese funds.

We at Burfield see this all too often. The majority of people come to us with a pension or pensions, or investments they have had for years and never done anything with or changed anything. We can see clear patterns when we review plans. Many people have money sat in funds which are inappropriate to their current circumstances and risk tolerance.

Equally the cost of products have come down, so are your charges too high? We understand the inertia people have regarding pensions and investments they hold. A statement will come through the post, it looks important so it is put on the side to look through properly “at the weekend.” The weekend then passes, and the envelope goes in the draw or filed away, and quickly the matter has gone from the mind until the cycle starts again 12 months later.

Sometimes people’s consciousness are pricked by an event, and there is a spark of intention to look into that matter, or do something about it. Again whilst this is a positive step, far too many times the impetus is lost at the first hurdle when something else happens or it is a bit of a struggle to get to grips with the issue, which results in the mantra “I will get round to it”.

As we are entering a new world of pensions, and UK Stock Markets are as high as they have been for some time, it really is now time for people to get their pensions and investments in order, dust off the old paperwork and get to grips with what you have got.

You need to understand whether it is good, bad or indifferent. Will it allow you to do want you want? Equally were you badly advised or have you not been getting a service you have paid for? We are seeing increased volatility in investments, are you happy with the risk in the funds you are invested?

With the Pensions tsunami around the corner, now really is the time to act.

We can help with all these issues. We are only a call or a click away. We can review your pensions and investments and we do not charge for an initial review. All we need is a plan provider, plan number and a letter of authority to request information on your behalf.

But we can only help if you ask us to! Make reviewing your pensions and investments your 2015 resolution. But start it sooner rather than later. It could just be the best thing you will do all year.