Could life assurance companies be ripping us off?
SIPPs are one of the best inventions to come out of the often overly creative minds of the market for years. They aren't for everyone though - not that that has stopped life assurance companies from having a go.
Have you ever been mis-sold something by a financial services company? Odds are the answer is yes.
If you've ever taken out a loan you've probably been brow-beaten into taking out Payment Protection Insurance with it, despite the fact that this is as Cliff D'Arcy of the Motley Fool puts it "the worst insurance ever".
If you took out a mortgage a decade ago you were probably mis-sold, or think you were mis-sold, an endowment policy. Add that to all the hideously inappropriate investment muck we've all had hoisted on us over the years and it's no wonder that so many of us aren't exactly enamoured of the industry.
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But the most irritating thing about it is that it never seems to learn. Look at the Self Invested Personal Pension market. I love SIPPs, which allow you to buy a pension wrapper' and then invest your own pension assets as you see fit. I think they are one of the best innovations to come out of the often overly creative minds of the market for years.
But they aren't for everyone. If you are never going to invest in anything except for the funds of one company for example, they are pointless. And if you have only a small pension, which you intend to keep in mainstream funds, you are likely to find you are better off with a stakeholder pension.
However, this isn't stopping the life assurance companies having a go: they are paying hefty commissions (up to 15%, says The Scotsman!) to advisers to transfer customers out of old-fashioned pensions into their SIPPs and then this is the good bit having them buy their funds with the SIPPs. Friends Provident, says the FT, requires its SIPP holders to invest £20,000 in its insured funds. Does this make sense? The FSA isn't so sure: it is conducting an inquiry into the sales of SIPPs by financial advisers.
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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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