Traded endowment policy (TEP) market maker Beale Dobie expects to boost its market share beyond 20% ...
Traded endowment policy (TEP) market maker Beale Dobie expects to boost its market share beyond 20% as smaller competitors are unable to compete on price and variety of supply, according to the company's head of business development Tracey Merritt.
With terminal bonus rates being cut, TEP returns have also been affected, but with the number of TEPs currently being traded worth about half the potential £1.2bn market, Merritt says there is plenty of scope for growth for stronger players.
But Beale Dobie is not looking for acquisitions, she adds.
Drivers of the TEP market include the FSA's rule on ensuring clients of intermediaries are told of the sales option rather than straight surrender, and the poor performance of equities that has created demand for investment products that carry lower risks.
Beale Dobie's own research suggests that even with terminal bonus cuts hitting policies investors are still going to end up with solid returns.
Bonus cuts would have to be in the order of 80% or more for many policies to fail to provide any returns on investment, while bonus cuts of 40% would still leave policies paying out average annual rates of return between 4% and 7%.
This type of investment may not be suitable for IFA clients with a greater risk/reward profile, but for those looking for more steady returns after losses from direct or indirect investments in equities, it is looking increasingly attractive, Merritt says.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress