Investors are becoming averse to with-profits investments, according to research from Managing Partners Limited (MPL).
An estimated 64% of investors who hold with-profits investments are unhappy with their current performance and more than 28% are very unhappy, MPL says.
Similarly, the proportion of investors who are 'fairly happy' with their policies has fallen to 30% from 37% a year ago.
Although 65% of investors plan to carry on investing in these products, 25% - representing 2.4 million people - intend to pull out.
Jeremy Leach, managing director of MPL, says: “Investors are leaving with-profits in their droves, especially those who are seeing their endowments fall short of repaying investors’ mortgages.
“This doesn't mean investors have lost their appetite for the steady, predictable returns that with profits once offered, it is just that with profits has failed to deliver. It is no surprise that only 3% of those people with these products are very happy with their performance."
Leach says that many investors and their advisers have sought alternatives to with-profits in funds that invest in traded life policies (TLPs).
TLPs are US-issued life assurance policies sold before the maturity date to allow the original owner to enjoy some of the benefits during their lifetime. They are purchased at a discount from their maturity value, which in the majority of cases is fixed at outset and means that they are guaranteed to rise in value.
“Traded life policies have a proven track record in delivering returns superior to cash without the risks involved with equities,” Leach says.IFAonline
A question of selectivity
Watchdog interviewed 13,000 people
Debate over loyalty bonuses