Network Intrinsic has questioned whether the stigma surrounding with-profits funds may be forcing clients into unsuitable products when they come to fund their retirement.
With-profits funds - once seen as a bedrock of retirement savings for many people - have come in for criticism in recent years over poor performance, falling bonuses, opaque charging structures and the practice of 'smoothing'.
Last month, Standard Life lowered bonus rates for 600,000 of its with-profits investors in its Heritage fund, despite increased returns of 7.9%.
Speaking at the Defaqto DFM conference on Tuesday, Intrinsic investment director Frank Potaczek said that, though the demise of with-profits seemed inevitable, the funds' approach was not designed to deliberately confuse or mislead clients.
"Most clients like the idea of smoothing," he said, referring to the funds' practice of holding back some of the returns in good years to bolster returns in the bad.
"As advisers, have we become too jaded about with-profits? Are life companies really ripping [off] clients by putting them into with-profits funds?"
The alternative for clients in the decumulation stage - multi-manager or risk-rated funds - also presented problems, Potaczek said.
"Let's say the target of a fund is to invest 70% in fixed income," he said. "If they crash, the computer would say there is no problem. There are problems with risk-targeted funds going forward."
Earlier in the conference, Standard Life Wealth head of business development, Ronnie Binnie, also touched on the problems faced by the demise of with-profits products.
"Do accumulation products work in the decumulation space?" he asked. "I'm not suggesting the recommendation of with-profits products, but we need a different approach [in decumulation]."
Taking the time to look
After 14-month FAS programme
More than half of people over the age of 55 see financial security as a top priority in retirement, yet a third allocate more time to buying a new car, research from Legal & General (L&G) has found.
Rebranded from OMW
Number of benefits