Personal finance and due diligence
- Thread starter betty swollocks
- Start date
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ChrisKH said:DO NOT:-
1. Cash in your endowment without having taken proper financial advice.
2. Take financial advice from bonj.
Endownment mortgages are a con. This is a widely known fact. The longer you have one, the more money you'll be pumping down the tills of the conmen.
If your going to be left with a shortfall, i.e. if the investment part of it isn't going to pay off the debt when you were told it will, then sue.
bonj said:
bonj, you are obviously younger than me. Endowments taken out in the 60's and 70's matured in the 80's & early 90's with great big surpluses. People had no idea the market would downturn and, more importantly, those companies selling them (all of them) underplayed the risk or did not explain the risk at all. So it's all very easy to say they are a crap product with hindsight but back in the late 80's & early 90's it wasn't so clear cut. Yes you wouldn't take one out now, but had you been much older than you are, I reckon I could have sold you three. Or more.
If you have been paying for an endowment for the last 15-20 years it doesn't necessarily make sense to surrender it, as the maturing policy will still as likely pay out more than you can get on surrender. Depends on the policy/company and the funds invested in.ChrisKH said:bonj, you are obviously younger than me. Endowments taken out in the 60's and 70's matured in the 80's & early 90's with great big surpluses. People had no idea the market would downturn and, more importantly, those companies selling them (all of them) underplayed the risk or did not explain the risk at all. So it's all very easy to say they are a crap product with hindsight but back in the late 80's & early 90's it wasn't so clear cut. Yes you wouldn't take one out now, but had you been much older than you are, I reckon I could have sold you three. Or more.
I'm sure I would have thought "hmm... this looks a bit too good to be true, it can't carry on like this forever."
Bigtallfatbloke
New Member
Do not just cash in an endowment without looking at all your options and being aware of the consequences first. You dont necessarily need a financial adviser to do this for you, especially if one of his/he roptions is to encourage you to re invest any surrenfer proceeds into a new policy/plan.
You should obtain a full set of valuations and surrender quotes from your policy provider, which should include future forcasted values on certain assumed growth rates at maturity (these are NEVER guaranteed). You should be fully aware of what fund (s) you are invested in, the managers aims and outlook on the future prospects for that fund, the consequences of withdrawel from any such fund (Including any possible surrender fee and or/ market value adjuster (penalty) on with profits plans that may apply in adverse market conditions). You should become fully aware of any internal fund switch options (alternative funds) available within your current plan which may offer better potential, or a more suited, fund within your existing plan. Be aware of any possible fund switch fees as well although most will allow you to switch free of charge once a year at least.
Many providers charge a monthly 'policy fee' in addition to a bid/offer % . This is a rip off and will detract from your funds growth potential. But moving to a new provider to avoid a policy fee needs to me considered only in light of the other (above) things.
Switching to a repayment option is generally a good thing...it offers a guaranteed way of clearing the debt as long as you maintain payments. But before you do so make sure you a re given/obtain illustrations/quotes from the provider so you can analise the costs against the benefits.
An endowment policy will likely also contain valauable life assurance to clear the mortgage on death...it may (should) also protect against 'critical' illness and 'terminal' illness. Ditching the policy will mean this cover is lost & will need to be replaced. It may cost you more as any new policy(ies) will need to be underwritten at todays rates.
Some endowment plans have an option to convert the plan to life assurance cover and may (in some circumstances) still be a suitable plan.
The issue of miss selling endowments centres around the view that they were sold as a guaranteed plan to repay the mortgage and give an additional lumpsum. In many cases this did happen. However the provider is likely to have provided full key features documentation at the point of sale (which should have been read ) which would clearly have shown this is not the way th eplan actually works and that there is a degree of risk. You would need to show that you were deliberatly mislead by your provider in the sales process. Having said that many peeps have been successful in claims and recieved compensation so it would be worth a try if you feel it applied to you. I am unsure however if the onbudsman is still accepting claims...I think I heard something about a deadline..which may have passed (??)..so check that out.
With regard to any potential new mortgage arrangement...well there are so many, and you would need to see a proper bloke (not a spotty nerd in an estate agent).
JMHO.
You should obtain a full set of valuations and surrender quotes from your policy provider, which should include future forcasted values on certain assumed growth rates at maturity (these are NEVER guaranteed). You should be fully aware of what fund (s) you are invested in, the managers aims and outlook on the future prospects for that fund, the consequences of withdrawel from any such fund (Including any possible surrender fee and or/ market value adjuster (penalty) on with profits plans that may apply in adverse market conditions). You should become fully aware of any internal fund switch options (alternative funds) available within your current plan which may offer better potential, or a more suited, fund within your existing plan. Be aware of any possible fund switch fees as well although most will allow you to switch free of charge once a year at least.
Many providers charge a monthly 'policy fee' in addition to a bid/offer % . This is a rip off and will detract from your funds growth potential. But moving to a new provider to avoid a policy fee needs to me considered only in light of the other (above) things.
Switching to a repayment option is generally a good thing...it offers a guaranteed way of clearing the debt as long as you maintain payments. But before you do so make sure you a re given/obtain illustrations/quotes from the provider so you can analise the costs against the benefits.
An endowment policy will likely also contain valauable life assurance to clear the mortgage on death...it may (should) also protect against 'critical' illness and 'terminal' illness. Ditching the policy will mean this cover is lost & will need to be replaced. It may cost you more as any new policy(ies) will need to be underwritten at todays rates.
Some endowment plans have an option to convert the plan to life assurance cover and may (in some circumstances) still be a suitable plan.
The issue of miss selling endowments centres around the view that they were sold as a guaranteed plan to repay the mortgage and give an additional lumpsum. In many cases this did happen. However the provider is likely to have provided full key features documentation at the point of sale (which should have been read ) which would clearly have shown this is not the way th eplan actually works and that there is a degree of risk. You would need to show that you were deliberatly mislead by your provider in the sales process. Having said that many peeps have been successful in claims and recieved compensation so it would be worth a try if you feel it applied to you. I am unsure however if the onbudsman is still accepting claims...I think I heard something about a deadline..which may have passed (??)..so check that out.
With regard to any potential new mortgage arrangement...well there are so many, and you would need to see a proper bloke (not a spotty nerd in an estate agent).
JMHO.
OP
OP
betty swollocks
large member
wow thank you BTFB.
Lots of stuff to consider there.
I had the notion of going to see a proper financial advisor and am awaiting recommendations from a friend who is a local solicitor,
I definitely will not go to some spotty, sharp-suited herbert in an Estate Agents.
Once again: thank you!
Lots of stuff to consider there.
I had the notion of going to see a proper financial advisor and am awaiting recommendations from a friend who is a local solicitor,
I definitely will not go to some spotty, sharp-suited herbert in an Estate Agents.
Once again: thank you!
Bigtallfatbloke
New Member
..oh I forgot to add...that if after all that you do decide to surrender the plan there are companies out there who will offer you a better deal than you provider for certain types of plans. So in effect you sell them the plan for a lump sum and they maintain the plan and clean up on the maturity pay out. Clearly they are only interested in plans they feel are worth keeping though...so there is the paradox.
There are also several other more cost efficiant ways of repaying an interest only mortgage...such as ISA's (Peps and pep transfers etc)..unit trusts, Oeics (no they arnt Chavs!)..etc...however once again the risks and terms and conditions need to be carefully considered first.
If you go and seean adviser...be sure to quiz them fully on how they are paid, fee vs. Commission etc or a combination of both. Often they will agree to a reduced fee/commission (rebate) to gain your business so ask them, and tell them they are in competition with Bloggs and Co .....oh yeah and be sure they are independant (or at least if Tied they represent a company you are happy to deal with and have investigated yourself already.
..just one other thing....a good adviser will see this as an opportunity for you to 'review' all of you financial planning. It is also a sales opportunity for them, however dont be put off by that. At the end of the day the adviser can only put in place plans you are happy with and make sense to you after due consideration. Far to many peeps deal with things in isolation when in fact they can get better advice and deals, more suited to their needs by reviewing their financial objectives in full at a time like this.
JMHO.
There are also several other more cost efficiant ways of repaying an interest only mortgage...such as ISA's (Peps and pep transfers etc)..unit trusts, Oeics (no they arnt Chavs!)..etc...however once again the risks and terms and conditions need to be carefully considered first.
If you go and seean adviser...be sure to quiz them fully on how they are paid, fee vs. Commission etc or a combination of both. Often they will agree to a reduced fee/commission (rebate) to gain your business so ask them, and tell them they are in competition with Bloggs and Co .....oh yeah and be sure they are independant (or at least if Tied they represent a company you are happy to deal with and have investigated yourself already.
..just one other thing....a good adviser will see this as an opportunity for you to 'review' all of you financial planning. It is also a sales opportunity for them, however dont be put off by that. At the end of the day the adviser can only put in place plans you are happy with and make sense to you after due consideration. Far to many peeps deal with things in isolation when in fact they can get better advice and deals, more suited to their needs by reviewing their financial objectives in full at a time like this.
JMHO.
andy_wrx
Über Member
ChrisKH said:DO NOT:-
Take financial advice from bonj.
What a bizarre idea !
