Tag: guaranteed products

Sophia Grene

Are guaranteed products gaining FSA seal of approval?

Are guaranteed products gaining IFAs' seal of approval?

Although research for the UK’s Department for Work and Pensions says guaranteed products cost too much to be a rational investment for pension savers, independent financial advisers seem to have a different take on things.

More than 90 per cent of IFAs recommend structured products to their clients, according to a survey conducted by Structured Products magazine. Even allowing for the likely bias as IFAs try to be polite to the questioner, that’s a swingeing majority in favour of a product with a distinctly opaque cost structure.

A large part of the cost to investors of guaranteed equity products (the main form mentioned in the survey) is dividends, which the product provider gets to hold onto. The DWP’s research estimates this cost amounts to between 15 and 20 per cent of the amount invested – are IFAs telling their customers that, or are they even aware of it?

Pauline Skypala

saving for retirement

Warning: saving for retirement

The work being done on the design of personal accounts is shining some much needed light into dark and murky corners.

Take the paper published this week by the Department for Work and Pensions on guaranteed investments and their suitability for inclusion as an investment choice within Britain’s new national pension scheme.

Written by David McCarthy of Tanaka Business School and based on economic modelling, it concludes there is zero demand for guaranteed investment products where guarantees are priced using financial techniques commonly used by banks that sell financial guarantees.

About the blog

FTfm is no longer updated but it remains open as an archive.

FTfm's specialist writing team offer their insights into the global fund management industry.

About the authors

Pauline Skypala has been editor of FTfm for four years having previously been deputy personal finance editor. She joined the FT in 1999 and has been writing on savings and investment issues throughout her career.

Steve Johnson, FTfm deputy editor, has been a journalist for 17 years, 10 of which have been with the FT.

Sophia Grene, reporter on FTfm, has been a financial journalist in print and online for 12 years.

Ruth Sullivan has worked as a financial/business journalist and foreign correspondent and for the past 10 years has been at the FT.