With-profits 'dead duck' loses IFA confidence

Independent financial advisors (IFAs) are losing confidence in with-profits funds – with just 13 per cent taking a positive view on the investments.

A poll of 201 IFAs found 38 per cent were quite negative and 25 per cent were very negative about with-profits based investments.

Investment management company Managing Partners' (MPL) survey also showed 59 per cent of IFAs are proactively trying to find an alternative investment product that has many of the characteristics of with-profits investments.

Jeremy Leach, MPL managing director, said: “With-profits investments have been delivering very poor returns for some years now and the turbulence seen on financial markets over the last year will undermine those returns further.

"With-profits was once a major consideration in the advice offered by IFAs but now it is rapidly becoming a dead duck."

The research also shows only 19 per cent of IFAs were now proactively recommending with-profits investments to their clients.

Mr Leach added: "It is not that investors have lost their appetite for the steady, predictable returns that with-profits policies once offered, it is just that they are failing to deliver."

With-profits investments have traditional been the basis of many people's savings – often with insurance companies or pension providers.

The pooled investment funds however have lost popularity since the 2000 dot com bubble burst and returns fell back from expectations.

Mr Leach advises investors looking for steady, predictable returns to consider looking at Traded Life Policies (TLPs).