Philippa Gee: Why am I still seeing dubious investment bond sales?


So after RDR came in, I thought the more dubious sale practices relating to investment bonds would ideally stop altogether and that investors could seek comfort that whoever they go to for advice, they would receive the right standard.

Today I received a call from another IFA who was pulling their hair out. They had spoken to a potential client who was looking to invest a decent sum of money and due to particular reasons; an investment bond seemed the best approach.

The client was keen to take the full 5 per cent income and the adviser clarified that their fee had to be deducted from the 5 per cent amount and therefore, in this instance, the income would be 4.25 per cent.

The client then called back to say that they had met with a representative from a very well-known advising firm who had told the client that they didn’t need to take the fee from the 5 per cent and could “work the figures so the fees still come from the investment bond and you still get the 5 per cent”.

The lady had decided to go for this company as her income would be higher.

Now perhaps there is a way of organising this that I have not yet come across and if so, I apologise.

However, if not, this seems to be a case of one adviser being fully transparent and losing their client and another avoiding the truth and getting the client. If this is the case it just shows that some people will find ways of bending or breaking the rules to their advantage and with, eventually, a terrible client outcome.

Philippa Gee is managing director at Philippa Gee Wealth Management