Damaging your wealth

Friends Profligate
A sleeping nightmare has returned to torment.

In  1998 ‘endowment mis-selling’ was hot news. Many families found that the promise that endowment policies would repay their mortgages had failed. Most expected an additional nest-egg that did not materialise.

Such was the publicity at the time; I am surprised this very odd way of paying a debt did not disappear. It’s a British institution, which is almost unknown in other countries.

The Sunday Times rang me up to say the problem has returned. Millions of savers with endowments, pensions and bonds have been short-changed by as much as £8 billion over the past year as insurers have slashed returns, even though their underlying funds have made money.

Payouts from endowments have been so derisory that roughly one in four policyholders would have been better off in a savings account over the past decade. Out of 45 endowment providers, 11 have returned less than cash, according to the latest survey by Money Management magazine.

For example, a 10-year endowment policy from Friends Provident has returned just 0.9% a year compared with 1.6% from a 90-day deposit account. This is despite the fact that Friends Provident's underlying with-profits fund rose 5% last year. 

I am astonished that so many Britons have been conned into buying useless shares from Florida on the strength of a few phones calls. Why are so many still being short-changed by endowments?   

Advisers who sold with profits policies were often more interested in collecting commission than pointing out the risks. They were vastly oversold on the basis of an overly optimistic view of future growth. They should come with a warning that this product can seriously damage your wealth.

Neil Davies
A sad celebration of the brief life of a good man was held at the funeral of Neil Davies at Bettws this morning.

My personal debt of gratitude to Neil goes back twenty years. He was then 15 and a stalwart supporter of the Labour party in Bettws. He has a prized photograph of a group of us on our party bandwagon. It was lorry with a jazz band on top.

Neil was a Charity Champion extraordinaire. The local paper, the South Wales Argus awarded him that title. He was Mr Bettws, forever organising events for good causes.  He had a way of getting the best out of everyone and never took ‘no’ for an answer.

His work has raised thousands of pounds and inspired a great deal of good work. His death at the age of 35 following a mysterious illness is a cruel blow to all those who loved him.

Touching tributes were paid to his memory this morning.

May he rest in peace.