Chapters Financial News

Many providers, indeed, it seems the majority, continue to review their product lines, both past and present, to ensure that these continue to offer value. Product providers who offer pensions, investments and the like are sometimes known as 'manufacturers', right at the beginning of any distribution chain through advisory companies to the end user, the policyholder.

All parties in the chain of distribution have been required to review consumer outcomes as part of the Financial Conduct Authority's (FCA's) ongoing Consumer Duty programme that started in 2023. Overall, this has been a good thing, with many making changes and adjustments to their current and past product lines to, in many cases, simplify arrangements and often to reduce costs to the end user, namely the client.

Some providers and investment platforms have (sensibly) also continued to upgrade their technology and processes to allow greater secure access to information, again largely with the objective of saving long term costs. The continued development of Artificial Intelligence (AI) has helped this position significantly, and technology is not going to stand still any time soon.

In recent weeks, we have seen many insurance companies and platforms reviewing their investment offerings with the aim of offering value updates where possible.

In recent reviews, and as an example, some clients have received letters confirming that the provider has looked at actively managed funds that could be closely replicated by using a tracker fund, which should offer cheaper overall charges. The pension provider has written accordingly to notify policyholders of the planned change, and we have largely been comfortable for these changes to proceed. There is no guarantee of improved performance; however, with lower charges being applied by the fund manager, this should help overall returns, although as always not guaranteed. Some investors may prefer actively managed funds (usually more expensive to run) than passive funds (index trackers), and some prefer a mix as their individual preference.

Not all the planned changes notified to us and to clients are as simple as the one illustrated above, with some funds closing and proceeds being moved to cash. This highlights the importance of reviewing the allocation of your funds on a regular basis to ensure that they continue to meet with your attitude to investment risk. A link to our investment risk scale can be found here: https://www.chaptersfinancial.com/private-clients/attitude-to-investment-risk

If you have not considered the investment risk profile of your funds for a while, then now may be a good opportunity. Your attitude to investment risk and capacity for loss may have changed over the years, and you may also have additional investment requirements (such as ethical, environmental, social or governance considerations) to take into account when you review your arrangements as you look forward in manging your financial objectives.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS
Director
Chartered Financial Planner
Chapters Financial Limited