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Most Property Advice Not Covered by FSA says Letting Focus

I have just had a letter from the Life Insurance Company with whom I invested in a With Profits endowment policy many years ago.
If you are too young to remember them, these were the dumb opaque products that for years the financial press told us were so great.
The letter told me how badly my policy is doing and how it hasn’t a cat in hells chance of paying off my mortgage.
And there was all the usual incomprehensible guff about crystallised assets, “holding back money in good times”, orphan assets etc.
The trouble is with these endowments is that the whole thing is so opaque.
I did an MBA is Finance at a top business school and even I don’t get it …… With Profits?…."With Losses” more like.
So now, when I invest in things other than property I now do so direct.
I have an account with a stockbroker (nominee) and buy shares directly.
I avoid funds and their high management costs hidden in the Total Expense Ratio, though some investments trusts are OK to get foreign exposure (though there fees are still too high)

HIDDEN CHARGES
By buying investments direct, there are no silly / hidden charges and opaque pricing, no exorbitant management charges etc. And it allows me to build up a portfolio in shares to counterbalance my property holding.
Of course all these awful endowment things, precipice bonds and the like were all sold by salesman on big commissions from the insurance company.
But at last this nonsense and exploitation of the consumer is to be stopped.
About time too.
The fact is that the public has been exploited for years and it is great to hear that at last the regulatory authorities have finally decided to force change on what the Observer newspaper called “A series of archaic practices, where poorly qualified "experts" administer inappropriate advice to the unwitting and are paid billions in commission to sell potentially harmful products.”
Of course, the industry that flogs this rubbish wants to fight back and continue with the situation where 20,000 odd agents play at being independent financial advisers but with with low levels of relevant qualifications.
These guys are almost entirely remunerated by commission paid by the life industry to sell life products.
Let’s hope the Government has the bottle to continue with legislating on this.
The FSA's Retail Distribution review should mean that, from 2012, all independent and tied financial advisers will need much higher levels of professional qualifications and will be forced to act as an agent of their client and be paid appropriately and not via the murky and corrupting commission system but through transparent fees instead.
So, what's this got to do with property?

PROPERTY ADVICE AND THE FSA
Of course, most property investments remain outside the FSA remit, apart from Sale and Rent Back and a few other areas and thousands of people continue to be ripped off by dodgy property seminar firms and Get Rich Quick in Property schemes.
Avoid them like the plague.
To learn some sensible stuff come to our next property seminar where we dispense sensible independent advice.
And, the best bit?
No one will try to hard sell you anything.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlord experts. I’m, David Lawrenson, the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy my Property Letting Book.
What’s unique about LettingFocus is that I offer independent unbiased landlord advice seminars. These cover property investment and letting and they are unbiased because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas) and what type of property to buy and I can answer all your questions on letting property too because I have been a landlord and property investor for over 25 years.
AFFILIATE PRODUCTS
Find out about all the GREAT DEALS we have arranged at our Property Affiliate page.
Keep checking as more will be added over the next month.
Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week.
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  1. Anonymous Nick | 8:21 AM |  

    Hi David, thanks for an interesting article ...... I was offered that mortgage yesterday, although it wasn't identified as being Bank of China, but it is pretty unusual right now it stands out like a sore thumb!

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