The Money Roundtable: Do long-term savings products serve their customers or their sellers? | The National
Analysts claim savers stick with them for just 7.6 years on average, but policyholders receive little back for exiting their plans after five, 10 years or even longer.
It is estimated that barely one in 20 completes the 25-year term. And those who do continue to the end often receive disappointing returns.
"To give you an example, if we have financial products that all in [cost] 4.5 per cent per year – and that is what we are seeing, 4.5 per cent, 5 per cent, sometimes higher – and the adviser is not doing anything silly and building a globally diversified platform, and if markets end up making, let’s say 7 per cent a year, and the investor is losing 4.5 per cent in fees, what do we have left?" said Mr Hallam, who is currently on a speaking tour of the Middle East.
"We have 2.5 per cent. But we have inflation historically, which has run historically 3 to 3.5 per cent per year. So it is my belief that you cannot retire effectively with the platforms that I have seen being sold prolifically throughout the Middle East."