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Apr 27 2011

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“We’ve just been scammed by Friends Provident, so what now?”


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I received the headlined quote in an email from a 35 year old American couple that bought an Investment Linked Assurance Scheme through Friends Provident.   

zurich warningBut was the couple really scammed?  Investors need to read the fine print behind any investment scheme. This particular product labels itself as an “investment” insurance policy, promising 101% of what an investor deposits, upon their death.

Of course, that sounds good.  But think about it for a moment.

The company promises 1% more than what you deposited or the market value of the investments upon death, whichever is highest.  I’ve taken this directly from the Friends Provident website:

“In the event of the death of the Life Assured (or the last surviving Life Assured if the policy is written on more than one life) while the policy is in force, 101% of the cash-in value of your plan will be payable.” … read the product summary

Fees charged to investors are high, but much can be found in the prospectus:

  1. 1.2% annual administration charge
  2. 1.6% annual establishment charge (for the first 5 years)
  3. 2.59% expense ratio (See Average Channel Island  Fund fees on page 1287, in the article by Henri Servaes, Ajay Khorana and Peter Tufano, called “ Mutual Fund Fees Around the World”: … read the article.)

Assuming that they have already paid the bulk of their annual establishment fees (charging 1.6 percent annually for the first five years) they will pay combined investment fees of roughly 3.79 percent annually, when adding up the annual administrative charge with the annual expense ratio for the funds.

This couple, after reading one of my earlier posts on Friends Provident, wanted to take action, by selling their investments, and reinvesting with a company that won’t drag them over the coals.  But Friends Provident paid their advisor a large upfront commission.  To recoup that money, the company needs to keep this couple in their product, so they can reap perpetual fees from their clients.

My new online friends have a dilemma:  Their investments have a market value of $150,000 U.S., but if they withdraw their money now, they’ll pay a penalty of $45,000 to Friends Provident, while receiving just $105,000. 

Should they do it?

As Americans, with Vanguard’s indexes, they could pay as little as 0.15 percent for a diversified portfolio.  With Friends Provident, they’re paying roughly 3.79 percent in annual fees.

Let’s have a look at what those fees could do to the 35 year old couple, over the next 30 years.  Assuming a stock/bond market return of 9 percent annually, they would make 8.85 percent annually with Vanguard, and 5.31 percent annually with Friends Provident.

Let’s have a look at what would happen if they pulled their money out, taking that $45,000 hit, and then investing with Vanguard.

Investment Company

Investment

Annual return over 30 years

End value in 2041

Vanguard

$105,000

8.85%

$1,336,725

Friends Provident

$150,000

5.31%

$708,238

 You can see, above, that despite taking that $45,000 hit, the comparative results with a low cost company like Vanguard would easily outstrip the results of a high-cost company like Friends Provident.  The decision, of course, is up to them.  But they need to be aware of the fact that according to Nobel Prize winner William Sharpe, fund investments (on aggregate) earn the markets return, before fees.  Over time, they will under-perform the market in direct proporation to the fees charged.

But these new friends of mine have an option:  they’ve told me that they can withdraw as much as $90,000 today, without a paying a fee.  And later, they can withdraw more money, paying a lower penalty as more time elapses.

If they want to pay lower fees, they could invest that $90,000 with Vanguard or Assetbuilder, and concentrate on building those accounts, while limiting their losses with the money they leave behind, with Friends Provident.

Unfortunately, from what I understand, they will have to keep contributing money to Friends Provident, based on the contract they have signed (bizarre, I know!) but the pain of selling their money later is abated, as the penalty to sell “early” isn’t as severe later on.

Expatriates often invest without reading the fine print on a prospectus.  Here are some rules to invest by:

  1. You should never pay a fee to either buy or sell your investments (with the exception of a small fee to buy exchange traded index funds.
  2. You should never have to pay a penalty to withdraw your money
  3. You should never have to pay an ongoing administrative charge (or an “establishment charge” as Friends Provident coins it)

You should also teach your friends not to fall for costly schemes that can cost them hundreds of thousands of dollars over their lifetimes.

Further Reading:

 Costs in the Mists of Time: South China Morning Post

Royal Skandia’s high commissioned Investment Linked Assurance Schemes are similar to those sold by Friends Provident and Zurich International

 Hong Kong Consumers Angry After Being Sold Complex Insurance Product ILAS:  South China Morning Post

 ILAS Products Under Scrutiny:  International Advisor

 The Real Cost of an Offshore Pension Plan:  Noto Financial Planning

Tony Noto once sold  ILAS products (much like Zurich and Friends Provident’s) until he recognized how much they took from investors.  In this article, he explains how they work.

 

 

About the author

andrew hallam

I'm a freelance finance writer, lucky enough to have been nominated as a finalist for two Canadian National Publishing Awards. I'm also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a book explaining how I became a millionaire on a teacher's salary, while still in my 30s. Working to empower people financially, I'm available to motivate and inspire people on basic retirement planning and index investing. I'm happy to comment on your questions, first, please read the Terms of Use.

Permanent link to this article: http://andrewhallam.com/2011/04/weve-just-been-scammed-by-friends-provident-so-what-now/

144 comments

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  1. avatar
    DIY Investor

    Woodie Guthrie wrote it down in song years ago:

    "Yes, as through this world I've wandered

    I've seen lots of funny men;

    Some will rob you with a six-gun,

    And some with a fountain pen. "

    1. avatar
      Andrew Hallam

      Well recited Robert.

      Woodie Guthrie probably would have make a great advocate for individual investors!

  2. avatar
    CreditDonkey

    So unfair. Poor fellows who have fallen to these scammers. Sometimes the desire to earn money can just end up in losing money – lesson learned the hard way :(

  3. avatar
    Paul Carey

    Can you please tell me if this is Friends Provident in the Isle of Man?

    1. avatar
      Andrew Hallam

      Yes Paul, that's the same company.

  4. avatar
    David

    As a Canadian living overseas will I benefit from investing in an 'off-shore' program like Royal London 360 vs. Vanguard where I will have to pay US taxes on my money?

    1. avatar
      Andrew Hallam

      Hi David,

      I don't know exactly where you are living, but as an non-American, you can't invest directly with Vanguard. You can, however, open an account of exchange traded funds at a brokerage. If you open an account in a country that doesn't charge capital gains, you're free and clear of paying capital gain taxes. You don't have to live in the country either. People in Vietnam (Canadians) are flying to Singapore to open accounts, then building their portfolio of exchange traded index funds from there. Wiring the money each quarter might cost a little, and it's not convenient, but overall, you will pay far lower fees with this option, than with the service company you are using.

      Also, even with your offshore investment company, you are paying U.S withholding taxes on the dividends, if any of their products have exposure to the U.S market. There's no way around that. Where do you live/work? I may be able to offer a suggestion.

      Cheers,

      Andrew

  5. avatar
    David

    Andrew – I live/work in KL and we have some mutual friends through SAS. I am seriously considering closing my IPP account and cutting my losses. This is a big step and I want to make sure I am making the right choice before I do it. I need a place to start investing once I give up my Royal London 360 account. Any advice?

  6. avatar
    David

    I failed to mention that my wife is a US citizen and we have funds in the US with Fidelity.

  7. avatar
    bill

    David, please share your experiences with IPP and Royal London. I have also invested with them but over 8 months. What are your reservations?

  8. avatar
    Gary Crock

    I have an account with them with these fees.. However, they match 125% of the money we put in..

    The program is called Premier Plus and the wording is:

    ""if you invest $2k per month for 10 years, you will qualify for the current Premier Plus Special Offer – Your Initial Unit Bonus Allocation will be: 125%

    This means that for the first 18 months, for every $2k you invest, there will be a $2500 USD working to buy units in your chosen investments..""

    I have to leave it in for 18 months, but then I can take out anytime.. How safe is this money ? I know they have AAA rating and Life Assurance Regulations of the ISle of Mann (1991)..

    is this a good deal??

  9. avatar
    Gary

    I have an account with them with these fees – Premier PLUS.. However, they match 125% of the money we put in..

    The program is called Premier Plus and the wording is:

    ""if you invest 2k per month for 10 years, you will qualify for the current

    Premier Plus Special Offer – Your Initial Unit Bonus Allocation will be:

    125%

    This means that for the first 18 months, for every 2k you invest, there

    will be a 2500 USD working to buy units in your chosen investments..""

    I have to leave it in for 18 months, but then I can take out anytime.. How safe is this money ? I know they have AAA rating and Life Assurance

    Regulations of the ISle of Mann (1991)..

    But is this a safe and good deal??

    1. avatar
      Andrew Hallam

      Gary,

      First of all, it's a 25% bonus that they're talking about. Giving you 100% of what you deposit means you are getting 0%. Getting 125% of what you deposit means you are getting 25%. But look very carefully at the contract. You must deposit money over 10 years, yes, but do you get this 25% bonus after ten years? Or after many other years?

      If you get the bonus after depositing for 10 years and you're keeping the account for 25 years, the "bonus" amounts to less than 1% annually.

      You will pay triple that, annually, in fees. Dissect that contract very very carefully. It's not as transparent as it appears, and it looks much better than it is.

  10. avatar
    Andrew Hallam

    David,

    If you learn about exchange traded funds, you may be able to open a DBS Vickers account in Singapore and use exchange traded index funds, just as I do. True, living in KL makes it less convenient, and you would have to open the account in person (then wire the money) but it's the most efficient way for you to invest. If you check the "expat investing" tab at the top of the page, you should be able to find some useful information.

  11. avatar
    Andrew Rowan

    With regards to the 18 month initial allocation period of the Friends Provident Premier; As I understand it you pay your monthly premium for 18months and it remains in the plan for the term i.e. 10 years. The bonus of say 25% is added to your premium thus buying 25% more units in the chosen investment and again this stays in the plan for the term.

    So ok you pay the fees etc and doing the math you're returning whatever % less the fees right?

    My question is as a lazy investor; If I'm making say 8% p.a. in the product less the 3.69% above means i'm returning 4.31%p.a.? Where 'should' I be investing my money (as a lazy investor) to forget about it for the term that will return me this %?

    As an expat I speak to numerous people, some opt to leave it in a bank account with little to no return others speak of Generali, Skandia etc but surely these are all much a muchness as fees go?

    1. avatar
      Andrew Hallam

      Hi Andrew,

      I have some options mentioned under my "Expat Investing" icon at the top of my home page. My total investment expenses average roughly 0.15 percent per year. I use DBS Vickers' online brokerage, and I purchase three exchange traded funds: Vanguard's International stock market index (VEA); Vanguard's total U.S. stock market index (VTI) and a short term Canadian stock market index (XSB.TO)

      I don't pay capital gains taxes on the profits. The dividend yield is low, and I do pay a 30% witholding tax on the dividends. But even in a tax sheltered account with Zurich or Friends Provident, you would pay this percentage on all U.S. stocks or U.S. stock funds (the witholding tax gets removed at the source, in this case, so you won't see it on the account, but you can read about it–in fine print–on their websites)

  12. avatar
    Linda

    hi Andrew

    I'm kinda in the same boat. I had subscribed to the FPI Premier plan for the last 5+ years, sold unfortunately while I was an expat in China. Now i'm back to Singapore (where I am from) and a financial planner friend here alerted me to the high hidden charges that I've been paying.

    Like the American couple that you've befriended, I've also have over USD140K parked with them. Thanks for your advice above – I think I will take out as much money as I can without penalty and reduce my monthly premium to the minimum.

    Thinking back to what had attracted me to FPI originally is the mix of the funds that they had to offer (opportunities to invest in markets like Brazil, Russia, hedge funds) and I had assumed that nil difference between bid and offer price of the funds means a good deal for me. I admit I had not checked on the expense ratio of each individual funds that I hold and I now know the admin fees for the plan fees are also very high!

    My question is whether through a normal brokerage like DBS Vickers, will we still get to invest (at relatively low costs) in markets aside from the likes of US, Australia, Singapore, China and India? do you recommend only ETFs then?

  13. avatar
    Andrew Hallam

    Hi Linda,

    Through DBS, you can buy indexes (ETFs) representing any country you want. I recommend against picking individual foreign markets though. Neither you, nor anyone else, is going to know which markets will do the best over the next year, five years or ten years. It could very likely be a sleeper, like Greece or Ireland. In fact, the odds of that are better than you might think, yet few people would pick them. That said, considering that nobody really knows, you might want to hedge your bets (like I do) by purchases an international index that owns the widest array of international markets, like VT (the entire world) or VEA (the developed first world) coupled with EEM (emerging markets). You might see the method as unsophisticated, but your odds of beating a diversified account of world stock indexes are incredibly low, over your lifetime.

  14. avatar
    Mel

    Hi Andrew and readers,

    Andrew, firstly great book! Congrats on pulling off writing a book in layman's terms that everyone can read, learn and act on.

    I entered the investing world about 2 years ago indebting all my savings with an advisor at a large financial advising company in Canada.

    Over the last few months I have awakened to the fact that my broker's interests are not in my best interests so I have started on the long and sometimes confusing trail of educating myself on investing and how to build and manage my own investments successfully.

    I was hoping you or your readers could give me some guidance. Currently all my investments are spread over 9 mutal funds (surprise surprise, did I mention I worked with an advisor) with an average MER of 2.2%.

    I am thinking of selling my funds to reduce the MER's by purchasing ETF's and Bonds. The problem is all of the funds have DSC's until mid 2016. If I were to sell the funds now I would have to pay around $6,000 in DSC charges. I am not sure if I have gave you enough info here, but do you think it is worth taking the hit now paying the $6k to get me out of mutal funds so I can save the 2% on MER's?

    Or am I looking at this the completey wrong way?

  15. avatar
    Andrew Hallam

    Hi Mel,

    This can be a really tough call. I don't know all of the details, but perhaps, it I paint a compounding picture/scenario, you may be able to use it to make a decision.

    Let's assume that you lose 5% to deferred sales load fees for exiting the funds (I'm not sure what your penalty would be, so you might want to have a look). Then, let's assume that you buy low cost ETFs with the proceeds. The ETFs would save you roughly 2% per year.

    Assume that from 2012 to 2016, your ETF investments generated a return of 8% per year.

    By sticking with your actively managed portfolio, there's a strong probability that you would make roughly 6% per year, based on the higher costs.

    OK…let's assume that your portfolio is worth $100,000.

    $100,000 making 6% per year (assuming you stay) over 4 years would grow to just over $124K

    If the sales load cost you 5%, you would have $95,000 to invest in ETFs, and let's assume you'd make 8% per year. After 4 years, you would have slightly more than $129K.

    Under these circumstances, it would be better to take the 5% hit. But again, I don't know what your hit would actually be for sure.

    I hope this helps you though. And thanks for the kind words about my book! If you have a few minutes to write a quick review on Amazon, I'd be thrilled! Here's the link, if you have time: http://www.amazon.ca/Millionaire-Teacher-Wealth-S
    Thanks Mel!

    Andrew

  16. avatar
    Lisa

    Andrew,

    From this post you are suggesting that someone living in KL can go to singapore to open an account in DBS Vickers and use exchange traded index funds. I was wondering how this is possible as i have checked the DBS Vickers website and it looks like you would need to be working in Singapore (with a valid employment pass) to open an account with DBS Vickers. Can you confirm that a foreigner that does not reside in Singapore (i.e a visitor/tourist) can actually open a DBS Vickers account in Singapore.

    Thanks

    Lisa

    1. avatar
      Andrew Hallam

      Hi Lisa,

      You don't need to be working in Singapore to open such an account. You could visit here, bring all your particulars, and open the account–then wire monthly savings to Singapore from your country of residence. I know plenty of non Singapore residents, firsthand, who opened their DBS Vickers accounts. This reminds me that I asked one of them to write a story about it (he teaches in Thailand) and I have it in my inbox somewhere. Firsthand, I know of the following people who have done it: two people residing in Thailand, one residing in Vietnam and one residing in Amsterdam. All three of them are Canadians. If you're American, you won't be able to open such an account. As easier option might be assetbuilder, for Americans: http://www.assetbuilder.com Let me know if you have questions Lisa.

      Cheers,

      Andrew

      1. avatar
        Joe

        Hi Andrew, If Lisa is an American, couldn't she just open an account directly with Vanguard? That's what I do, and I can buy or sell Vanguard ETF's for free. That's right, zero transaction costs! Cheers! Joe

        1. avatar
          Andrew Hallam

          Hi Joe,

          If Lisa lives overseas, she can try, but unless she tells a small white lie, they won't let her open a Vanguard account. If Vanguard catches a sense that she lives overseas, game over. They brought that into effect about 3 years ago. If you are a current overseas American Vanguard customer, you can keep your account, but if you're trying to open a new account, they won't let you.

          1. avatar
            Lisa

            Dear Andrew,

            Sorry, it's me again….I was wondering….you mention that a portfolio should be 40% bond index fund and 60% stock index funds (i am 38 years old). You also mention that it is better to get a stock index or bond index from you home country or the country you plan to retire in.

            Well, i live in Brunei, and we don't have access to buying stock index funds or bond index funds and there is no broker in Brunei when i checked via the link you gave me http://www.selectabroker.com/Brunei-Darussalam/

            So, what index funds would you advise me to buy?

            I am trying to plan where to put my retirement savings once i get it out of Friends Provident!

            If i already have an account with a Singapore Bank where i can buy ETF Tracker Funds should i just buy them from them? I think they would charge USD150 per transaction…..is that a high charge?

            Regards

            Lisa

      2. avatar
        Lisa

        Dear Andrew,

        Thanks for all your help & advice. I am not an american, i am Bruneian.

        I will look into the DBS Vickers account the next time i am in Singapore. Since reading your book (i am on chapter 5) and reading your posts i have realised that my retirement savings are with Friends Provident International and London 360….gulp!!!!

        This has happened over the last few days so i am trying to get in touch with my financial adviser to find out how i can get as much money out as possible without paying huge surrender charges. i will use your advice to the other couple where they took out as much as they could without a penalty and left the rest there and reduced their monthly contribution to the absolute lowest possible.

        Wish me luck.

        Lisa

        1. avatar
          Andrew Hallam

          Hi Lisa,

          If you learn about exchange traded funds, you could set up an account in Singapore with DBS Vickers. You'll need to fly here to do it. Then you could buy the world stock market index (VT) and the international bond market index (ISHG). That's all you'd need for full diversification. You'd pay $25 U.S. per purchase, so make sure you invest a decent sum at a time. You can then wire your money here. if you ask the bank for help, they will move you into what they want you to buy, and it won't be low cost ETFs! Good luck with Friends Provident. I hope it's not too painful.

          1. avatar
            Lisa

            Dear Andrew,

            I will continue to check my options with buying index funds(either low cost with DBS Vickers) or slightly higher cost index funds (at my existing bank). My question would now be…if I set up an account with DBS Vickers what would happen to the money invested if say something should happen to me before I take out the funds to use for my retirement?

            Regards

            Lisa

          2. avatar
            Andrew Hallam

            The money would be in your name Lisa. Is as much "yours" and your family's after you die as it would be if it were in any other bank.

  17. avatar
    mahathir

    David,

    I've been roped into Royal London 360 through IPP as well and have been making contributions for over 13 months.

    What has given you cold feet? I will be placing a substantial amount of my savings through this plan as well and am concerned. Would appreciate your kind feedback.

    MM

  18. avatar
    Lisa

    Dear Andrew,

    Thank you for all your helpful advice. I have just finished reading your book & I am so thankful that I did as it made me look seriously at my retirement savings & made me realize that I was being duped!!!!

    You mentioned in your last reply to me that I should get VT and ISHG. I am assuming I should be getting approximately 40% in ISHG and 60% in VT…is that correct? Also in your book you make a case for buying short-term government bonds….is ISHG one of these?

    Lastly, is 2 funds enough for retirement savings and where could I find data showing past performance of these funds? Should I be adding another fund?

    Great book. Life changer for me

    Thank you so much

    Lisa

    1. avatar
      Andrew Hallam

      Hi Lisa,

      The historical returns of VT are irrelevant—it's a total world stock market index with a low expense ratio. ISHG is a medium term international bond index, but that should be fine. I don't know of a short term international bond index—I don't think there is one.

  19. avatar
    Gading Karsika

    Hello Andrew

    I live in Bali indonesia and have been reading you posts on Friends Providential currently I am in the 12 month of the 18month payment plan/portfolio. I have already Committed 20,000 USD and need 2 more payments of 10,000USD to complete the initial startup investment. If I default on the next payments I will loose my 20,000. So what should I do? default or continue the payments? Do you have more knowledge on Friends Providential that may calm my nerves on the subject …… or is it to late and I should consider my $$ swindled?

  20. avatar
    Andrew Hallam

    I think you should do the specific math on when it's best to pull your money. I'm sorry to hear about your circumstance, but you may find the best time to pull the plug. Keep in mind, however, that if you remain with them for a lifetime, you will receive very little of what will rightfully be yours. Too much will be eaten by the tyranny of their fees.

  21. avatar
    Tony

    Upfront commissions for the IFA are typically your first 6 months of contributions for a 10 year plan, and your first 12 months of contributions for a 25 year plan. Friends Provident is the one you should be complaining to as they purposely encourage misbehavior by paying their sales force like this. Good luck.

  22. avatar
    Harum

    1." ISHG is a medium term international bond index, but that should be fine."

    You responded to another reader, Lisa, as above. May I know why ISHG is fine even though it is medium-term and not short term? 

    2. Also, you mentioned to her, " Then you could buy the world stock market index (VT) and the international bond market index (ISHG). That’s all you’d need for full diversification."

    Normally you would recommend another index, a home country index, but did you not recommend it to Lisa because she is Bruneian and a Brunei index is not available through Vickers?

    I am a Malaysian, about to study in France. I plan to work in France after my studies but I do plan to come back to Malaysia in the future. (Especially to retire as my money would stretch further)

    Since French ETF and Malaysian ETF are not available through Vickers, should I proceed with a diversification like Lisa's or should I buy UK ETFs (in  lieu of French) and look for other options (besides Vickers) to buy Malaysian ETFs? Or should I just buy Singapore ETFs? Help! 

    1. avatar
      Andrew Hallam

      Hi Harum,

      There is a Malaysian stock market ETF. You're right about why I didn't recommend a home country index for Lisa. At this point, I don't know of one. But you should build with a home country equity bias. The ticker symbol you want is EWM. Here's the link: http://finance.yahoo.com/q?s=ewm&ql=1

      You can buy this via a DBS Vickers or Standard Chartered account…any account, actually, giving you access to the New York Stock market.

  23. avatar
    Afonso Vieira

    Message to Gading Karsika,

    As the article said, you need to pay fees until the end of the "term". So if you open the account for say 20 years, you need to pay fees for the all 20 years regardless if you keep deposits going after the initial 18 months.

    At my firm we have tried several times to close this type of accounts and get the money back to clients that come to see us a few months AFTER being sold an account with Friends Provident by Devere, in the same fashion as the article describes. We complain to the Isle of Man regulator but to no avail. The reply is always the same: the client signed a contract that clearly states fees, penalties, etc.

    So the advise is to complete the 18 months and stop making deposits. Also, I recommend to share the story among your network but remember that it was not Friends Provident that advise you, it was most for sure an "IFA" working for some "regulated" company. He was the one that didn't tell you how the account works.

    Good luck.

  24. avatar
    IFA Abroad

    Alfonso – why keep paying for 18 months when the aggregate fees on those contributions are going to be close to 10% per year, for the entire length of the term?

    1. avatar
      Andrew Hallam

      I think investing in one of these variable annuity plans (based on the prospectuses I have seen) will cost something like 3.5-4 percent per year in annual fees, not 10 percent. But I have to agree: these are nasty little products, sold by salespeople keen to make big bucks off the naivity of others.

      1. avatar
        IFA Abroad

        Andrew – great work on the site in regards to spreading awareness, but I'm actually correct when I say close to 10%. Have another look at the FP terms and conditions – there is a 1.5% quarterly administration charge on initial units – which is 6.14% a year, on initial shares and all those ridiculous bonuses (the ones that were about to run out before you signed on). Then you still have the investment admin charge of 1.2% and then the external fund fees – which usually add up to around 2% (total expense ratios, AMCs are nonsense). This is also ignoring other fees like funding the account with your credit card (1%) or foreign exchange fees. So there you have it – 9.3% in fees per year – and that's generous! That's charged on the initial units (everything you contributed for the first 18 months), every year for the entire term. If you continue throwing money at them, maybe you can work the fees towards 3.5%-4%, but why would you throw good money after bad?

        People are blown away when they learn it's actually 6.1%. It's so underhanded to quote the fee on a quarterly basis (who else in the world of finance does that??) AND who would have thought an initial charge is applied every year for the entire term? These insurance companies are horrible.

  25. avatar
    Afonso Vieira

    Hi IFA Abroad,

    Gading said "I am in the 12 month of the 18 month payment plan/portfolio" and I assume he was sold Premier from Friends Provident:

    http://www.friendslife.co.uk/doclib/xim16e.tg.pdf

    On page 4 it says the account will be "surrendered", which means closed in life insurance jargon. We encounter this issue recently with a Deveres sold/advised Friends Provident Premier. The client stopped deposits after 14 months because he find out that the information he received was incorrect, but didn't do anything else. He came to see us when Friends told him via letter to deposit the remaining 4 months or else. After we explained how the account really works and what he had been sold –he had been told that there were no fees AT ALL after 18 months– he decided to let Friends close the account.

    The client end up losing the equivalent of 5 months deposits (he had made some investment profits in 2011 and 2012; and luckily he is almost 65 years old, so the "term" was for ten years "only" because of age limit.

    Letting the account close is also an option to Gading, but he needs to calculate how much he will lose, both financially and mentally. If he has signed a contract for 25 years (called "term"), the loss after 12 months deposits may well be… 12 months!

    By the way, to my knowledge Friends doesn't sell directly to the public. So far, all similar cases I have had the opportunity to work with, were sold by an intermediary, broker, IFA. Never directly by Friends.

    1. avatar
      IFA Abroad

      Singapore regulators are actually debating whether they should ban commissions – and this is exactly the type of story the press and regulators in Singapore need to hear!

      Organize all the details related to your complaint and submit it to authorities. They can't ignore it if people keep coming out of the woodwork.

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