“All In It Together” – Why With Profits Funds Have And Continue To Weather The Test Of Time

15.08.2018 by Jim Ker

With Profits funds are a well-known concept but are they still relevant to modern financial circumstances? Nowadays, words like investment or investing are very commonly paired with words like risk and loss. Unfortunately, major market upheavals in the not too distant past have left many with weary assumptions about investing into the stock market and it’s understandable why – market volatility and an unpredictable political future can put off potential investors making a commitment with their savings. However, for those who are considering investing, but are concerned for the future, there are some investment products that have stood the test of time.

What is a With Profits fund?
The aim of a With Profits fund is to provide a consistent annual return, whilst minimising the ups and downs of the stock market. It achieves this by pooling together all the money paid into the fund and invests it across a range of different assets such as shares, property, Government bonds, corporate bonds and cash.

The goal is to reduce the risk of the fund by diversifying across different assets, whilst generating a steady return. In addition to this, a concept known as Smoothing is applied. Smoothing holds back some of the fund’s returns in a good year, which then can be used to increase bonuses in years that may not be as successful. Using the above techniques, a With Profits fund provides a more consistent return on your long-term investment than a standard stock market-based fund. You can learn more about how we invest our With Profits fund by viewing our Product Performance page here. 

A Tarnished Reputation?
With Profits funds were primarily used by all life insurance companies during the 1980s and 90s. However, following the endowment mis-selling scandal – where many people were promised unrealistic returns, by overzealous salesmen – With Profits fell out of favour with advisers and the general public, leading to a number of companies closing their funds to new business.

This has resulted in some With Profits funds being slowly managed down over time rather than developing a portfolio for growth. Yet the modern With Profits fund manager looks past this bleak history and can work to provide savers with an option to invest without the fear of suffering stock market mishaps.

A Robust Concept in Volatile Markets
Despite a no thrills outlook for some closed With Profits funds, those open for new business are offering consistent returns and delivering on this alongside reduced investment risks. Once again, many people are beginning to appreciate the option to weather unpredictable markets with the chance of better returns than cash accounts.

With many savings and investment providers falling victim to the test of time and not keeping up to date with the demands of the sector, both in terms of regulations and performance expertise, it’s reassuring to see that the stronger survivors of the With Profits concept are able to reinvent themselves to continue offering an investment fund that puts a customer’s best interests first and offers a long-term performance that warrants attention.

Please Note: You must confirm you have read the key facts, before downloading this document.

Key Facts about our services and costs

1. The Financial Conduct Authority (FCA)

The FCA is the independent watchdog that regulates financial services. This document is designed by the FCA to be given to consumers buying certain financial products. You need to read this important document. It explains the service you are being offered and how you will pay for it.

2. Whose products do we offer?

We offer products from the whole market

We only offer products from a limited number of companies

We only offer our own products

3. Which service will we provide you with?

We will advise and make a recommendation for you after we have assessed your needs.

You will not receive advice or a recommendation from us. We may ask some questions to narrow down the selection of products that we will provide details on. You will then need to make your own choice about how to proceed.

We will provide basic advice on a limited range of stakeholder products and in order to do this we will ask some questions about your income, savings and other circumstances but we will not:

  • conduct a full assessment of your needs;
  • offer advice on whether a non-stakeholder product may be more suitable.

We can only offer products from Kingston Unity Friendly Society. These products will enable you to:

  • protect yourself and your loved ones in the event of death
  • save and invest with the added benefit of protecting yourself and your loved ones in the event of death
  • provide benefit cover in the event of sickness

4. What will you have to pay us for our services?

Normally, if you buy a financial product direct from us, there will be no payments such as commission or fees payable. If there are any commission or fees payable, we will tell you how we get paid and the amount before we carry out any business for you.

5. Who regulates us?

Kingston Unity Friendly Society, 9 Navigation Court, Calder Park, Wakefield, WF2 7BJ is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and .the Prudential Regulation Authority. Kingston Unity Friendly Society’s FCA Registered Number is 110056.

Kingston Unity Friendly Society permitted business is advising and arranging life assurance and pensions business.

You can check this on the FCA’s Register by visiting the FCA’s website www.fsa.gov.uk/register or by contacting the FCA on 0845 606 1234.

6. What to do if you have a complaint

If you wish to register a complaint, please contact us:
…in writing Write to Kingston Unity Friendly Society, Complaints Department, 9 Navigation Court, Calder Park, Wakefield, WF2 7BJ. …by phoneTelephone (01924) 240164

If you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service.

7. Are we covered by the Financial Services Compensation Scheme (FSCS)?

We are covered by the FSCS. You may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim.

Most types of insurance business are covered for 90% of the claim with no upper limit.