L&G Increase Their Charges
Recently Legal and General, my endowment provider, wrote to me to inform me that my two endowment policies that I hold with them will most likely make a loss.
Using three projected returns, the 1987 policy (target £35000) will produce the following results:
-4% shortfall £5400
-6% shortfall £2700
-8% surplus £ 300
The 1991 policy (target £39700) will produce the following shortfalls:
-4% shortfall £10200
-6% shortfall £ 7500
-8% surplus £ 4600
I received another letter from them today, informing me of the following:
1 That they have changed the rules to give them the right to use fund managers other than Legal & General Investment Management Ltd, if they believe that it is necessary.
Don't they have confidence in their own management skills?
2 They are increasing the management fees for managing my policies. Seemingly they have compared their fees to other endowment providers, and feel that an increase is necessary!
The good news is that the new fees (after a search on the back of their letter, it seems that the fees are going up by 0.06% of the value of the investment per year) are, in the opinion of L&G, "highly competitive with typical market rates".
So that's alright then!
A couple of questions that have crossed my mind:
1 Why the hell are they raising the fees, when their "management" of my policies has produced losses?
2 Why are they charging more for their "management" services, when they have said that they may in fact use other fund managers?
Given the losses that my funds are projected to "yield", an increase in charges will simply make matters worse.
These endowment providers are very relaxed about changing the rules, when it suits them. Now is the time for them to change the rules to suit the hapless millions who own these useless, badly managed, costly and underperforming products.