It’s a (green) jungle out there

It’s a (green) jungle out there

Successive consultants and managers have struggled to see my resistance to support Old Mutual when looking for solutions for clients. They have repeatedly tried to sell me the “company line” – 165 years of experience, solid big company etc etc etc…

I dont care, I just dont trust them to do what is in the client’s best interests and this was proved yet again when we were approached by a client for help to transfer an Old Mutual Retirement Annuity. Bottom line is that he was tired of what he perceived to be poor performance and high fees on an RA that was sold to him in 2000. A few years into the policy he cancelled the annual premium escalation and has now finally decided that he is “done with OM”.

We duly approached OM for a quote to do a section 14 transfer to a unit trust RA for the client. Not suprisingly, the quote came back showing a 30% penatly on the fund value i.e. OM were going to take 30% of the total fund as a penalty to recover all sorts of “unrecouped” expenses. I say not surprisingly as 30% is the “maximum”  penalty that they are allowed in terms of the statement of intent that was signed betweem the life insurers and the minister of finance some years back.

However, when the client cancelled the premium escalation OM would also have applied a penalty to his policy back then and when we reminded them of this fact, the new penalty was suddenly reduced to about 23%. How does that work? We are still waiting for a response from OM re this “error” on their part but I think we have a greater chance of world peace!

And this is not the first time that something like this has happened (with OM)…as a result I just dont trust them. They are not interested in what is best for the client and it appears that they will try to get away with whatever they can. If the client did not know better or if he did not have someone fighting for him who did, he would just have lost an additional 7% of his retirement savings…with no explanation or apology from OM.

For the record, I dont think that any of the other insurance companies are any better and it just goes to show that you should probably never put your hard earned money into an investment that is done through an insurance company – there is still too little transparency and too little truth in their communication with clients. There are better (and cheaper) ways to invest…