More than half of IFAs are looking for investments that are alternative to with-profits but which have the same characteristics, according to new research from Managing Partners Limited.

Overall, the research shows IFAs have a dim view of with-profits themselves. Only 3% of IFAs have a very positive view and 15% are quite positive, while more than half (55%) have a negative view, with 20% being very negative. Nearly four out of five (77%) said they would not recommend clients invest in with profits-based investments.

MPL believes that traded life policies (TLPs) offer the same steady, incremental returns that with-profits once offered. TLPs are US-issued whole of life policies sold before their maturity date to allow the original owners to enjoy some of the benefits during their own lifetimes. By building diversified portfolios of TLPs and carrying out the right actuarial analysis, fund managers can use them to deliver steady returns that are uncorrelated to other financial assets, according to MPL.

Jeremy Leach, managing director of MPL, said: “Many IFAs are looking for investments that have the characteristics of with-profits. Investors always liked the prospect of steady, incremental returns, which with-profits offered for some decades. The difficulties of the financial crisis have just reinforced that sentiment but investors don’t know where to turn because all the main asset classes went down together.

“Our research also showed that 18% of IFAs said they were familiar with TLPs to a great extent and 50% to a little extent. We would recommend that IFAs seek more information on this relatively new asset class.”

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