Research highlights IFAs as most trusted guide on whether investments are truly 'ethical'

Friday, September 24, 2010

Foresters Friendly Society offers new Ethical Child Savings Plan

Independent research commissioned by Foresters Friendly Society and undertaken by YouGov among 2,035 UK adults has found that nearly one quarter (24 per cent) of respondents regard IFAs as their most trusted guide on whether a product is 'ethical', more than any other provider of financial information and advice.

In contrast, just three per cent of those surveyed saw banks as the best guide to whether an investment is ethical, while a surprising 10 per cent of people would most trust members of an online community with financial expertise.

The research provides a public vote of confidence in the role of IFAs ahead of the full implementation of the Retail Distribution Review and coincides with the launch of Foresters Friendly Society's new Ethical Child Savings Plan (ECSP) (www.forestersfriendlysociety.co.uk/ethical-child-savings-plan).

The product, a new variety of Tax Exempt Savings Plan (TESP), is a regular premium savings policy that can only be offered by friendly societies. It has been designed to bridge the gap left in the children's savings market created since the Government's decision to terminate the Child Trust Fund scheme (CTF) from January 2011.

The ECSP allows grandparents and parents to invest £25 (or from £15 online) per month, for a self-selected term of between 10 and 25 years. On maturity, the savings plan will provide the child recipient with a cash lump sum exempt from both income and capital gains tax (1).

Premiums will be invested in the ethical section of Foresters Friendly Society's with profits fund, which avoids investing in companies that are harmful to the environment, people and animals.

The research finds also that IFAs may benefit from the increasing interest and investment in ethical products. With total funds held in ethical investments having doubled to more than £6.8bn (2) in the past ten years in the UK, 21 per cent of those surveyed trusted IFAs most to inform them about changes in ethical investment products during the next decade. Mutual organisations, including friendly societies, followed just behind this figure, being cited by 17 per cent of respondents.

The survey further reveals that the children's savings market could witness more growth in ethical investments after over a third 34% per cent of respondents, all with children and grandchildren, said they would be more likely to consider an ethical investment if the beneficiary was their child or grandchild.

Neil Armitage, Marketing Director at Foresters Friendly Society said: "The scrapping of CTFs has given savings providers a unique opportunity to bring new products and ideas to the children's savings market.

"Saving needs to be a lifelong habit for everyone, and the Government's cuts don't change that principle. In fact, the reduction of state support makes it all the more important for families to set money aside whenever they can.

"As a benevolent society we have a natural interest in ethical investments. We're delighted to offer our new ECSP product which reflects both our own values and those of the public who are increasingly endorsing ethical products."

The ECSP launch follows the launch last month by Foresters Friendly Society of a new IFA portal www.forestersfriendlysociety.co.uk/ifa allowing users full access to the Society's product literature and the capacity to download and create personalised illustrations.


(1) Tax rules may change and are subject to individual circumstances. The child may not get back the amount that has been saved in the plan.

(2) Source: Ethical Investment Research Service (February 2010)