It is astonishing that the biggest single sector of the UK investment market is in such a mess. The most prevalent part of this is that the market is completely shrouded in mist. We have undertaken our survey over nine months and despite the time and resource put into this still have found it virtually impossible to uncover all the facts and figures. Companies remain intransigent when it comes to helping with information and the industry is not even close to establishing some basic market standards to help consumers.

Consumers are being badly let down by the Insurance Companies. The attitude of these companies is generally abysmal and they play on the consumers’ lack of knowledge to a significant extent.

It is inconceivable that in a modern investment world with-profits still plays such a large part. Even the term with-profits is not understood and it is clear that this allows Insurance Companies and their sales channels to package up with-profits as something it is not: we found many people had invested into with-profits as straight alternative to deposit accounts.

With over £300 billion in with-profits it is clear that large numbers of people are stuck in such funds, many of which are appalling, we think the market should be whittled down to around £120 billion freeing up the money for investors to use in a much more constructive fashion.

However in reviewing the performance of with-profits we discovered that many companies and their funds had broadly achieved some positive and acceptable results for their plan holders. We found many companies that had applied the original principles and benefits of with-profits to good use and investors with these companies should be pleased with what they have got. Sadly this does not apply across the board. Our estimate is that about 40% of all invested money had achieved this acceptable level or better, about 20% fell somewhere in between and about 40% was in the category of doomed.

The trouble is that the ordinary plan holder has often no idea what category they are in.

One of the resulting contradictions for investors is that those in good plans with good companies may have had the best results and be in the best position, but this may include the fact that to move out is also comparably quite easy. Poor companies often have the highest penalties, whereas the good funds and companies often have none or very low penalties.

Finally a further complication arises: the good companies with the best past results are also those that tend to have the highest asset allocations into shares and property (i.e. good growth areas), which ironically makes them more vulnerable to any further market downturns. This means a company with a strong track record (e.g. Prudential) is in some ways more risky as they would be more detrimentally affected than a weak company which by default has their assets in cash and fixed interest.