This article will review Scottish Widows. If you have a policy, or are thinking about your options, you can contact me on the chat function below or via firstname.lastname@example.org
1.Who are Scottish Widows?
Scottish Widows are a UK financial services company, who were established all the way back in 1815!
They specialise in life insurance, pensions, savings and investments.
With 3,500 employees, they are one of the largest companies of their type in the UK and indeed Europe.
They are now a subsidiary of Lloyds banking group and Aberdeen Asset Management.
The firm has become famous for their advertising involving widows, as per the image below.
The company has experienced a lot of change in recent years. The Scottish Widows Investment Partnership was sold to Aberdeen Asset Management.
This was after Lloyds gave Aberdeen Asset Management over £130 million a year to manage the Scottish Widow funds.
2. Where are they sold?
Scottish Widows are mainly sold in the UK, but they do have expat clients as well.
This is especially the case for UK expats that have moved overseas, and have existing policies, from their time in the UK.
3. How have their funds performed?
The vast majority of Scottish Widows funds haven’t performed well. One reason for that is that the fees are high, as a generalisation, if you include the indirect costs.
There have been some exceptions to that underperformance. For example their Scottish Widows Pension Portfolio 1 has performed quite well as a stand alone fund, although there a lot of other charges that would impact on the net performance.
The Scottish Widows HIFML UK Property fund has also performed relatively well, although the recent crisis in the markets in 2020, has affected performance.
It is a mistake though to assume that it is easy to just pick the best performing Scottish Widows funds, as past performance is seldom a guide to future returns.
This has been shown by the current crisis, where the worse performing Scottish Widows funds of 2020, were previously some of their best performers.
4. What are the positives associated with Scottish Widows?
The main positives associated with Scottish Widows is:
- They are likely to still be around in another 20-30 years, even if they are bought out by another company again. So you don’t need to worry about the life policies paying out or relying on government guarantees.
- They are operating in a well-regulated space in the UK.
- Some of their mortgage and other products aren’t bad even though it pays to shop around and they are seldom the cheapest.
- They have made strides to modernise their products. For new customers, the charges aren’t as bad as historical policies.
- Their critical illness cover isn’t bad, but again, cheaper options exist, with better benefits.
5. What are the negatives?
The main negatives with Scottish Widows are:
- Their funds are an “off the peg” and old-fashioned solution, which was competitive in the 1980s and 1990s, but can no longer compete with better options in the market.
- Most of their funds underperform competitors long-term.
- Customer reviews are mixed at best. These complaints go beyond performance. As per the off the peg comment above, many of the negative customer reviews indicate that they are being treated as customer number 100,393, with slow processes for withdrawals.
- They aren’t focused on a specific niche like high-net-wealth or expats even though they might have originally been focused on widows.
- They are mainly trading on brand name for older, existing customers.
- They haven’t completely moved with the times when it comes to online processes.
- As this is a very UK-centric option, expats living in Britain or British people planning to live overseas in the future, should consider carefully whether this company can best serve them.
In general then, the negatives far outweigh the positives.
Twenty of thirty years ago, Scottish Widows was one of the best options in the market.
Times have changed. There are now cheaper life insurance options, and better retirement and investment options.
For people with existing policies, however, you can rest assured the claims are likely to be paid.
That doesn’t mean you shouldn’t review your existing policies, as it might be cheaper to cancel them, depending on the specific circumstances you find yourself in.
After already selling off parts of their asset management and retirement divisions over the years, it will be interesting to see what changes the future holds for the company.
The sell offs do illustrate that the company was increasingly struggling to stay competitive given changes in the industry, and customer expectations.
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The article below puts it under the spotlight.