How financial firms announce performance statistics is a good reason why investors should take independent financial advice.
Everyone knows the saying about damn lies and then there are statistics – but although financial firms are careful not to tell lies, they can be economical with the truth.
For investors and consumers who do not keep up with financial news, this can lead to carefully crafted statements influencing buying decisions.
For instance, trade body the Equity Release Council has issued statistics for the first three months of 2016.
The headline for the media release is ‘Record start to 2016 for equity release’.
Well, that depends on how you read the details.
Reading the figures in context
What the council actually says is lenders advanced £400 million in equity release loans in the first quarter of 2016.
That’s correct.
The council also says this is a record for the first quarter.
That’s correct.
But both Q3 and Q4 saw bigger sums advanced by lenders, according to the same trade body.
So, Q1 2016 may be the busiest first quarter, but the amount advanced is lower than in the previous two quarters, so is in fact a drop in the amount sought by equity release borrowers.
Consumers could be excused for reading that equity release hit record heights in Q! 2016 and that they can see a bandwagon – in fact the bandwagon has already passed in the last six months of 2015.
Of course, equity release may rebound to exceed Q3 and Q4 2015 figures.
Are annuity sales reviving?
The Association of British Insurers has put together some figures for annuity sales.
The ABI states that annuities are ‘starting to see a revival in popularity’ with 21,200 worth £1.1 billion sold in Q4 2015 – the latest available figures.
That’s correct.
But in Q3 2105, 22,380 annuities worth £1.17 billion were sold. You can make your own mind about if that’s a revival.
The ABI does reveal that in Q2 2015, £990 million was invested in 18,200 annuities, so perhaps a media release saying that annuity sales over the past six months seems to show sales are reviving.
How these statistics are presented is a good case for consulting an independent financial adviser.
An IFA should ignore the hype and recommend the best products to suit a client’s personal financial circumstances.
