Investors warned over rates offers

A firm of independent financial advisers is warning Tessa investors that they could lose out if they roll over their tax-free money into equity-based products.

In a new report, which comes with a condom fixed to the cover, IFA Kerry Nelson of Deep Blue Financial, based in Fareham, Hampshire, says there is too much reliance on "smoke and mirrors".

"You can be tempted by headline rates and bullish claims in products such as Tessa Triple Plus Isa from Credit Suisse First Boston. This promotes a 100% potential return which it equates to 20% a year.

"But it's not so simple. The five years is split into 10 periods of six months. Each period has a 10% ceiling and no floor. Each 10% plus period rachets up the level for the next. Unless markets move in a perfect straight line, the 100% growth is impossible," she says.

Deep Blue has run the 17 years since the Footsie started through its computer.

It concludes that not one of the 3,291 periods tested would have produced the maximum promoted payout.