commission v fees

cheerfulcat

richgirl wrote:

What about Eds point about care home fees ?

Why are the IFA's ignoring this ?

It was actually in the OP's post and I wondered about this yesterday ( number 41, above ). Still no answer...

dunstonh

Why are the IFA's ignoring this ?

I am the only IFA posting on this thead so far. The others you mistake as IFAs are equally or more qualified but hold different titles, authorisations and specialisations.

I dont like the way this has become a them and us issue. It certainly shouldnt be that way but if you look at some of the thanks being passed around, its interesting to see some of the posts containing inaccurate information being thanked. The "advisers" point out the inaccuricies but are then seen as being against the others. Would you rather we didnt post?

What about Eds point about care home fees ?

What about long term care? It says it may be required in the future. Well, money in investment bonds doesnt get registered as savings/investments on means tested local authority care. Plus the funds are in trust. So it becomes a non issue and could easily result in local authority funding even though there is £500k of investments there.

Apart from that, not enough information is known to comment much more. We dont have the benefit of a factfind or hours of discussion and research

Tiggs_2

dunstonh wrote:

Well, money in investment bonds doesnt get registered as savings/investments on means tested local authority care. Plus the funds are in trust. So it becomes a non issue and could easily result in local authority funding even though there is £500k of investments there.

ok...the bar has been set - £200k tax saved and local authority funding......first person to suggest a way to do away with that and kick the IFA in the wallet at the same time wins a cuddly toy.

Chrismaths

Take out the money in £50 notes, and burn it. No tax to pay, no IFA commission! Win win!

Ian_W

Tiggs wrote:

ok...the bar has been set - £200k tax saved and local authority funding......first person to suggest a way to do away with that and kick the IFA in the wallet at the same time wins a cuddly toy.

OP's elderly relative spends the £500K on wine, women and song .... :cool:

No IHT, no LA care funding ...

Where's me cuddly Toy? :rotfl:

jem16

Talking about no answer.....

Ed - any chance of those figures as requested in post 34?

The OP seems to have disappeared from this thread - maybe she found the answer elsewhere?

EdInvestor

Ed - any chance of those figures as requested in post 34?

Perhaps someone would like to provide some figures for the bond performance including the effect of annual withdrawals after 10 years? Otherwise it's impossible to make a proper comparison.

Perhaps we could fix the withdrawal figure at 4%, which would keep it within the age allowance on a fund of 500k, assuming no other income and also keepit more or less comparable with net after tax income from cash and achievable net dividend income.

BTW one thing this thread has highlighted is the lack of info about what to do for people with fairly large estates if they are single, or on the first death.There's plenty of info about discretionary trusts to use the 2 nil rate bands for IHT, but there's little knowledge about what to do after that.

The immediate needs annuity product is also little known - and it makes the whole care issue pretty well irrelevant for anyone with reasonable assets.

dunstonh

Perhaps someone would like to provide some figures for the bond performance including the effect of annual withdrawals after 10 years? Otherwise it's impossible to make a proper comparison.

Well, seeing as all the funds available on unit trusts/oeics and therefore ISAs are also available in investment bonds, what do you want to pick? Fidelity Special Situations, Invesco Perpetual Income? Or how about looking at 5 years as that includes the stockmarket crash with investing just prior to the worst drop and instead of picking a best performing fund lets just stick with a sector allocated portfolio of medium risk and use sector average performance only. Total return 52.91%.

Perhaps we could fix the withdrawal figure at 4%, which would keep it within the age allowance on a fund of 500k, assuming no other income and also keepit more or less comparable with net after tax income from cash and achievable net dividend income.

You cant assume no other income. What about the state pension? Does the OP's parent have other pension income? other investments? You cant make the case fit what you are trying to do. Advice doesnt work on the basis of "well if we ignore that" or "if we pretend that doesnt exist".

dunstonh

(1) What is the time frame for expectant nursing care?

It says maybe required. Not will be.

(5) Why are there so many fees? It looks like a wrap fee product, but also paying commissions on purchases and sales. This is called DOUBLE DIPPING.

It is not a wrap product. Its an offshore investment bond. That is how they charge. You are also incorrect on commissions on purchases and sales as well.

Cant answer rest as we dont have the factfind or information the original adviser would have spent hours discussing and considering.

Its all very well having people trying to help the OP in this situation but posting incorrect information helps no-one.

Chrismaths

As was said before, the OP could probably get a better deal. The 0.625% a quarter includes the advisers commission and the costs of setting up the bond (for AXA). Don't forget though that the client has got an allocation rate of 105% (from memory, if I'm wrong correct me), so that 500k will buy 525k's worth of funds. So the issue isn't so simple.

I've endeavoured to work out what effect this has compared to an initial commission/fee situation. On the basis quoted to the OP, this is equivalent to initial charges of about 6.5%. Some will go to the adviser, some to AXA. And as has been repeated on this thread before, everyone agrees that the OP should go back to the adviser and negotiate.

In fact, the best situation for the OP would be to get the adviser to take as much commission as he can get his hands on, and get him to rebate whatever you can negotiate. This will then create an artifical "loss" on the bond, which will reduce the tax to pay when it is eventually surrendered. But maybe we are gilding the lily.

I've said before, and will say again, I don't like allocation rates, because they are confusing (even to me!) and it is much simpler and transparent to make the charge upfront. But the fact remains it is not as bad a deal as you make out.