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ISA or offshore?
Comments
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I can't honestly recall ever having a suitability report presented to me, I don't have the paperwork with me right now but I have looked through it several times recently and that is one document I haven't noticed. My main concern, after the irritation at being so gullible, is for the viability of any complaint procedure if appropriate, due to the elapsed time since the policy was sold to me.
There is no timebar on complaints unless the FSA specifically introduce one in an area or its pre regulation (which it isnt).
The suitability report is basically a summary written by the IFA to explain what they are recommending and why and what options that could possibly be considered appropriate and why they were ruled out. It is a mandatory requirement on new business (but not increments to an existing plan). On an offshore bond, I would expect it to be around 11-14 pages.
If you havent got it, you could ask the IFA to supply a copy. The IFA has to hold the document effectively for life.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Many thanks for all the help, I will pursue that next week.
I looked through the paperwork, which isn't extensive and there is no suitability report.
The commission expense is the part that is most annoying me right now, mostly because i've been so ignorant and trusting as not to check whether I was being ripped off, but the plan itself now seems on the whole completely unnecessary in my circumstances.
I've come to the conclusion this plan has been sold purely on the basis the commission fees are extremely lucrative given that other cheaper onshore options would have been at least as suitable.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
Many thanks for all the help, I will pursue that next week.
I looked through the paperwork, which isn't extensive and there is no suitability report.
You could ask the IFA to email it to you. You could then check the date of the pdf. That would tell you if its just been generated or does date back to when the bond was taken out.
It is not unknown for these reports not to be written. However, it is also not unknown for people to say that they never got them when they did as very often they are the sort of document that tends not to be read and chucked out very quickly. Personally, I upload a copy to my compliance company and that proves it was done at the time should someone say it was only just written. It still doesnt prove it was issued but the balance of probability is that if you have spent 30 mins to 2 hours writing a report, you are unlikely to not issue it. Asking for the pdf to be emailed and checking the date of the pdf could indicate whether it was done at the time.I've come to the conclusion this plan has been sold purely on the basis the commission fees are extremely lucrative given that other cheaper onshore options would have been at least as suitable.
I dont agree in that respect (and do note my comments in earlier posts). The onshore bond can pay exactly the same. Indeed, a few providers can pay more. For example, the aegon onshore bond can pay 7.5% initial. It also allows trail and can have a TER of 0.2% plus trail. So, if they wanted bias they could have got more.
Have a look at the illustration from Canada Life. Somewhere near the back will be a reduction in yield figure. It will say something like "the effect of charges will reduce a return of 7% p.a. to 5.9% p.a." The figures will vary but the difference indicates the charging the level (typically minus 0.1% e.g. a 1% p.a. charge will show a reduction in yield of 1.1%).
The reduction in yield figure is key to seeing if you have been given an expensive option or not. If you used internal funds (insurer own brand) then you would expect a figure of less than 1% reduction. If you used external funds (e..f Fidelity, Inv Perp etc) then it will be closer to 2%.
I am not clear from the posts whether you have used a trust or not. It suggests you have. Many trusts are only available on onshore/offshore bonds. Trusts are one of the key reasons that bonds are used as it eliminates many of the other options. Unit Trusts platforms are starting to offer trust based options but the range is limited. Plus, for trusts, going offshore can be the most beneficial.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I've come to the conclusion this plan has been sold purely on the basis the commission fees are extremely lucrative given that other cheaper onshore options would have been at least as suitable.
Are you basing this on the commission differences (or lack of) between an onshore bond and an offshore bond or are you thinking that a bond was not the right option at all - i.e use S&S ISA and unwrapped investments such as OEICs instead?I am not clear from the posts whether you have used a trust or not. It suggests you have. Many trusts are only available on onshore/offshore bonds. Trusts are one of the key reasons that bonds are used as it eliminates many of the other options. Unit Trusts platforms are starting to offer trust based options but the range is limited. Plus, for trusts, going offshore can be the most beneficial.
No it's not clear if a trust was used or not.
However I'd also ask if a trust was needed anyway given the OP's statement that he is well under the IHT limit.0 -
You could ask the IFA to email it to you. You could then check the date of the pdf. That would tell you if its just been generated or does date back to when the bond was taken out.
I'll do just that, it certainly hasn't been thrown away. I have documentation from funds with previous providers no longer held that are kept simply as historical records for my own interest.I dont agree in that respect (and do note my comments in earlier posts).
I have and appreciate them, will continue to do so.Have a look at the illustration from Canada Life. Somewhere near the back will be a reduction in yield figure. It will say something like "the effect of charges will reduce a return of 7% p.a. to 5.9% p.a." The figures will vary but the difference indicates the charging the level (typically minus 0.1% e.g. a 1% p.a. charge will show a reduction in yield of 1.1%).
The CLI documentation shows the table of charges and the subsequent explanations contain the following last line >
"Putting it another way, if the growth rate were to be 7.0%, which is in no way guaranteed, this would have the effect of reducing it to 4.1% a year."I am not clear from the posts whether you have used a trust or not. It suggests you have. Many trusts are only available on onshore/offshore bonds. Trusts are one of the key reasons that bonds are used as it eliminates many of the other options. Unit Trusts platforms are starting to offer trust based options but the range is limited. Plus, for trusts, going offshore can be the most beneficial.
It's a Canada Life Delta Account and is a trust, I am one of the trustees of the settlement and named as the first life assured.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
Are you basing this on the commission differences (or lack of) between an onshore bond and an offshore bond or are you thinking that a bond was not the right option at all - i.e use S&S ISA and unwrapped investments such as OEICs instead?
The later, knowing what I know now and looking at the plan I've been advised to use I'm struggling to see any merit, with regard to my benefit from having it, whatsoever.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
The later, knowing what I know now and looking at the plan I've been advised to use I'm struggling to see any merit, with regard to my benefit from having it, whatsoever.
Much would depend on your discussions with the IFA at the time.
Did you mention IHT being a possible issue either now or at some time in the future? How close are you to the IHT limits?
Did you ask for a trust to be used?0 -
Much would depend on your discussions with the IFA at the time.
Did you mention IHT being a possible issue either now or at some time in the future? How close are you to the IHT limits?
Did you ask for a trust to be used?
At the time the discussion was about how I could best use the money to secure my financial future. I don't recall mentioning IHT as an issue but do recall it being mentioned. I was largely ignorant of what all the options available to me at the time were, the entire reason for seeking and taking the advice given without disputing it. I had no frames of reference and so trusted they had my best interests in mind.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
At the time the discussion was about how I could best use the money to secure my financial future. I don't recall mentioning IHT as an issue but do recall it being mentioned.
The Suitability Report is going to be important.
On mine it has a section for Inheritance Tax with figures for the estate at the time which was over the limit at that time. The possibility of a Trust was also mentioned but decided against as I wanted to keep control.0 -
What's the point of going offshore if the money is returning to the UK?
Tax will have to be paid at some stage.0
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