ISA or offshore?

JohnRo

These are the sort of questions I was unable to fire at the IFA at that time and quite probably still, since I simply didn't and don't have much of a grounding in financial markets and what options and outcomes were available.

The decision I made was to take their advice at face value as having my best interests in mind and central to the plan they offered.

pressuredrop_2

I could see the point if you were retiring abroad. Or the money was retiring abroad.

Apart from that....

dunstonh

"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."

Ouch. Anything less than 7% to 5% is not nice.

What's the point of going offshore if the money is returning to the UK?

Tax will have to be paid at some stage.

Gross roll up. The tax is paid when a chargeable event occurs. Not as you go along as you would with unwrapped investments. The gross compounding rolls up the value and for long term investments on larger amounts it can be much more beneficial than an onshore bond or unit trusts.

Problem is that the offshore charges are often explicitly charged as an amount, not percentage and geared towards higher investment values (I generally look at it as being around £500k as the point you start to see benefit - 100k is more for onshore)

jamesd

It is possible for an offshore insurance bond wrapper to be appropriate even for UK resident. Deferring tax until they are basic rate would be one - the gross rollup mentioned by the HL adviser. But in this case income is already basic rate.

Lower costs might be another one. But it looks as though ISA allowances were available and those probably beat an offshore bond and should probably be used first.

That leaves inheritance tax and we don't know enough about the prospective value of the estate to comment on that. Also possible care fees avoidance but a suitability report wouldn't mention that because planning avoidance can make avoidance fail.

JohnRo, a non-confrontational emailed request for a copy of the suitability report is the way to go. Non-confrontational at the moment, just ask without comment.

If they know they were doing a bad job that might even be sufficient to cause them to do something about rectifying it.

JohnRo

jamesd wrote: »

JohnRo, a non-confrontational emailed request for a copy of the suitability report is the way to go. Non-confrontational at the moment, just ask without comment

Thanks, I've no intention of being confrontational at all, even if it gets to the stage of pursuing an official complaint. I'm more the type to allow them enough rope to hang themselves. I'll quietly request a copy of the report for my file and take things from there.

My annoyance is with myself mostly for being stupid enough to trust them without making the effort to learn more sooner. I had other things happening at the time and although thinking then the charges looked a bit extreme I had this mistaken notion it was all for very good reason and that they knew what they were doing to get the money working best for me.

edit: IHT is a complete none issue with regard to the current value of my estate.

JohnRo

The report still hasn't been provided 8 days after the request was sent, I did get an acknowledgement of the request.

dunstonh

Send an email now saying that if its not provided by the weekend that you will make a formal complaint.

JohnRo

I received the report this afternoon, it is in word document format, I use openoffice and the creation and edit date show it was made today.

Having read the report I'm not unhappy with what is written but the matter of excessive charges, general suitability and how these relate to other options I was unaware of at the time, having no frames of reference to either challenge or dispute the advice given, still remain an issue for me.

Would you be prepared to have a quick glance through the body of the report and give an opinion? I'm not looking for ammunition just an impartial professional view and better appreciation of the suitability of the plan that was recommended.

dunstonh

I received the report this afternoon, it is in word document format, I use openoffice and the creation and edit date show it was made today.

FSA state that reports should be held in a non-editable format. PDF is the industry standard. It "smells" as if it has just been created.

JohnRo

There's nothing in it that "smells" edited or authored recently to me, I'm assuming its a copy / paste of the pdf but I've requested a copy of the original in pdf format.