240 K Investment problem

geezercdg

Hi All

Can anyone help me with this headache! I have power of attorney over my mother.

My mother has returned from living abroad and is now in a care home. She has 240k invested in a Lloyds high income fund. (In Jersey)

This earns around 4.7% (after 20% tax). I have been looking at bringing it back to the UK but can't decide on whether to get financial advice (and pay a hefty 3% fee) or just pick a fund like woodford and do it myself.

I've been told that I will have to pay gross roll up tax (by an adviser who is keen to get the commission) if I bring the money back to the UK.

I just don't know what to do for the best.

Can anyone help or recommend a good safe fund that can earn more?

Thanks

Linton

Considering the size of the pot and the fact that it is being managed on behalf of someone else I strongly suggest you get professional advice. Not only do you have to invest prudently, you have to be seen to be investing prudently. The advice should be from an independent regulated advisor (IFA) and not from a bank. In the UK such advice is fee based, it cannot be based on commission, so you can be more confident that it is really independent. I dont know the situation in Jersey and I dont know how easy it will be to find an advisor with experience of Jersey tax rules.

From your comments I, perhaps unfairly, conclude you are not an experienced investor. Just picking one fund, particularly one fairly focussed fund such as Woodford's is risky. You need to balance returns against risk - the better the returns generally the higher the risk. There is no such thing as a high return low risk option.

PS advice shouldnt cost anything like 3%.

geezercdg

Thanks Linton

How much should I be getting charged for advice?

dunstonh

How much should I be getting charged for advice?

It is difficult to price up a job without knowing what the job is.
3% on £240k is just ridiculously high. In monetary terms you would typically be aiming for £1k-£2.5k

I've been told that I will have to pay gross roll up tax (by an adviser who is keen to get the commission) if I bring the money back to the UK.

Look to use a UK adviser rather than one not regulated by the FCA. As Linton says, they will be fee based. Commission is banned in UK.

xylophone

http://www.thepfs.org/yourmoney/find-an-adviser/

Ring round and ask about fees?

princeofpounds

Agree with regards to being seen to act properly with money that you run for someone else.


Now, having said that, 4.7% after tax is a fantastic rate. I'm not sure it makes any sense at all to extract it while it is still capable of earning that sum. Expected returns on income stocks are probably not that much higher than that, and involve a lot more volatility.

badger09

In this situation, you need both investment, and tax advice.

In my opinion, this is not something you should be looking to DIY.

geezercdg

Thank you Prince! I have seen 3 different advisers and no one has said that to me. It earned 5.05% last year and after taking off 20% tax it still comes to something like 4.04%.

One adviser from Fishers promised me 9%!

Until now I had no idea whether it was doing well or not!

atush

AS long as the income from the Jersey investment is declared to the UK tax authorities and income tax paid, then you can leave it where it is if you want to?

jimjames

atush wrote: »

AS long as the income from the Jersey investment is declared to the UK tax authorities and income tax paid, then you can leave it where it is if you want to?

I'd agree. When you're getting a decent return I can't see a need to move it.


In terms of due diligence you've not made any changes and it's your mother's money that is continuing in existing investments. Moving it will be something that will only cost you (her) money

princeofpounds

Sorry, I made an error - for some reasons I read it being in a 'high income fund' as a 'high income account'. I thought she was on some old fixed rate savings product that couldn't be replicated now.


So my earlier comment is, unfortunately, invalid. Although the idea that it might be best to leave it in place is not invalid. Would need to see more detail about the fund to decide if that was a reasonable product or not. For starters, any idea what the fee on it is?