Investment Bond Wrapper & Supermarkets

MrMicawber_2

Many thanks for a very comprehensive answer. Just to pursue the charge bit, you are saying that despite what the product literature says (Selestia very clearly states 5% fee on intial investment) the actual negotiable charges might well be different depending on IFA, network used etc. This being the case I could potentially put money in a bond for much the same charges as I could from a discount broker I.e. total charge = 0 to 0.25% for initial charge and 1.5% - 2% for AMG / TER.

I find that when I read the product literature for bonds it is far from transparent exactly what fees / charges are payable hence me keeping asking questions.

jem16

I have the Norwich Union Investment Bond arranged through an IFA.

I invested £100,000 and commission paid to the IFA was 1%. Initial allocation was £107,500 - this is what NU invest initially for me made up through reduced commission taken by the IFA and a special offer at the time. AMC is 1.2%.

http://www.norwichunion.com/investment-bond/index.htm

Mine is the Portfolio Stepdown option.

http://adviser.norwichunion.com/product-literature/files/in/in50006c.pdf

EdInvestor

jem16 wrote: »

I invested £100,000 and commission paid to the IFA was 1%. Initial allocation was £107,500 - this is what NU invest initially for me made up through reduced commission taken by the IFA and a special offer at the time. AMC is 1.2%.

The bond appears to take additional fund charges on top(TAC). How much are they for your chosen funds?

jem16

The 1.2% figure I quoted takes into account all charges.

dunstonh

Many thanks for a very comprehensive answer. Just to pursue the charge bit, you are saying that despite what the product literature says (Selestia very clearly states 5% fee on intial investment) the actual negotiable charges might well be different depending on IFA, network used etc. This being the case I could potentially put money in a bond for much the same charges as I could from a discount broker I.e. total charge = 0 to 0.25% for initial charge and 1.5% - 2% for AMG / TER.

5% assumes maximum commission. That will range from 3.5 to 4.5% depending on what the IFA has negotiated. The best you can expect is an initial charge of 0.5% (although that is more typical of investments in excess of £200k).

I find that when I read the product literature for bonds it is far from transparent exactly what fees / charges are payable hence me keeping asking questions.

The documentation is written to be presented with a personal illustration where the charges are fully disclosed. If you are just looking at key feature documents and brochures, then you are only getting one bit of the information.

The bond appears to take additional fund charges on top(TAC). How much are they for your chosen funds?

NU takes a 1% starting point (mainly for internal funds) and then external funds have an additional charge to make the full annual management charge.

One of the big advantages of NU is that they have a big initial allocation and a good range of internal funds. This can keep the reduction in yield over 10 years down below 1.5%.

EdInvestor

jem16 wrote: »

The 1.2% figure I quoted takes into account all charges.

That's not what it says on the link you posted above.

dunstonh

EdInvestor wrote: »

That's not what it says on the link you posted above.

The illustrations issued would take into account the annual management charges of the individual funds so the RIY Jem is talking about it correct.

jem16

EdInvestor wrote: »

That's not what it says on the link you posted above.

I posted the link for information purposes on the product not the charges. If you look at the link again, you will see that it mentions initial allocation on £100k to be £102,500 and not the £107,500 that I actually got.

As explained by Dunstonh the information published on the website is generic. My specific figures came from my personal illustration and were only given as a guide as to what could be achieved.

EdInvestor

jem16 wrote: »

If you look at the link again, you will see that it mentions initial allocation on £100k to be £102,500 and not the £107,500 that I actually got.

Interested to hear what yur early cash-in charges would be.

The link quotes 11% in year 1, 8% year 2, 6% year 3, etc to year 5.

dunstonh

The early cash in charges are what you show. However, there are clean versions available but you dont get the increased allocation.

The early cash in charges are not a problem as you shouldnt be investing for a couple of years only anyway. Better to take the increased allocation rather than a clean one with no tie in.