GIA within Offshore Bond - Move away from wealth mgmt company
The investment is £260k. The plan is to use global index tracker funds (c£100k in low/med risk, £160k in med risk). Ideally I would like to complete in specie transfers to reduce the risk of being out of the market, then after the transfer is complete, I will change funds. No exit fees apply.
Please may I ask if:
1) anyone has any opinion, experience or knowledge of the list below?
2) for any research tips (my amateur plan is to visit their websites and check fees, choice of funds etc
3) if you think any the wealth management companies below are worthy of consideration (ie pay mgmt. fee to gain better-than-index-tracker performance?
If you think I have forgotten to consider something please shout up – all opinions welcome!
James Brearley & Sons (DFM & Platform)
Succession Inv Platform
AFH Wealth Management
Alpha Portfolio Management
ARIA Capital Management
Barclays Private Bank
BNP Paribas Securities Services S C A
Bordier & Cie
Brooks Macdonald International
Brooks Macdonald International
Canaccord Genuity Wealth Management
Canaccord Genuity Wealth Management
Capital International Group
Cazenove (CI) Ltd
Cazenove Capital Management
Charles Stanley & Co
Deutsche Bank Private Wlth Mgt
Erik Penser Fondkommission
FIM Capital Limited
HFM Columbus Asset Mgt Ltd
Investec Asset Management
Investec Wealth and Investment
J Brearley & Sons
J M Finn & Co
Killik & Co McInroy & Wood Limited
LG Vestra Wealth
Mangold Fondkommission AB
Psigma Investment Management
Quilter Cheviot (London) Head Office
Ravenscrodt Optimal Management
Raymond James Investment
Rothschild Wealth Mgt (UK) Ltd
Sanlam Private Inv
Seven Investment Management (Tethys Platform)
Smith & Williamson Investment Management
Standard Life Wealth
TAM International Limited
Union Bancaire Privee
W H Ireland (IOM) Ltd
W H Ireland Ltd
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There may be a large tax bill to pay if they sell it, but the thing about offshore bonds is that ignoring them may just make it worse.
It would be a good idea to take independent financial advice given you are investing somebody else's money.
If it was possible to do that consistently, passives wouldn't exist. There is no evidence that any fund or portfolio manager can consistently beat the market. Let alone by more than their fees (which tend to be high if "wealth management" is in the name).
In a nutshell offshore bonds are usually used to avoid (one or both of) capital gains tax and inheritance tax. But if you repatriate it to the UK this will incur a tax charge and of course become part of your relative's estate. You are usually able to withdraw 5% a year to the UK without incurring tax, so they are kind of useful as an alternative to a pension for those who can't use a normal UK pension, drawing down over a period of 20 years. Before, or when, you die these can be reassigned to someone else without triggering a CGT event and gifted to a trust to pass outside of the holders estate in an IHT efficient way.
You can see from that very simplified explanation above that it may be a complex decision based on the tax consequences (and any of my comments are NOT tax advice) so you should really speak to someone (ideally and IFA with some specialisation in offshore products) who can look at the specific situation and at least give you some ballpark figures of what tax might be due if you were to pursue different options. But to bring the whole amount 'onshore' in one go would almost certainly trigger tax charges which may make those ongoing fees seem cheap, and it may be that simply drawing down 5% a year and swallowing the fees is the best course of action.
I'd say this should be your first question to answer, before choosing who to transfer to.
Sorry I should have said that we took regulated IFA advice which was also confirmed by Friends Provident.....that because the outer offshore bond wrapper will remain in place and that we are only changing the mgmt of the GIA within the bond wrapper and no withdrawals above the permitted 5% annual have or will be taken.....that there are no unexpected or unplanned tax liabilities.
The bond owner is 89 years old and has no immediate need to make any further withdrawals or remove the offshore bond wrapper as he wishes the bond to be part of his estate (nil IHT issues as this bond is the majority of his estate.) The IFA advised that the offshore bond, unlike isa wrappers, can be reassigned with its wrapper intact.
In an ideal world, yes we would not have chosen the complexity of an offshore bond but this wrapper affords certain advantages (not tax related) that isas, for eg, do not. With the bond owner being 89 years of age....now is not the time to be removing that wrapper.
Are we talking about the exemption in financial assessments for care costs? How long has he had the bond?
Is the "IFA" the wealth management company you want to get away from? Wealth management companies tend to be tied rather than independent.
You may struggle to get a response to your questions here, as there isn't a large intersection between "people who use wealth management firms" and "peope who regularly visit a website called MoneySavingExpert".
The first seven names on your list are investment platforms, and as far as I know they all cater primarily to advised clients rather than DIY clients. You may find it more difficult or more expensive to use them on a DIY basis, or they may not allow it at all. The rest look like wealth management firms (i.e. they run the platform, choose the investments and give you advice, usually for a high all-in fee, like the one you have now).
The list indicates that the offshore bond provider wants quite badly for you to be getting advice from somewhere, either from one of their selected wealth management firms or an independent or tied adviser that can use one of their selected platforms.
Is simply removing the current wealth manager and keeping the existing GIA an option? (I.e. you no longer pay them for advice and wealth management and just pay for the administration of the bond and GIA.)
I would reiterate that taking independent financial advice would be a very good idea given that this is a complex arrangement and somebody else's money. That goes double if you are not your relative's sole beneficiary. Paying an independent financial adviser for advice could still save money compared to the existing wealth manager. The tax consequences of getting it wrong (e.g. not assigning the bond out at the right moment) could easily dwarf the fees.
Firstly thanks for taking time to reply.
You are correct in the purpose/reason for using an offshore bond. No notes to that effect are detailed on record. It was taken out in 2013 £200k invested and for 14months £300 per month was withdrawn to evidence that bond was being used to provide income.
Relative was and is mentally and physically well and (ageism is an accepted discrimination and so social services financial assesors are prohibited from using age to imply that one was deliberately depriving oneself of assets.)
We accept no guarantees re above but have taken the steps we were comfortable with.
The IFA we have taken advice from re changing the investment management was not the original/current Wealth management company.
"Is simply removing the current wealth manager and keeping the existing GIA an option? (I.e. you no longer pay them for advice and wealth management and just pay for the administration of the bond and GIA.)"
Good idea, I shall ask that question.
I am the sole beneficiary of this offshore bond, hopefully not for many more years.
My relative wants to grow the investment and interestingly we have the same risk profile med/med high eg a 60-80 equities index tracker would suit both of us.