Name

Address

Address

Address

Address

Date

Dear Client’s Name

Following our recent telephone conversations / discussions and completion of a Personal Financial Planning Profile on Date I am writing to detail the recommendations which I feel are appropriate to your current circumstances. You stated that you wished toCLIENT OBJECTIVE e.g.: invest£Amountforcapital growth over the longer termand these recommendations are aimed at meeting this objective.

Investment Bonds

I recommend that you invest £Amount into the Product Provider / Investment or WithProfit bond. We have discussed the reasons why investing into a single premium investment bond would be suitable for you and I have provided you with a Key Features Document. It would be inappropriate for me to repeat all of the information contained therein but I would like to highlight a few points which have particular relevance to your circumstances.

1)Basic rate tax liability is accounted for within the fund. Higher rate taxpayers have an additional tax liability on encashment of the bond or on the balance of withdrawals in excess of 5% per annum.

2)Minimal administration.

3)Pooling funds. By pooling many individuals’ monies, funds can be diversified to a broad spread of investments which, depending on funds selected, may also help spread the risk.

4)Switching funds. The bond has a wide range of funds, which can be tailored to your risk profile, and switches between funds are straightforward should your future requirements change.

5)Access to unitised with profit funds.

6)Future withdrawal facilities. Up to 5% per annum (for up to 20 years) of the initial investment can be taken as income without immediate liability to tax. Higher Rate taxpayers may incur an additional tax liability at a later stage. (and if Applicable add);- Please note that our on-going service charge of X% will reduce the 5% withdrawal allowance accordingly.

7)The bond can be placed in trust, which can help reduce Inheritance Tax. If not required at this time, you should contact us again if your circumstances or requirements change.

DELETE ANY OF THE ABOVE NOT RELEVANT TO THE CIRCUMSTANCES AND ADD ANY REASONS WHY OF PARTICULAR RELEVANCE TO CLIENT.

In determining the suitability of this Bond I have compared the other options available and they have been discounted as follows: -

1)Banks/ Building Society Accounts are dependent on interest rates and are unlikely to outperform the Investment/With ProfitBond over the longer term. However, I do recommend that £XX is retained with the Name of Bankas it is easily accessible and may be used as an emergency fund.

2)ISAs. You have already used your full ISA allowance for this tax year.

3)Unit Trusts/Investment Trusts. These havebeendiscounteddue to yourcautiousriskprofile/other reason.

We have discussed the amendments to the Capital Gains Tax regime, specifically the CGT rates applicable to basic rate and higher rate taxpayers. This would make Unit Trusts more tax efficient than Investment Bonds, but the latter has been recommended because REASON.From our discussion you are satisfied that you have understood the implications regarding your Bondthat arises from these changes.

In selecting the company with whom your bond should be effected I have considered a number of factors. Of these the most important was, of course, to ensure that the contract which they offered contained the right features for your requirements.

In this respect, I have looked for companies that can provide a contract that offers the following features:

  • Strong track record regarding Investment or With Profit bonds.
  • Policy segmentationwhich will giveyou the required flexibility to make partialsurrenders if necessary.
  • No initial charge
  • Other reason/s?

Financial strengthand administrative support have also been taken into account in deciding to recommend Product Provider.

Withdrawals have been set to commence on DATE at a rate of 5% per annum (NB care re impact of any annual adviser charge being taken, if applicable) with payments on a MONTHLY basis. This can be amended to suit your changing circumstances. Although the Bond is designed primarily to provide capital growth, the structure of this investment is such that it can provide you with regular payments. Under current legislation you will be able to withdraw up to 5% of your initial investment each year with no immediate liability to tax. You can, of course, take higher levels of ‘income’ from the Bond. If you are, or become, a higher rate taxpayer when such an ‘excess’ withdrawal is made there will be a tax charge at your highest personal rate, less the current basic rate applicable at the time (basic rate tax is treated as paid within the fund).

The Investment or With Profit fund within this single premium bond, will match your investment risk profile which you stated was cautious / balanced / speculative.

(If appropriate to funds recommended include following paragraphs)

We discussed your wishes to have potential for modest growth compared to the low returns from Cash currently. However, as discussed, you should be aware that the future returns of Gilt and Bond funds will be sensitive to increases in both UK interest rates & inflation. If prevailing interest rates increase this is likely to have a negative effect on returns from Gilt & Fixed Interest funds, and may well cause reduction in capital values.

(If Corporate Bonds include following paragraph)

Additionally as regards Corporate Bond funds, although the fund manager will seek to spread risk, the value of the fund will be affected in the event of the failure or downgrading of any underlying companies issuing the bonds.

I would stress that when UK interest rates or inflation increase markedly, then a switch out of these funds may be necessary, and you should monitor this aspect. You are able to arrange such a switch with/without penalty/charge (if with penalty/charge confirm what) and I would be pleased to assist you with any switch instruction at your request.

The previously provided 'key features document' provides a great deal of information concerning the terms under which the policy will be issued. You should read these documents carefully and contact me if you have any queries concerning them. I would like to draw your particular attention to the sections on charges, exit penalties during the first five years and cancellation and in particular the section on the market value adjuster.

For our advice and setting up your bond, we have agreed a fee amounting to £Amount /as shown on your personalised illustration as we have already discussed. This sum will be deducted from your fund byProduct Provider and paid to us/ You are paying our fee directly to us.

Total Charges

The table below shows the charges for your plans over the next12 months. Where relevant, we have used weighted averages for some of the charges and also, where regular contributions are made:-

Plan Details / Charges
Platform charges
Product Charges
Fund/Investment Charges
DFM Charges
Adviser Initial Charge
Ongoing Annual Service Charge / %
X
X
X
X
X
X / £
X
X
X
X
X
X
Total / % / £

Please note, for certain investments, there may be the possibility that other costs may arise, including taxes.

There is no fixed term to this investment so it can be encashed in whole or part at any time, however to fully benefit from the product terms, you should view this as a five-year plus investment, particularly in view of the penalties imposed on surrender during this period.

Any headline bonus rate is not guaranteed beyond the initial offer period and any future bonuses are expected to be of a lower amount. Future bonuses are not guaranteed as they are dependent on profits still to be earned. When the UKstock market is depressed it is common practice for product providers to apply a Market Value Adjuster (MVA) upon a full or partial encashment, or switch out, of a with profits fund and/or bond. This MVA represents a penalty against the value of the bond and could result in investors receiving back an encashment value less than the amount invested.

Past performance is not to be treated as a guide to future returns and the value of units can fall as well as rise.

With regard to property funds, the value of land and buildings is generally a matter of a valuer’s opinion rather than fact.You may not be able to encash an investment in a property fund whenever you choose as the fund managers reserve the right to delay disinvestment instructions for up to twelve months should property in the fund not be easy to sell.

For my records, please sign and return a copy of this letter in the prepaid envelope provided.

Yours sincerely

Adviser’s Name

Title

………………...

Client’s Name