EUROPEANSELECT BOND - LIFE
‘REASONS WHY’ FOR THE INDIVIDUAL INVESTOR
For financial advisers only
This document suggests some of the ‘reasons why’ to invest in this productthat you may wish to incorporate within your recommendation letters for your UK resident clients. You will, of course, need to relate these to your clients’ own circumstances. You are responsible for ensuring your recommendations comply with the rules and guidance issued by your regulatory body. Old Mutual International Ireland daccannot accept any responsibility in this respect.
The information provided in this document is not intended to offer advice.
It is based on Old Mutual International Ireland dac's interpretation of the relevant law and HM Revenue Customs practice as at April 2017. While we believe this interpretation to be correct, we cannot guarantee it. Tax relief of the product and the tax treatment of investment funds may change. The value of any tax relief will depend on the investor’s individual circumstances. The value of investments can fall as well as rise and investors may not get back what they put in.
Old Mutual International Ireland dac cannot accept any responsibility for any action taken or not taken as a result of the information contained in this document.
/ All references to Old Mutual International Ireland, we, us and our in this document mean Old Mutual International Ireland dac, who are the providers of the European Select Bond - Life.Throughout the document we refer to you and your.Unless otherwise stated this refers to the end customer not the financial adviser.
Please note that throughout this document, we use the word ‘fund’ to also mean the assets that you choose to invest in.
Overleaf you will find a contents page showingthe topics that are included in this document.It also includes hyperlinks to each heading for ease of navigation.
ContentsPage
3 / What is theEuropean Select Bond - Life?
Life assurance basis
3 / Reasons whyanEuropean Select Bond - Lifecould be right for you
Easy Access with Wealth Interactive
Future aspirationsand objectives
Appointing a fund adviser or a discretionary asset manager
Investmentflexibility
Riskprofile
Funds and fund managers
Fund choice
Currency choice
Access
Clear charges
Phased investment
Rebalancing
Tax planning
Tax benefits
Valuations
Trusts
7 / Tax planningreasons for recommending anEuropean Select Bond - Life
Gross roll-up
Tax reporting
Policy segmentation
Capitalgainstax
Timing
5% tax deferred withdrawal allowance
Chargeableevents
Taxation on chargeable event gains
Top-slicing relief
Cashing inthe policies in your bond when you are not UK resident
Time-apportionment relief
Assignment
9 / Risk warnings
Currency conversions
Funds withstocks in specialist sectors
Fundswith investments in emerging markets
Funds with holdings in a different currency
Money market funds
Propertyfunds
Past performance
10 / About Old Mutual International
11 / About Old Mutual International Trust Company
11 / Regulatorystability
11 / Policyholder protection
13 / Our Awards
What is the European Select Bond - Life?
The European Select Bond - Life is an offshore bond (life assurance policy) issued by a non-UK life insurance company, Old Mutual International Ireland dac. This brings certain advantages to you in terms of tax treatment and allows you to hold a wide range of funds in one place.
The European Select Bond - Life is automatically issued as a group of 100 policies, but to enhance the future flexibility of the bond you can select a different number of policies when applying. (See ‘policy segmentation’ later on in this document for further information.)
Life assurance basis
As your European Select Bond - Lifeis a whole of life contract, it will have one or more ‘lives assured’, which means the policies will come to an end when the last person whose life is covered by the policies dies (‘the Relevant Life Assured’). If you, as the owner of the European Select Bond - Life,are the only life assured, then on your death a chargeable event would occur.However, by having multiple lives assured,you can deferthe chargeable event on deathas it would occur when the last person who is a life assured dies.Old Mutual InternationalIrelandhas a flexible approach to the number of lives assured that can be included at the start of the contract.
The European Select Bond - Lifeincludes life assurance cover of 101% of the surrender value. This means that on the death of the Relevant Life Assured, the person(s) who is entitled to the policy proceeds at the time will receive 101% of the surrender value provided the policies have not already been cashed in. For example, if the life assured is not the same person as the policyholder, then the proceeds will be paid to the policyholder(s). However, if the policyholder and life assured are the same person, and the European Select Bond - Lifeonly has one policyholder, then the proceeds will be paid to the legal personal representative(s) of the policyholder's estate.
Reasons why anEuropean Select Bond - Life could be right for you
- Easy access with Wealth Interactive
Facts and figures at your fingertips
Wealth Interactive provides you with an at-a-glance view of yourEuropean Select Bond - Life, and a straightforward, clear and transparent way toaccess your information.You can sign in to your own secure online service account and review yourpolicy, including your portfolio of assets, whenever you have access to theinternet. You’ll be able to check the latest available facts and figures aboutyour investments and keep up to date with any changes made by me as yourfinancial adviser.
Wealth Interactive is supported by Old Mutual International’s large, highly experienced customerservice team andtheir investment administration department. So, if you need any help with the system,just call Old Mutual International.
Wealth Interactive will let you see everything you need to know about yourbond, including:
- its current value
- how your assets have performed since you started
- a library of correspondence you’ve received fromus
- a history of the transactions you or your financial adviser have placed
- access to factsheets for the funds you hold.
Wealth Interactive can make your life easier because you can updateyour personal details quickly and easily online, as well as approving keytransactions electronically, reducing the amount of paperwork you needto sign and file.
You can also view correspondence between you and Old Mutual Internationalabout your policy in your Wealth Interactive account. I, as your financial adviser, can even request your online approval of transactionssuch as buying and selling assets – this will speed up the approval processand ensure that transactions happen faster.
You can then sign in to review the transaction and submit or requestchanges if you wish.
Old Mutual Internationalalso shares important information with me, as your financial adviser, to helpme provide you with the best possible service. Wealth Interactive givesme access to data, tools and insight I need to manage your portfolio and optimise your wealth. It also providessupport and services to help me plan your portfolio of assets and keep iton course to achieve your long-term goals.
Altogether, Wealth Interactive should make investing a much more interestingand engaging process for you.
- Future aspirations and objectives
- Appointing a fund adviseror discretionary asset manager
There are two types of fund adviser.
- An advisory fund adviser can guide you through the process of choosing fundsand then manage your portfolio for you. However, all decisions will ultimately be made by you.
- You can also go one step further and allow your fund adviser to make decisions on your behalf in line with pre-agreed boundaries. This role is sometimes known as a ‘discretionary manager’.
There are two types of discretionary asset manager:
- Discretionary basis means the discretionary asset manager holds regulatory authority to carry out discretionary investment management activities based on an agreed investment mandate and does not need to agree any changes to the fund selection before they submit the dealing instructions.
- Advisory basis means the discretionary asset manager holds the regulatory authority to advise on investments and provide investment recommendations in relation to assets that can be linked to the policy.
pro-actively managed and holds the most appropriate fundsfor your needs. If you are interested in using advisory fund advisers, discretionary managers or discretionary asset managers, I will be able to recommend one for you, or I can offer this service myself.
- Investment flexibility
- Risk profile
I have discussed your attitude to risk with you and confirmed what this is. This has been reflected in the assets that we have selected for your European Select Bond - Life.
- Funds and fund managers
WEALTHSELECT - a researchedand monitored range of around60funds. Itconsists of competitively pricedfunds from some of the UK’s best-known fund management brands and covers a wide range of investment approaches, geographical areas and a variety of asset types available in the wider fund market, as well as a selection of Quilter Investors Multi-Asset Solutions.
SELFSELECT - provides access to awider range of funds (1,250+) so we can create a bespokeportfolio which is appropriate foryour needs. SELFSELECT has plenty of choice inevery sector.
When you invest through the European Select Bond - Life, Old Mutual International will buy units on your behalf from the fund managers of your chosen funds and looks after the administration. Old Mutual International is not a fund manager. The value of your bond will be determined by the performance of the funds within it that you choose to invest in. Its value could go up or down and is not guaranteed.
- Fund choice
- Currency choice
Note to financial adviser: Remember the appropriate risk warnings regarding exchange rate fluctuations. For examples, please see the section on risk warnings later on in this document.
- Access
You can set up regular withdrawals and ask for payments to be made on any of the following bases: monthly, quarterly, termly, half-yearly or yearly.
Alternatively, you can make one-off withdrawals, or cash-in a number of policies, at any time by writing to Old Mutual International at their Head Office oryou can submitthese requests online viaWealth Interactive through your secure service account, providing there is a minimum residual value of £10,000/US$15,000/€15,000 left in the bond.
Note to financial adviser: Please also see information on 5% tax deferred withdrawal allowance on page 8.
- Clear charges
Fund manager charges
The funds selected will have an annual charge. In addition,fund managers also charge certain additional expenses to the fund to cover ongoing costs such as bank and audit charges, trustee fees, performance related fees where applicable and any additional costs. The annual management charge plus these additional charges are collectively referred to as the Ongoing Charge Figure. Details can be found in the Fund Information document, which I can supply to you. - Phased investment
Rather than investing your money all in one go, I recommend that you phase your lump sum, or transfer investments froma selected fund, into your chosen funds over 3, 6, 12, 18 or 24 months. This allows you to gradually spread the purchase of your funds over a period of time and so reduce the risk of investing a substantial sum when markets may be experiencing volatility. - Rebalancing
Rebalancing is the process of realigning the weightings of your portfolio of funds. It involves buying or selling funds in your portfolio over a set period of time in order to maintain their agreed proportions.
I recommend that you use the rebalancing function to manage your investment and will therefore link your portfolio of funds to this service if you choose this option.
- Tax planning
- Tax benefits
Some of the dividends earned by thefunds linked to your bond may be liable for ‘withholding tax’ in their country of origin and therefore only the net value of the dividend will apply to the value of your bond. However, once the dividends form part of the assets linked to your bond they can accumulate tax free.
This tax-efficient environment means you can make the best use of your own personal tax allowances. Changing the funds linked to your bond will also be taxfree in Ireland.
The European Select Bond - Life offers flexibility in switching between fund managers and changing funds, even those of different currencies.
- Valuations
- Trusts
We have discussed how you can reduce your inheritance tax liability and the fact that Old Mutual International provides you with access to a number of trusts which may be suitable for you.