Introduction
This document has been compiled to provide you with some of the reasons you may wish to incorporate within your recommendation letters. You will, of course, need to relate these to your client’s own circumstances.
This wording has been produced to help you, as a financial adviser, draft your own material. Old Mutual Wealth accepts no responsibility for ensuring that it meets with your own regulatory requirements and you should arrange for approval in accordance with the FCA rules within your own firm.
The content of this document is compiled for Collective Retirement Accounts opened on Charge Basis 3, as this is the only charge basis available for new accounts.
Further information on suitability letters can be found at:
http://www.fca.org.uk/your-fca/documents/fsa-factsheet-suitability-reports
To help you navigate your way around this document, it contains hyperlinks from the contents page. From the contents page, select the section you wish to view by hovering over the heading, then press Ctrl and click to follow the link. You can return back to the contents page by hovering over Back to contents, press Ctrl then click.
Contents
· Managing your investments with Old Mutual Wealth
· Award-winning service
· Old Mutual Wealth’s online technology
· A consolidated approach to your investments
· Building a portfolio unique to your circumstances
· Funds and fund managers
· Wrapper features
· Transparent charging from Old Mutual Wealth
· Client Linking
· The Collective Retirement Account (CRA)
· Tax advantages
o Tax relief on contributions
o The Lifetime Allowance
o Tax on funds
· Payment flexibility- New Line and Link- Retirement Benefit Optionss
· Tax-free cash
· Income withdrawals- New Links Capped Drawdown- Flexi-access drawdown- Managing your tax liability with regular income- lump sums from untouched savings- small pots
· Lifetime annuity
· Phased retirement option- new link – tax on death
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· Cost-effective investing
o Fund manager initial charge
o Fund manager annual charge and rebates
· Phased investment
· Cost-effective switching
· Portfolio rebalancing
· Investing in cash funds- add new link Stakeholder pension
Managing your investments with Old Mutual Wealth
Old Mutual Wealth is the leading wealth management business in the UK and internationally, helping people secure their financial future.
It has an adviser and customer offering spanning:
· Financial advice via the Intrinsic network
· Wealth management products and services, such as investments, pensions and life assurance, via Old Mutual Wealth in the UK and Old Mutual International globally
· Asset management solutions via Old Mutual Global Investors
· Discretionary investment management via Quilter Cheviot
Old Mutual Wealth oversees £98.6bn in customer investments (as at 30 September 2015).
Old Mutual Wealth is a core part of Old Mutual plc, a leading international long-term savings, investment and protection Group. Based in London, it is trusted by more than 14 million customers across the world. For over 167 years, it has been serving the growing insurance and investment needs of local customers, companies and their advisers. Old Mutual’s vision is to become its customers’ most trusted partner, being passionate about helping them achieve their lifetime financial goals. At 30 September 2015, the Old Mutual Group held £319.4 billion of client assets under management.
Old Mutual Wealth provides an innovative way to manage your investments online, in one place. It provides access to over 1,450 funds (with multiple share classes available on many of them). Old Mutual Wealth also offers a range of tax-efficient ways to hold these funds, known as ‘product wrappers’. Wrappers are not investments in their own right but when you hold your funds inside them they may enjoy certain tax benefits.
Old Mutual Wealth offers the following products:
· ISA
· Collective Investment Account (CIA)
· Collective Retirement Account (CRA)
· Onshore Collective Investment Bond (CIB)
The Old Mutual Wealth ISA and CIA are provided by Old Mutual Wealth Limited. Old Mutual Wealth Limited provides and services your account and gives you direct access to invest in a range of funds.
The Old Mutual Wealth CRA and CIB are provided by Old Mutual Wealth Life & Pensions Limited. Old Mutual Wealth Life & Pensions Limited provides and administers your bond or pension product, through which you can invest in a range of funds.
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Award-winning service
Old Mutual Wealth’s* reputation as a market leader has been consistently recognised through prestigious industry awards for products and service. Over the past 20 years Old Mutual Wealth has won the coveted Financial Adviser 5 Star Service Award 32 times – that’s more than any other investment provider. A ‘5 Star’ rating is the highest accreditation a company can receive.
Old Mutual Wealth is recognised as one of the leading pension providers in the market, having been named Best Personal Pension Provider at the consumer-focused Moneywise Pension Awards in 2012, 2013 and 2015. In 2015, they were also rated top by Defaqto for Individual Personal Pensions, winning a gold award with a 91% satisfaction rating for service.
Old Mutual Wealth has also received multiple awards at the FT Adviser.com Online Service Awards (the 5 Star Awards online equivalent) including 5 Star awards for Life, Pension, and Investment services, and Company of the Year in 2012 and 2013. In 2014, they were given a Consistent Service Excellence Award to recognise seven years of consistent, quality online service.
*Before 22 September 2014 Old Mutual Wealth was known as Skandia, so awards before this date were awarded under the Skandia name.
Old Mutual Wealth’s online technology
Old Mutual Wealth’s online technology is designed to help financial advisers meet the demands of their investment customers.
It is one of the most flexible and convenient ways of investing, providing access to over 1,450 funds (with multiple share classes available on many of them) from more than 100 fund managers.
You can access all your investments quickly and easily in one central place from your computer, tablet or mobile. Managing your investments online, in one place, means:
• you can hold and manage all of your fund-based investments in a single, easily accessible location
• you and your financial adviser can view and control all your investments as one in a range of tax-efficient products
• you can easily access valuations, give investment instructions and perform all other portfolio management activities
• you can track performance, react to changes in the market and switch between funds quickly and with no switching charge.
A holistic approach to your investments
Building a portfolio unique to your circumstances
Old Mutual Wealth’s consolidated approach to investing aims to achieve the maximum investment return in your portfolio through optimal asset allocation, taking into account your attitude to risk.
An optimal asset allocation differs from investor to investor and is based on the level of risk each investor is prepared to accept. Old Mutual Wealth provides investment portfolio construction tools that use an investor’s investment risk profile and an asset allocation, based on independently verified assumptions. These tools aim to provide the maximum return for a given level of risk. In doing so it gives individual investors access to expertise previously only available to large institutional investors.
Funds and fund managers
Old Mutual Wealth offers access to over 1,450 open-ended investment company (OEIC) and unit trust funds (with multiple share classes available on many of them), from more than 100 leading fund managers, with the ability to easily switch between them. This comprehensive range of funds represents all the main asset classes, world markets and a variety of investment approaches.
Over the last few years the financial services industry has been encouraged to make investment charges clearer and easier for customers to understand. This has resulted in the introduction of newer versions (or ‘share classes’) of many funds, which are sometimes referred to as ‘unbundled’ funds. Old Mutual Wealth has been adding these unbundled funds to their fund range since May 2013.
Unbundled funds generally feature a lower Annual Management Charge (AMC). In many instances this will be discounted further, as Old Mutual Wealth has been able to negotiate a refund on the fund, called a ‘rebate’.
This rebate is paid back to you by adding extra units to your investment. Old Mutual Wealth uses their scale and buying power to negotiate the best price deals on funds on your behalf.
When you invest via the Collective Retirement Account, Old Mutual Wealth will buy units on your behalf from the fund managers of your chosen funds and looks after the administration. They do not manage these funds. The value of your investment will therefore 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.
Product wrapper features
The product wrappers available offer a wide range of features to give you the flexibility to manage your money to suit your needs. This gives you the opportunity to consolidate, build and manage your portfolio in one place. Depending on the wrapper(s) you choose, you can normally:
· enjoy certain tax advantages
· invest in a number of ways
· invest in cash, either through a cash deposit facility or by investing in cash funds
· view your portfolio online through Old Mutual Wealth’s secure online customer services
· easily switch between funds, currently with no administrative charge
· regularly rebalance your portfolio, thereby retaining your investment risk profile
· phase a lump-sum investment from cash into your chosen funds, enabling you to spread the risk of investing a substantial sum on one particular day
· choose how income is taken.
Transparent charging from Old Mutual Wealth
Old Mutual Wealth service/product charges are simple, competitive and customer-focused. The more Old Mutual Wealth investments you hold, the more cost effective it becomes.
The service/product charges are tiered, which means that the charge is applied in slices according to how much is invested across all your investments. Customers with greater assets are rewarded by the overall charge percentage reducing as the value of their investments increases. The tiered charges work like income tax bands to create an overall ‘effective charge’, so for total investments of £125,000, for example, the effective charge will be 0.37%. Additional investments are always charged at the lowest tier that applies to an investor. If your spouse or civil partner holds an ISA, CIA, CIB or CRA with Old Mutual Wealth you can further reduce the ‘effective charge’ by linking your accounts. Client linking increases the investment value used in calculating your service/product charge, potentially reducing the charge that you pay.
The service/product charge is taken in the following ways:
· by selling units from the largest fund holding in your account or bond; or
· by selling units proportionally across some or all your fund holdings.
Old Mutual Wealth does not make any additional charges for transactions or for taking an income.
This tiered charging structure applies to all new investments after 18 December 2012. The pricing arrangements for investments before that date remain unaffected, but you have the choice to move to the new charging structure if you wish.
Client Linking
If you have an account or bond which pays Old Mutual Wealth service/product charge then you may be able to benefit from a reduction in that charge by linking your Customer Reference Number (CSN) to that of another eligible accountholder, such as your spouse or civil partner.
The table below outlines the criteria that enable you to apply for Client Linking. Old Mutual Wealth will only accept requests for Client Linking that meets these criteria:
Scenario / Can I link my CSN to the CSN for this investment?Your spouse/civil partner has an Investment with Old Mutual Wealth / Yes
You have a SIPP which is holding a CIA Investment with Old Mutual Wealth / Yes
You are the Settlor of a Trust which has a CIA/CIB investment with Old Mutual Wealth / Yes
You are the settlor of a CIA with Old Mutual Wealth which is designated in favour of your Child/Grandchild / Yes
You are the settlor of an offshore bond held in trust, which is holding a CIA investment with Old Mutual Wealth / Yes
Your spouse/civil partner has a SIPP which is holding a CIA Investment with Old Mutual Wealth / Yes
Your spouse/civil partner is the settlor of a Trust which has a CIA/CIB investment with Old Mutual Wealth / Yes
Your spouse/civil partner is the settlor of a CIA with Old Mutual Wealth, which is designated in favour of your Child/Grandchild / Yes
Your spouse/civil partner is the offshore bond holder or settlor of an offshore bond held in trust, which is holding a CIA investment with Old Mutual Wealth / Yes
In order to continue offering market leading investments with a sustainable longer term business model, and maintain service levels, Old Mutual Wealth needs to limit this offer strictly to its eligibility criteria.
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The Collective Retirement Account
The Collective Retirement Account is a personal pension. It is one of the most tax-efficient ways of saving for retirement. It has the added advantage that, when you come to take retirement benefits, you can take an income directly from your account in a number of different ways. This means you can keep your pension not just up to retirement but for life, whilst enjoying the flexibility to adapt it as your circumstances change.
It also provides a number of options that will allow any value remaining on your death to be passed to your chosen beneficiaries tax-efficiently and in a way best suited to their individual needs.
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Tax advantages
The Collective Retirement Account will enable you to enjoy the benefit of the following tax advantages:
· Tax relief on contributions
You can pay in, and will be given tax relief on, your personal contributions up to 100% of your relevant earnings or £3,600, whichever is the greater amount. You will not be able to contribute to the Collective Retirement Account once you reach your 75th birthday.