Products Our Way

What’s Products Our Way About?

Here we describe where we will hold your savings {{1}}. The management of savings requires a much more hands on approach than it used to. No longer can you just invest in a plan and leave it till maturity, hoping for a great outcome. Unless your savings are modest, you need to be more involved, taking regular decisions to help maximise your returns. We help you make those decisions and hold your savings in places where we can quickly and cheaply switch funds.

What will you recommend?

The FCA {{2}} states that we must take reasonable steps to ensure that our recommendations are suitable for you. We have to research your existing position fully before we can make any new recommendations. If it is beneficial in your circumstances we will recommend that we become your future Financial Planners and Discretionary Investment Advisers.

If you choose to engage us, we will be regularly making investment recommendations. In order to be able to follow our investment recommendations, your savings will need to be held in a place where those recommended funds are available. A place where fund switches can be carried out efficiently.

Where will my savings be held then – not in your bank account I hope?

Of course not. Your savings will be held on a wrap platform {{3}}. Most people understand the “old school” way of saving and investing. That was where you gave your money to an insurance company. Today’s investment world takes a little more explaining. Technology constantly moves on bringing new opportunities. We can now create a bespoke solution for you where we split up the functions, which were once sold only as an expensive opaque bundle. Every savings, pension or investment plan has the following elements.

  • Plan administration so you can receive correspondence and regular valuations.
  • An internal bank account that receives contributions in and can pay income and withdrawals out.
  • A trading function where investments can be bought and sold.
  • Legal & Tax Compliance with HMRC {{4}}.

We outsource the above elements to a wrap platform because it is more economical for you to do so. Individual plans are still available on a wrap platform, but they are called tax-wrappers.

I have not heard of a wrap platform or tax-wrappers before. Could you explain it in more detail?

Since many clients have asked the same question we have developed our graphic of tins on supermarket shelves.

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OK. What you used to know as products are what the wrap-industry calls “tax-wrappers”; they are the holders of your money – what used to be called a product. Products used to be as expensive as the provider could get away with by cleverly hiding charges amongst the investments. Products or tax-wrappers simply hold their contents. They should be cheap and efficient – like a tin can. If you went into a supermarket and all of the tins had their labels removed you would have no idea what you were buying. Yes you would be buying a tin but it could contain soup, beans or carrots. Wrappers like tins should all look and cost the same.

We always buy the tin in a supermarket based on its label. Like tins of food, the tax-wrapper label tells us what is inside. However label also tells us how much can go in and how and when it can come out. The label is of course the tax rules that apply to that individual product. The taxman creates the labels. He tells us what we can and can’t do and he regularly changes his mind. If we apply the label to the tin we now know what we are buying. As with tins of food, it is the contents that is important. The tins should be simple and cheap. They add no value and are simply a cost that needs to be contained. The wrap platforms we use are efficient and competitively priced.

Will all of my savings be lumped together then?

It would indeed be easier if we could do just that, but unfortunately we can’t. On the wrap platform your savings are divided into distinct “tax wrappers” {{5}}. In simple terms there are the following wrappers.

Will I need one of each of these?

Probably not. But it is nice to know that whatever you may require in the future could be sourced on the wrap platform. That way our Discretionary Investment Management can continue.

Does one account cost more than another?

No they all cost the same. Therefore our advice is un-biased. Many Banks and Restricted Advice providers incentivise their salesmen (advisers) more for selling the more profitable products, which distorts financial advice and creates bias.

The cost of administration on the Investment Bond wrapper is slightly higher (0.1%pa) as it contains a tiny amount of life assurance.

What other choices will be considered for me?

We are whole of market, Independent Financial Advisers, free to select any product available. That does not mean we have to use every product! Believe me there are some poor, expensive products out there. {{6}}

After 25 years we have a mature, niche, investment business that means if we do not believe that a wrap platform is the best option for you, we will not recommend it. However we will probably not personally offer an alternative as the ability to switch funds efficiently and cheaply on an ongoing basis is core to our discretionary proposition. The FCA allows us to decide whether we take on a client or not. We would however recommend some other adviser firms to you who have a different investment model from ours.

How often do you review the market offerings?

As and when a new wrap platform emerges, or an existing platform alters it’s charging structure, we assess its viability and whether it offers better value for money for our clients. {{7}}

So now you have described how you are going to hold my savings are you now going to explain which investments will sit inside my tax wrappers?

We are discretionary fund managers which means we actively manage your savings. We are also independent advisers which means we are not tied to any product producer or investment house enabling us to select from the whole of the investment universe. Our research into investments is never-ending, our selection of funds is ever-changing. We will obviously give you specifics of where you will be invested before you go ahead and choose our discretionary investment service. More detail is explained in Investment Our Way.

Are my savings tied up?

Of course we do not tie up your savings. As we have said savings are simply deferred consumption. You will need your savings back at some point. Unless your savings are contained within a pensions wrapper, you can withdraw your savings at any time without penalty. However the minimum length of time you should consider for any investment is around 5 years. If you think you will need it earlier it should be held as cash.

If we recommend investment into any individual funds, which could prove to be hard to get your hands on in the short-term, we will draw your attention to this before you invest.

What happens after I invest?

We watch your investments like hawks, making ongoing recommendations. Most individuals can buy when things look cheap, but then they tend to forget about their investments. We will review your investments regularly to help you to achieve your financial goals.

How can I tell how things are going?

We will keep you updated, but you can also have access online 24/7. If we recommend a specialist product where you cannot see it’s value online 24/7 we will tell you that before you proceed.

What happens when I require income?

We have found no two retirements are the same and individual income requirements vary. By having a combination of wrappers it is far easier for us to help you minimise tax in retirement. We explain how we help clients to get the maximum income from their investments in retirement here.

[[1]]What do you define as savings?
Economic theory defines savings simply as deferred consumption. You have decided not to spend some money just yet. This money is often allocated into medium to long term savings plans. You will know them as ISAs, pensions, national savings etc.[[1]]
The Financial Conduct Authority. Our regulator.[[2]]
[[3]]What’s a wrap platform?
It is simply a web-based administrative service that helps us to manage your savings efficiently. Investment via a wrap means we don’t have to use the insurance companies, investment companies along with their intolerable call centres. We work directly on-line and you can log in and see exactly what is going on.[[3]]
Her Majesties Revenue & Customs. a.k.a. The Taxman. [[4]]
[[5]]What’s a tax wrapper?
If the wrap platform is the home for your savings, then the tax wrappers are the individual rooms. They are the divisions than ensure your ISAs don’t mix with your pensions. You used to call tax wrappers your individual plans.[[5]]
[[6]]Why do most Insurance Companies and Fund Supermarkets impose their fund selection?
As you have guessed it is for their benefit not yours. An investment fund can only be distributed via a fund supermarket by paying for “shelf space”. The typical payment is at least 0.25% per year of your investment. Many cheap tracker funds only charge this amount in total, so they cannot afford to pay this on to the platform. Hence many funds we advocate don’t appear on the Fund Supermarkets Top 100 lists.[[6]]
[[7]]How secure is a wrap platform?
The software is identical to that used by banks, investment companies and insurance companies. Its security is provided by the same organisations that are used by governments and military. The platforms we recommend are all authorised & regulated by the Financial Conduct Authority.[[7]]