Important Notes on Investments

Retail Distribution Review (RDR)

This review means that commission on advised products no longer exists. This means the companies have to offer a `clean’, `low charge’, `unbundled’ or `commission free’ products. However, execution only investors should be unaffected by this and are in the main with unit trusts, ISA’s, etc where the old style product that pays commission is still available and we are able to offer high up front discounts, as before. In the case of Fundmarkets, eg Cofunds & Fidelity – the new regulations state they can only sell clean share class products and therefore this means you will pay 3 charges per annum which include the fund managers charge (eg. 0.75%) the platform charge eg. Cofunds 0.26% (decreasing sale) and then our servicing charge at 0.2%. This replaces the old fund managers AMC or Annual Management charge eg. 1.5%. In some cases the new clean product means we have to charge a small fee to process your application – this fee various on the type of product and work involved – please contact us for details.

RDR and capital investment bonds

Our understanding from the companies is that you are not able to buy the `advised bond’, direct from insurers without an adviser. If you go direct to the investment company for investment bonds they will `charge’ you to `sell’ the product to you. This has only left a small number who offer the new bond where we can offer a discount on execution only but the majority do not have an execution only bond – please let us know the company you require and we will let you know what we can do to help. For those companies that do not offer commission to discount we therefore have to charge a fee for the processing which we keep as low as possible in our aim to be extremely competitive.

RDR and capital investment bond top ups

We are able to help here in many cases as commission is payable for execution only brokers, which we can therefore use to enhance your bond – please contact us with your bond number and company and we will obtain the most competitive illustration we can for you.

We want to be very clear and open and ask investors to check what is available directly with the insurance company without the need for advice and the charges that go with it. Of course, should you feel you need advice we strongly recommend you seek independent advice.

Charges and Expenses for your Investment

Our discounts, or premium enhancements, are given mainly by commission sacrifice, and in some cases by extra discounts we have negotiated for our clients as well. Please refer to the investment company’s literature and key features for the charges and expenses for any investment you are considering. Our discount lists give details of how to obtain investment company literature. Please feel free to ask us if you would like to know how much commission we would be receiving for any investment you are considering.

Details of the amount of commission Power Robbins have received / will receive, will be given on your contract note (OEICs, Unit Trusts, ISAs, ISA transfers), or on your cancellation documentation (capital investment bonds, some term life policies, and whole of life insurance). If we charge a fee then we are not receiving any commission.

Power Robbins are not investment managers

Power Robbins do not manage any of the investments on our discount lists. The names and addresses of the fund managers are given in investment companies’ literature. Our discount lists give contact details by telephone and/or internet for investment companies, except where we will provide you with the literature.

Product literature

In the event of any conflict between product literature and information provided by Power Robbins, the product literature shall prevail and it is the investor’s responsibility to ensure this is read as part of their research in advising themselves.

Tax treatment of investments

Where investments currently carry taxation allowances, these are subject to statutory change. The value of tax relief (if any) will depend upon your individual circumstances.

If you should change your mind after investing

People who invest after having received advice from the person or organisation that has placed the business for them, are entitled to cancellation rights. This right does not extend to investors who have not required or received advice, and have therefore invested on an execution only basis. Our customers who place investments through Power Robbins on an execution only basis should, therefore, be aware that they will not be entitled to cancellation rights.

What does “execution only” mean?

Execution only means that the investor has chosen their own investment, and has not required, or received, any advice either now or in the future. The investor therefore accepts full responsibility for both the research, merits, risk and the suitability of the investment.

For UK residents only

Power Robbins Investment and Life Insurance discounting services are for UK residents only with a UK bank account.

Most investments fluctuate in value

This means that you might not get back the full amount of your investment.

Past performance should not be seen as an indication of future performance. Exchange rate fluctuations may have an adverse effect on the value of non-UK shares.

Higher volatility funds

When reading the literature from the investment company you are considering, you will see that some funds carry a high risk. These investments may be subject to sudden and large falls in value, and you could get back nothing at all.

The higher the return advertised, the higher the risk that you may lose capital

The higher the rate of return you are promised, the higher the risk that you may not get back all of your capital at maturity.

It could be some time before you may see a return

When making investments that do not have a fixed term, it should still be borne in mind that it could be some time before you may see a return on your investment.

If you are looking for income from your investment

Taking withdrawals for “income” may erode the capital value of your fund, especially if the level of “income” taken is higher than the investment’s growth. Rates of income that you see advertised (headline rates) may depend on certain conditions being met, they are not usually guaranteed. Often, if the rate of “income” during the term of an investment is guaranteed, the return of your original capital is not.

If you intend to purchase an annuity with the eventual proceeds of any investment, your eventual income could be lower if you had taken more in withdrawals from the previous investment than its growth, or if annuity rates were low when your annuity was eventually purchased.

Investment funds investing in shares denominated in foreign currencies

Changes in the rates of exchange between currencies may cause your investment / the income to go down or up.

Front-end loaded contracts (investments where most of the charges are taken at the start)

With some investments, most of the charges are taken in the early years. This means that if you withdraw during the early years you may get back less than you invested. You should bear this in mind when reading the key features of any investment you are considering, to see how the charges are taken.

Fixed term investments

If an investment has a fixed term, you should check the investment company’s literature for what would happen if you needed your capital back before the end of the term. The investment company’s literature would tell you whether you would be able to have your capital back early, and whether you might receive a very poor return on your capital if needed during the term.

(Corporate) Bond Funds

Yields offered by bonds often reflect in part the risk rating of the issuer. Investment in such bonds brings an increased risk of default on repayment, and this in turn means there is a risk that the capital value of the fund will be affected. The yield and / or the capital values of bond funds can fluctuate.

Equity Funds

Prices of units in equity funds, and incomes from them, can fall or rise, and you may not get back the amount invested. With unit trusts, the manager’s initial charge is part of the bid / offer spread. Funds invested in emerging or smaller markets, such as Latin America or some of the markets in the Asia Pacific region, may have a higher degree of risk and volatility than those in more traditional markets such as the UK, Europe and the USA. Such risks may be associated with failed or delayed settlement of market transactions, with registration and custody of securities, and a possible lack of liquidity and efficiency in certain of the stock markets or foreign exchange led markets.

Investment Trusts

Discount brokers cannot normally save investors money on investments into ongoing investment trusts, because with this type of investment the charging structure works differently, and any commission paid to the broker makes an extra charge for the client. We can however process any application for a minimal fee if you prefer us to undertake any anti money laundering requirements, etc.

Investment bonds – including capital investment, distribution, property and with profit bonds

Our understanding of current legislation and Inland Revenue practice, which may change, is that you can withdraw up to 5%* of your initial investment each full year the bond is in existence, up to a maximum of 20 years, without incurring any personal liability to UK income tax or capital gains tax at the time. However, if withdrawals exceed the 5% allowance, higher rate taxpayers will be liable for the difference between the higher rate and basic rate of income tax on the excess over 5%. If the maximum withdrawals allowed by the Inland Revenue are taken, high income withdrawals may not be sustainable during the deferral period. You are strongly advised to read all information about taxation in the literature supplied by the insurance company of your choice.

*NB : Please note that any renewal commission taken by an adviser is deducted from your 5% allowance – please check carefully before proceeding with any investment

ISA transfers (including old PEP investments)

You should consider whether your existing ISA manager will make exit charges. You should also consider the effect of the difference between the buying (offer) and selling (bid) price of units for unit trust ISAs, and initial charges from your new ISA manager this may not be applicable post RDR if you have the clean share class. When transferring from one ISA manager to another, the holdings are liquidated and a BACS payment/cheque sent from your old ISA manager to your new one. There could be a loss of income, or a reduction in the value of the investment you were transferring, if stock markets rose whilst your ISA transfer was being carried out. To transfer a ISA, you should complete a transfer application form supplied by your new manager and send this to us. The new and old managers will arrange the transfer between them.

Re-registration of ISAs (also investment funds) means changing the ISA administration manager but keeping the same funds. For example if you move existing holdings to a fund market, the units will be moved intact, but then converted to clean share classes but will not be affected by stock market movements. If you contact your old manager yourself and tell them to sell, you will lose the ISA status of your investment.

Property Funds

Property funds invest in property and land. This can be difficult to sell – so you may not be able to sell / cash in a property fund investment when you want to. The investment company may not be able to act on your instructions to sell your investment quickly. The value of property is generally a matter of a valuer’s opinion rather than fact. With some property funds, the majority of the charges are taken in the early years. This could have the effect that if you cash in your investment during this time you may get back less than you invested. On cashing in your bond at any time, you might not get back the amount invested.

Self Invested Personal Pensions

The wide investment choice offered under SIPPs means increased complexity. Active management is needed. A Revenue approved administrator and trustee are required, resulting in SIPP schemes having higher setup and annual fees than other personal pension plans. Fund markets offer SIPPS with a wide choice of collective investments, but without the option for investing in property or single shares. Some pension companies offer deferred SIPP plans with standard personal pension plan charges, and an option to convert to a SIPP with a wide investment choice and higher charges, should this be required.

This product is generally not available on execution only although additions to existing policies are.

Structured or `capital at risk’ Products

Levels of risk for return of capital are described by investment companies in their literature. Please read the investment company’s sales literature very carefully. Please also read the Financial Services authority booklet on structured products enclosed with your literature and also view the Financial Services Compensation scheme website regarding the different protection on `investment’ and `deposit’ based structured products. If when we describe a product, we talk about stock market indices “failing to recover”; we mean failure to recover to their level at the start of the investment period. The word “income” is often used to describe regular payments to the investor during the term of one of these plans. It should be borne in mind that the more money taken as regular withdrawals (“income”) during the term of one of these plans, the less capital growth (if advertised) would be achieved, and the greater the risk to capital return at maturity.

This product is sometimes not available on execution so please contact us

With profit funds / with profit bonds

These are not like building society or bank accounts. They are not deposit funds. They are intended as medium to long term investments, i.e. 5 years or more. Taxes on with profit funds are paid by insurance companies. Investors who pay lower rate income tax, or no income tax, would not be able to reclaim the tax paid by the insurance company.

It could be some time before a person may see a return on the investment. Please see the paragraph on page 3 entitled “If you are looking for income from your investment”. Unless you have chosen to take a fixed amount of regular withdrawals for “income”, the income will not be fixed, and could go up or down. Future bonus rates are not guaranteed. Past performance is not a guide to the future. The value of a with profit fund / bond depends on how much profit the insurance company makes, and how the company decides to distribute this profit. With some with profit bonds, the majority of the charges are taken in the early years. This could have the effect that if you cash in your investment during this time you may get back less than you invested. Please read about the Market Value Reduction in the key features. On cashing in your bond, you might not get back the amount invested.

To provide you with the advertised combinations of potential growth / advertised income, and repayment of capital, investment companies enter into agreements with other UK financial institutions. Whilst the investment companies concerned believe these institutions to be financially sound, it is important to note that if they are not able to meet their obligations you may not get back your original capital or achieve any growth. References to ‘stock market growth’ exclude any form of income payment.

With these plans, not all of the capital is invested at the outset. It should be borne in mind that ‘gross’ returns will not be paid to investors, as maturity benefits will be paid after the deduction of tax, which is not recoverable. Please read the investment company’s literature carefully with regard to taxation, especially whether the return will be treated as income or capital gains, where the investor may be entitled to a tax free exemption limit with the added benefit of indexation.

Most of the investments listed by Power Robbins are NOT guaranteed investments, unless they are described as GUARANTEED INVESTMENTS in the investment company’s own brochure. The investment company’s literature for any guaranteed product will say who the guarantor(s) are. For all other investments, you should note that your capital is at risk. The Financial Conduct Authority has produced a booklet for potential investors to read about Capital-at-Risk Products.

We enclose a copy of this booklet every time a client requests information on one of this type of investment from us. Availability dates in our lists could change, particularly if a product is fully subscribed before the advertised closing date. For ISA transfers, where available, you will need to submit your application earlier than for lump sum investments. The latest dates for ISA transfer applications will be given in the investment companies’ literature. We recommend applying for transfers as early as possible in the offer period. These are fixed term investments. If you need to withdraw your capital before the bond matures, you could have a very poor return on your capital.

E&OE