Intelligent Money - your investment questions answered

[Testaburger]

JulianPH said:

I think we can both agree that the most important factor involved here is the soufflé.

Great to hear your thought. We are now looking at the UK Sterling denominated approach to a gross roll-up account for international clients very seriously.

Advantages:

• It is (literally) identical to the portfolios we currently run for pensions and ISAs (by which I mean the exact same portfolios).

• There is no cost increase for the service as there is not the increased cost in running separate off-shore mirrors of these portfolios.

• The majority of ex-pats return to the UK for retirement and so having their investments denominated in GBP makes sense.

• There is nothing stopping us adding an offshore USD range at a later date in any case.

Disadvantages:

• This is what we are checking now. There may be something so obvious that we have missed it, but equally we may be comparing this with a traditional route that is over complicated for no reason (other than the historic commission paying reason that does not apply to us).

Cheers!

Of course I can’t speak for your prospective expat clients, but I’m sure I’m not alone in being drawn to a) the simplicity of the U.K.-based GIA, and b) the value generated by the very palatable cost structure.

I think that if the waters get muddied in those regards, you would be losing an edge in a market swamped by seemingly over-complicated financial infrastructure.

Having been an expat for most of my adult life, my observations (mirrored by those of my British friends) is that the offshore investment landscape for us is filled with expensive, convoluted propositions requiring large sums and hefty commissions, with fees on the front, middle and back. Most of us (bearing in mind we’re not the super-wealthy, just vanilla professionals looking to safeguard our financial futures) just wish for access to the offerings back home, but with the (very) odd exception, none want to deal with non-residents.

For a while I thought there must be something substantial that prevented them offering to us, but FS shot that down. I’m sure I’m missing a beat, but it seemed like they just wanted proof of my overseas tax status to remove me from U.K. reporting. Or something like that.

Fortunately with my wife being a Yank, we’re able to use that avenue (as she doesn’t get to leave the US tax system), but it’s not optimal for a few reasons.

Very happy to share my thoughts over the phone/email, if you feel my opinion is of any use as you sound this out.

When thinking about the bigger picture, however, none of these trivialities should detract from the soufflé.

[Testaburger]

DonkeyApple said:

In the old days, as taxation on this front may have changed making my point moot, the key was to not repatriate client funds into the U.K. so typically something like a Jersey based entity was set up to hold the offshore client funds & assets.

Interesting. I’ve no idea, to be honest. I send a chunk to the U.K. every month. I’m demonstrably non-resident. I know that the definition of non-resident for tax purposes has been tightened up in recent years. It’s now whether you pass one of the ‘tests’ published by the IR. If you do, you’re non-resident. As such, I haven’t thought too much about sending my cash back to the UK - as the professional advice I received stated that as ‘not ordinarily resident in the UK’ (or words to that effect), there’s no restrictions on shuttling cash back.

I recall some timeframe (5 years rings a bell) before you become permanently ‘expatted’ in their eyes, as opposed to temporarily non-resident.

https://www.gov.uk/capital-gains-tax/what-you-pay-...

This link (bottom of the page) seems to corroborate that as an expat, I’m liable to CGT on my property, but not on other U.K. assets.

Edited to add the link.

Edited by Testaburger on Thursday 24th January 15:40

[DonkeyApple]

Testaburger said:

Having been an expat for most of my adult life, my observations (mirrored by those of my British friends) is that the offshore investment landscape for us is filled with expensive, convoluted propositions requiring large sums and hefty commissions, with fees on the front, middle and back. Most of us (bearing in mind we’re not the super-wealthy, just vanilla professionals looking to safeguard our financial futures) just wish for access to the offerings back home, but with the (very) odd exception, none want to deal with non-residents.

I have put my cynical hat on for this post (to be honest, it’s rarely not on).

Expats are easy marks. They are usually relatively financially uneducated in relation to the amount of money they are earning and this makes them targets. Because they are not bringing their income back into the U.K. but needing to hold it offshore this opens the doors wide open to low to zero regulation financial services and the army of little used car vendors who front a rather large part of it.

The general view is that the client is swerving not just 50% tax but also typically has much lower living costs so there’s a lot of revenue to be had.

In short, a lot of expats are suddenly finding themselves with a lot of cash and having grown up under the luxury of all the U.K. protections makes the mistake of assuming that a financial advisor with an English accent is kosher. Combine that with a strange willingness to pay huge fees because so much tax is being saved and the offshore financial services market obviously expands at the bottom end to cater for this.

I’ve lost count of the number of expats who have returned after a couple of decades away and have been paying enormous fees (mostly hidden) and who’s tax situation is a complete mess.

The problem is that many of the practices that have been regulated out of the U.K. market and for good reason remain rife offshore and that does make it a minefield for expats.

[mikeiow]

Unexpected Item In The Bagging Area said:

Julian has asked me to help out anyone who’d like to win some further prizes by answering the quiz question posted last night.

The code PH2607 relates to something posted about in this thread https://www.pistonheads.com/gassing/topic.asp?h=0&...

Anybody who can’t get it with this help doesn’t deserve £100!

Well, despite following the legendary pool build at the time, I can't say I have spotted the significance of the number....I hoped "forky" might be a cryptic answer, but who knows ;-)


But back on topic!
I have a main 'active' pension plan with Aviva - work contribute, I have done some fund shuffling following my own research (not that I am a qualified FA!), and that appears to have very low costs and going quite well. I *believe* it is reasonably low cost come drawdown/retirement time (I am approaching mid-50s, & with 4 funerals in the past 12 months, it is safe to say my mind has focussed a little on retirement lately.....) - but maybe there would be better ways to go. Who knows.....


I also have a fund with PIC currently around £120k in value. I really don't know what it is investing in - it basically flat-lines (& actually, slightly embarrassingly, I had clean forgotten about the plan until a couple of years back....a nice thing to find down the back of a sofa!)

Having moved a couple of other much smaller funds to Aviva, I was considering this one as well.
Then I saw this thread!
Actually, a letter from PIC saying they were moving to use Capita filled me with horror this week, and is even more of a trigger ;-)


So: with Aviva, I kind of know what the fees are, and I can very easily see fact sheets for the approximately 80 funds I can chose from. It was some analysis of those that led me to shift some funds about, and I have done that a couple of times over the years.

Do you have something similar for the fund schemes you offer?
Have they been going for 1/3/5/10 years to provide that sort of information?

Thanks!

[Testaburger]

DonkeyApple said:

I have put my cynical hat on for this post (to be honest, it’s rarely not on).

Expats are easy marks. They are usually relatively financially uneducated in relation to the amount of money they are earning and this makes them targets. Because they are not bringing their income back into the U.K. but needing to hold it offshore this opens the doors wide open to low to zero regulation financial services and the army of little used car vendors who front a rather large part of it.

The general view is that the client is swerving not just 50% tax but also typically has much lower living costs so there’s a lot of revenue to be had.

In short, a lot of expats are suddenly finding themselves with a lot of cash and having grown up under the luxury of all the U.K. protections makes the mistake of assuming that a financial advisor with an English accent is kosher. Combine that with a strange willingness to pay huge fees because so much tax is being saved and the offshore financial services market obviously expands at the bottom end to cater for this.

I’ve lost count of the number of expats who have returned after a couple of decades away and have been paying enormous fees (mostly hidden) and who’s tax situation is a complete mess.

The problem is that many of the practices that have been regulated out of the U.K. market and for good reason remain rife offshore and that does make it a minefield for expats.

Exactly right. Your hat seems a good fit.

It’s a minefield so most of us don’t bother. I’m unwilling to take the risk of going with a double-glazing salesmen to secure my financial future, so unless I have access to reputable outfits in the U.K., I’ll probably just buy UK-listed investment trusts and similar through my HK Interactive Brokers account instead.

[jeff666]

Unexpected Item In The Bagging Area said:

Julian has asked me to help out anyone who’d like to win some further prizes by answering the quiz question posted last night.

The code PH2607 relates to something posted about in this thread https://www.pistonheads.com/gassing/topic.asp?h=0&...

Anybody who can’t get it with this help doesn’t deserve £100!

PM sent.

[DonkeyApple]

Testaburger said:

Exactly right. Your hat seems a good fit.

It’s a minefield so most of us don’t bother. I’m unwilling to take the risk of going with a double-glazing salesmen to secure my financial future, so unless I have access to reputable outfits in the U.K., I’ll probably just buy UK-listed investment trusts and similar through my HK Interactive Brokers account instead.

The problem, historically, for kosher U.K. houses has been that you need to set up a mirror operation offshore, which is easy enough, but then to tap into the offshore sales network to gather clients you need to matching the kick-backs to them. A chap selling expat products in Asia is not going to sell your product that earns him 1% when other products offer him 5-10% upfront and then a bigger ongoing share to boot. To get round that you need your own boots on the ground which costs a lot of money and you know that those boots will suddenly on day lift all your clients and steer them into much bigger fee generating products to triple his income or more.

[Testaburger]

DonkeyApple said:

The problem, historically, for kosher U.K. houses has been that you need to set up a mirror operation offshore, which is easy enough, but then to tap into the offshore sales network to gather clients you need to matching the kick-backs to them. A chap selling expat products in Asia is not going to sell your product that earns him 1% when other products offer him 5-10% upfront and then a bigger ongoing share to boot. To get round that you need your own boots on the ground which costs a lot of money and you know that those boots will suddenly on day lift all your clients and steer them into much bigger fee generating products to triple his income or more.

This is the issue I’m faced with. It’s offshore infrastructure at huge cost. That’s why I said I’m (generally) only comfortable investing in U.K.-based reputable outfits - not their Luxembourg satellite. Failing that, then I’ll just have to settle for ITs on the LSE.

I’m not sure what the administrative burden is for U.K. fund houses and similar, but evidently it can be done onshore. Fundsmith deal with me in their ‘normal’ fund, as do Vanguard (albeit needing a sizeable chunk deposited). Woodford would also, but wanted 100k down.

Again, perhaps it’s not worth the hassle for some (no idea what it entails) fund houses. I’m perfectly happy for my fund investments in the U.K. to be reported to the IR along with all the other shareholders - and I can deal with the tax affairs via self-assessment. Again, not something that seems to be an option (short of lying and pretending to be U.K. resident).

[condor]

jeff666 said:

Unexpected Item In The Bagging Area said:

Julian has asked me to help out anyone who’d like to win some further prizes by answering the quiz question posted last night.

The code PH2607 relates to something posted about in this thread https://www.pistonheads.com/gassing/topic.asp?h=0&...

Anybody who can’t get it with this help doesn’t deserve £100!

PM sent.

PM also sent

[JulianPH]

condor said:

jeff666 said:

Unexpected Item In The Bagging Area said:

Julian has asked me to help out anyone who’d like to win some further prizes by answering the quiz question posted last night.

The code PH2607 relates to something posted about in this thread https://www.pistonheads.com/gassing/topic.asp?h=0&...

Anybody who can’t get it with this help doesn’t deserve £100!

PM sent.

PM also sent

Money sent!

[JulianPH]

selmahoose said:

!!!! Stupid Money!!! (busy making small fortunes out of large ones )Ltd

An Announcement

Following the well known dimots v JamesB (who's a welcher and who ain't ?) fiasco bet on the crypto thread, news of success in the Julian/IM competition was met with some scepticism.

Was Julian a dimots (honourable) or a JamesB (welcher)?

Was Julian ever going to return to the forum or was he going to slink away and vanish from sight ?

Was "Julian" in fact Julian at all or was he in Reality .......JamesB himself!!!!!!

So many questions and so many doubts and of course a sleepless night ensued.

However, we are happy to announce that following a heated late-nite emergency board-level debate the PR Dept at IM overcame the various and vehement objections of its Investment Division, and competition winnings, as agreed, were fully and duly dispatched to www.jairahfunds.com and will be used in the near future to build not one, but two basic but permanent dwellings for dispossessed and homeless families in Orissa!!

Hurrah IM!
Hurrah Julian!

Now vouched by the !!!Stupid Money!!! (busy making small fortunes from large ones) Ltd official Seal of Approval as a competition you may enter without fear of being bumped for any winnings!

Signed

Very Reverend Ebeneezer (Mason Boyne) Groak
(Grand Master and Ipsissimus, Church of Anthrax Northern Division)

Edited by selmahoose on Thursday 24th January 17:13

Was that actually a complement from you...???!!! Wonders never cease!

Cheers Groat! A great choice of beneficiary BTW.

Julian

[DonkeyApple]

Testaburger said:

This is the issue I’m faced with. It’s offshore infrastructure at huge cost. That’s why I said I’m (generally) only comfortable investing in U.K.-based reputable outfits - not their Luxembourg satellite. Failing that, then I’ll just have to settle for ITs on the LSE.

I’m not sure what the administrative burden is for U.K. fund houses and similar, but evidently it can be done onshore. Fundsmith deal with me in their ‘normal’ fund, as do Vanguard (albeit needing a sizeable chunk deposited). Woodford would also, but wanted 100k down.

Again, perhaps it’s not worth the hassle for some (no idea what it entails) fund houses. I’m perfectly happy for my fund investments in the U.K. to be reported to the IR along with all the other shareholders - and I can deal with the tax affairs via self-assessment. Again, not something that seems to be an option (short of lying and pretending to be U.K. resident).

The caveat here is that I am a few years out of date on the tax front but the issue isn’t with an onshore U.K. house dealing with your funds, that’s bread and butter but rather that most offshore workers don’t wish to repatriate funds and therefor pay U.K. tax on them as they bring them in and then tax on any gains. The norm with money earner overseas is to leave it overseas so there is no U.K. tax to pay and then if you come home later just pay it to yourself in a tax efficient manner when needed etc.

[JulianPH]

DonkeyApple said:

Testaburger said:

This is the issue I’m faced with. It’s offshore infrastructure at huge cost. That’s why I said I’m (generally) only comfortable investing in U.K.-based reputable outfits - not their Luxembourg satellite. Failing that, then I’ll just have to settle for ITs on the LSE.

I’m not sure what the administrative burden is for U.K. fund houses and similar, but evidently it can be done onshore. Fundsmith deal with me in their ‘normal’ fund, as do Vanguard (albeit needing a sizeable chunk deposited). Woodford would also, but wanted 100k down.

Again, perhaps it’s not worth the hassle for some (no idea what it entails) fund houses. I’m perfectly happy for my fund investments in the U.K. to be reported to the IR along with all the other shareholders - and I can deal with the tax affairs via self-assessment. Again, not something that seems to be an option (short of lying and pretending to be U.K. resident).

The caveat here is that I am a few years out of date on the tax front but the issue isn’t with an onshore U.K. house dealing with your funds, that’s bread and butter but rather that most offshore workers don’t wish to repatriate funds and therefor pay U.K. tax on them as they bring them in and then tax on any gains. The norm with money earner overseas is to leave it overseas so there is no U.K. tax to pay and then if you come home later just pay it to yourself in a tax efficient manner when needed etc.

A very good point.

This is exactly what we are looking into before deciding which route to go down. Most of the offshore rational is commission based (or biased). We are seeking certainty of the absolute tax position of such holdings (from HMRC itself).

Cheers

Julian

[NRS]

Julian, I sent you a PM earlier (2 actually - had thought I messed up first one - sorry!), and mentioned about overseas stuff - is this more for countries with lower taxes etc? I'm full time in Norway (pay tax here) but might move back to the UK - come from UK, have not lived there for 8 years. If I invested now does that mean I have no capital gains in the UK since it's past the 5 years, but presumably pay it here instead? You have to declare interest etc earned abroad in the tax system here.

Edited by NRS on Thursday 24th January 21:43

[JulianPH]

mikeiow said:

Unexpected Item In The Bagging Area said:

Julian has asked me to help out anyone who’d like to win some further prizes by answering the quiz question posted last night.

The code PH2607 relates to something posted about in this thread https://www.pistonheads.com/gassing/topic.asp?h=0&...

Anybody who can’t get it with this help doesn’t deserve £100!

Well, despite following the legendary pool build at the time, I can't say I have spotted the significance of the number....I hoped "forky" might be a cryptic answer, but who knows ;-)


But back on topic!
I have a main 'active' pension plan with Aviva - work contribute, I have done some fund shuffling following my own research (not that I am a qualified FA!), and that appears to have very low costs and going quite well. I *believe* it is reasonably low cost come drawdown/retirement time (I am approaching mid-50s, & with 4 funerals in the past 12 months, it is safe to say my mind has focussed a little on retirement lately.....) - but maybe there would be better ways to go. Who knows.....


I also have a fund with PIC currently around £120k in value. I really don't know what it is investing in - it basically flat-lines (& actually, slightly embarrassingly, I had clean forgotten about the plan until a couple of years back....a nice thing to find down the back of a sofa!)

Having moved a couple of other much smaller funds to Aviva, I was considering this one as well.
Then I saw this thread!
Actually, a letter from PIC saying they were moving to use Capita filled me with horror this week, and is even more of a trigger ;-)


So: with Aviva, I kind of know what the fees are, and I can very easily see fact sheets for the approximately 80 funds I can chose from. It was some analysis of those that led me to shift some funds about, and I have done that a couple of times over the years.

Do you have something similar for the fund schemes you offer?
Have they been going for 1/3/5/10 years to provide that sort of information?

Thanks!

Hello mate

Long time no speak! How are you? "Forky" has seemingly gone to Hollywood these days (Toy Story) but always remains in my heart (and garden!).

The whole pool thread seems so long ago now. It was great fun and I can't believe it went on for over 100 pages (and became a Legendary Thread).

It is great to speak again with you here

Yes we do, 9% per year on average for our growth portfolio over the last 10 years (including the loss last year (c. 6%) that everyone else went through).

You can see these on our website. Past performance is no guarantee of future returns though!

Let me get back to you in the morning. My wife is demanding I spend some time with her and TBH I have run out of excuses!

Cheers

Julian

[Testaburger]

DonkeyApple said:

The caveat here is that I am a few years out of date on the tax front but the issue isn’t with an onshore U.K. house dealing with your funds, that’s bread and butter but rather that most offshore workers don’t wish to repatriate funds and therefor pay U.K. tax on them as they bring them in and then tax on any gains. The norm with money earner overseas is to leave it overseas so there is no U.K. tax to pay and then if you come home later just pay it to yourself in a tax efficient manner when needed etc.

Perhaps things have changed in that regard. If you are classified as non-resident, then there is no restriction on repatriating your funds. While I’m an expat, any income derived in the U.K. Is subject to U.K. taxation, and CGT is not applicable (except on property). This is regardless of whether the money was invested from a U.K. current account of an overseas one.

Edited by Testaburger on Friday 25th January 01:56

[harrycovert]

I`am confused, not difficult Mrs Covert does all the finances.
Lived in France for over 20 years ,all income generated in UK ,State pension +rental income .
Pay UK and French taxes.Both in our 70s looking for income not growth.
Are any of you products suitable or are we barred from using them ?

[Intelligent Money]

mikeiow said:

Well, despite following the legendary pool build at the time, I can't say I have spotted the significance of the number....I hoped "forky" might be a cryptic answer, but who knows ;-)


But back on topic!
I have a main 'active' pension plan with Aviva - work contribute, I have done some fund shuffling following my own research (not that I am a qualified FA!), and that appears to have very low costs and going quite well. I *believe* it is reasonably low cost come drawdown/retirement time (I am approaching mid-50s, & with 4 funerals in the past 12 months, it is safe to say my mind has focussed a little on retirement lately.....) - but maybe there would be better ways to go. Who knows.....


I also have a fund with PIC currently around £120k in value. I really don't know what it is investing in - it basically flat-lines (& actually, slightly embarrassingly, I had clean forgotten about the plan until a couple of years back....a nice thing to find down the back of a sofa!)

Having moved a couple of other much smaller funds to Aviva, I was considering this one as well.
Then I saw this thread!
Actually, a letter from PIC saying they were moving to use Capita filled me with horror this week, and is even more of a trigger ;-)


So: with Aviva, I kind of know what the fees are, and I can very easily see fact sheets for the approximately 80 funds I can chose from. It was some analysis of those that led me to shift some funds about, and I have done that a couple of times over the years.

Do you have something similar for the fund schemes you offer?
Have they been going for 1/3/5/10 years to provide that sort of information?

Thanks!

Hi,

We do have the same information available for all our portfolios. The summary shows 1,3,5 and 10-year performance as well as10 year annualised performance along with a breakdown of the assets and geographical areas that the portfolio uses for investment.

You can see this information on our webpage
https://www.intelligentmoney.com/private-clients/o...

In addition you can access quarterly Portfolio Fact Sheets, which provide more information on the portfolio performance and comments on the general market position from the portfolio investment Manager Tim Horrocks.

Following investment you can track your performance, with real time updates, via your own portal and make any changes you may want to via the same portal.

As a PH member your fee structure is 0.87% per annum

Our service provides you with all the information you need with simple straightforward access so you can see how your portfolio is working for you and quickly and easily make any alterations you need.

I hope his helps; please let me know if you need any more information,

Regards

Nik

[trowelhead]

JulianPH said:

selmahoose said:

!!!! Stupid Money!!! (busy making small fortunes out of large ones )Ltd

An Announcement

Following the well known dimots v JamesB (who's a welcher and who ain't ?) fiasco bet on the crypto thread, news of success in the Julian/IM competition was met with some scepticism.

Was Julian a dimots (honourable) or a JamesB (welcher)?

Was Julian ever going to return to the forum or was he going to slink away and vanish from sight ?

Was "Julian" in fact Julian at all or was he in Reality .......JamesB himself!!!!!!

So many questions and so many doubts and of course a sleepless night ensued.

However, we are happy to announce that following a heated late-nite emergency board-level debate the PR Dept at IM overcame the various and vehement objections of its Investment Division, and competition winnings, as agreed, were fully and duly dispatched to www.jairahfunds.com and will be used in the near future to build not one, but two basic but permanent dwellings for dispossessed and homeless families in Orissa!!

Hurrah IM!
Hurrah Julian!

Now vouched by the !!!Stupid Money!!! (busy making small fortunes from large ones) Ltd official Seal of Approval as a competition you may enter without fear of being bumped for any winnings!

Signed

Very Reverend Ebeneezer (Mason Boyne) Groak
(Grand Master and Ipsissimus, Church of Anthrax Northern Division)

Edited by selmahoose on Thursday 24th January 17:13

Was that actually a complement from you...???!!! Wonders never cease!

Cheers Groat! A great choice of beneficiary BTW.

Julian

Come on Groak, Julian is the real deal!

My winnings too have been donated to a worthy cause (dogs trust)

Thanks again Julian, top bloke, nothing but respect for him and the team at IM

[JulianPH]

NRS said:

Julian, I sent you a PM earlier (2 actually - had thought I messed up first one - sorry!), and mentioned about overseas stuff - is this more for countries with lower taxes etc? I'm full time in Norway (pay tax here) but might move back to the UK - come from UK, have not lived there for 8 years. If I invested now does that mean I have no capital gains in the UK since it's past the 5 years, but presumably pay it here instead? You have to declare interest etc earned abroad in the tax system here.

Edited by NRS on Thursday 24th January 21:43

I sent you an email back which I hope you received.

harrycovert said:

I`am confused, not difficult Mrs Covert does all the finances.
Lived in France for over 20 years ,all income generated in UK ,State pension +rental income .
Pay UK and French taxes.Both in our 70s looking for income not growth.
Are any of you products suitable or are we barred from using them ?

As these questions are regarding the same thing I hope you don't mind if I answer both together (and Testaburger).

Our understanding (and we are speaking to tax lawyers to have this confirmed, but so far this appears to be correct) is that that people who are non-resident in UK for tax purposes for 5 years have no CGT to pay on any capital gains made within the UK (this part is absolutely confirmed) and whilst they remain liable for income tax on distributions each year they can fully utilise their £5,000 dividend, £1,000 interest and £11,850 income tax personal allowances before having to pay any income tax on distributions (assuming no other UK based income).

This means that a 5 years+ non-tax resident can invest over £500,000 in the UK without generating any tax liability (assuming a 3% portfolio distribution and unlimited capital growth).

On the same basis a £1m investment would only pay £2,430k in tax and a £5m investment would only pay £34k in tax.

Obviously I have been very simplistic in the above, but given the principles you can see why we are looking to provide the assurance and protection an established UK based investment manager offers, rather than setting up a new off-shore venture (that would automatically be tainted by the others - see Testaburger's and DonkeyApple's comments above).

It is probably quite obvious now why launching an International Private Clients service has been so time consuming!

As with our standard service for UK tax residents, we wanted to cut through the rubbish and deliver value without unnecessary (or hidden) costs.

Cheers

Julian