Investment & Retirement Focus

Investment & Retirement Focus

F CUS

INVESTMENT & RETIREMENT

A Tenet Group Publication Issue 3 | Autumn 2018

A focus on… Finding opportunities

Is the global economy losing steam?

Pension freedoms’ impact on investment strategies Why recommend a trust?

ALSO IN THIS ISSUE: Should we be Fans of Faaans? Tax Efficient Investments - The path of least resistance? Eating your retirement cake Equity Release – the ever changing landscape

F CUS

INVESTMENT & RETIREMENT

A Tenet Group Publication Issue 3 | Autumn 2018

A focus on… Finding opportunities

Is the global economy losing steam?

Pension freedoms’ impact on investment strategies Why recommend a trust?

ALSO IN THIS ISSUE: Should we be Fans of Faaans? Tax Efficient Investments - The path of least resistance? Eating your retirement cake Equity Release – the ever changing landscape

INVESTMENT & RETIREMENT FOCUS | 3

Foreword From the Editor

CONTENTS

6

Welcome to the Autumn edition of Investment & Retirement Focus.

4-5

Technical Services & Research Check before you check out!

15

Premier Asset Management Made to measure income

We open this edition with an article from Jo Rigby, Tenet’s Head of Technical Services & Research. ‘We all know it can be all too easy to make errors on a platform when carrying out transactions. But do you know the full implications of these admin errors?’ Jo and her team have identified the key issues they see at Tenet and what you can do to prevent them. Also featured in the issue: Many assume trusts are complex and are exclusively for the wealthy, when actually they are used far more frequently. Julia Peake, Sanlam UK, discusses the benefits of trusts, the key considerations, and the rules around them. Tax-efficient investment specialists Deepbridge Capital look at how tax planning is an increasing part of an adviser’s role, and how there is little excuse for advisers to not consider appropriate tax-efficient investments. Simon Morris, Head of Strategic Partners at Premier Asset Management, explains why it is important to have a clear and focused approach to income investing and part of this is understanding how to measure income. End in sight for pensions emergency tax issue - Andrew Tully from Retirement Advantage believes that it is good new options are being discussed, as confusion around these deductions can overshadow the need to plan withdrawals carefully. Age Partnership takes a brief look at the ever changing equity release landscape and how a recent report sparked interesting conversation within the growing market. Nick Hunt, Technical Manager at Prudential considers the wider implications on the back of the RDR and MiFID II. He explores the key changes and the things firms in scope need to consider for the long term impact of the changes.

20-21 Invesco Perpetual Finding opportunity in financials: Alternative lenders

13

24-25 Prudential

RDR & MiFID II got married

31

Fidelity Capitalising on change Ingenious Property investing in the modern world

33

19

27

I hope you find this edition informative and supportive and enjoy reading the excellent and varied selection of articles.

Kind Regards Cristina Marketing Consultant

EDITOR Cristina Giovanelli

Tenet Group Limited, 5 Lister Hill, Horsforth, Leeds, LS18 5AZ Tel 0113 239 0011 Fax 0113 258 6959

This publication is for internal purposes only and is not intended as an advertisement. As a result this should not be issued in any form to clients. Not all the products in this feature are the responsibility of the Tenet Group Limited. Terms and Conditions. Although every effort has been made to ensure the accuracy of the information contained in this publication, The Tenet Group cannot accept responsibility for any errors it may contain. The Tenet Group cannot be held responsible for the loss or damage of any material, solicited or unsolicited. No reproduction of any part of this publication, in any form or by any means, without prior written consent from The Tenet Group. The views ex- pressed in this publication do not necessarily reflect those of the advertisers or the publishers.

4 | INVESTMENT & RETIREMENT FOCUS

Check before you Check Out! Advisers, Paraplanners and administrators usually complete transactions for clients on a platform following a suitable recommendation and confirmation to proceed from the client. However, mistakes can easily be made which could result in customer detriment. It is therefore important to have appropriate checks and processes in place to minimise such errors occurring. Technical Services and Research

INVESTMENT & RETIREMENT FOCUS | 5

The typical errors we see at Tenet can include:

PII In some circumstances, we have seen an off panel fund selected in error, when an on panel fund was recommended to the client. It is worth noting that in this instance, this piece of business may not be covered by PII. In order to be covered by your PII, it is therefore imperative that the fund administered on the platform is the fund that was recommended to the client, is on panel or has had off panel approval. Preventative Measures What can you do to prevent these errors? • Ensure all staff within your business are trained to use the platform properly. • Peer review all trades on the platform. This could be a buddy check system so that two people check every trade to ensure accuracy. • Check every transaction note post sale so that it accurately reflects the advice that was recommended and accepted by the client. This way, mistakes can be identified early and rectified. Having a robust process in place for completing transactions on platforms is vital to ensure the client is invested in line with your recommendation. So take that extra time to double check before you check out! Contact your platform provider to arrange appropriate training if necessary.

we compare the performance of what the client should have been invested in against the fund they were actually invested in. Any difference will need to be reimbursed to the client. When putting the investment right, this may also give rise to a potential CGT liability, when the investment is held outside of a tax wrapper such as an ISA or Pension. This will depend on how long the investment has been held and any gain in the investment. If the client has already used their annual CGT allowance elsewhere, then the client may have a tax bill to pay. Again this could form part of any payment of compensation to the client. Where the wrong risk mapped/targeted fund has been transacted, then it is important that this is rectified as soon as possible especially where the risk mandate is higher than that agreed with the client as part of your attitude to risk discussion. The client could bear greater losses than anticipated in this scenario and therefore the cause for complaint could be greater. Where the risk mandate is lower than that agreed, then the client may not fully gain from any market growth as expected from In all circumstances where a mistake has been made the customer must be informed. The Tenet Customer Care team can contact the client on your behalf. This way, we can organise for the client to be compensated for any loss. In order to perform a loss calculation, the team will need to know the original date of the investment, the fund that was invested in error, the fund the client should have been invested in, and the date the investment was rectified. On this basis Customer Care will calculate the loss and write to the client informing them of the error and organise a payment. the initial risk discussion. Customer Redress

• Selecting the income fund instead of the growth fund. • Selecting an off panel fund rather than an on panel fund. • Selecting income (inc) units instead of accumulation (acc) units. • Investing in the wrong risk profiled fund e.g. Multi-Asset 4 instead of Multi-Asset 3.

What are the consequences of these errors? This will ultimately depend on when the error has been identified. If this was picked up immediately following the transaction then this can be rectified without any detriment to the client. Whether it is inside or outside of a tax wrapper does not matter as the fund will not have lost or gained in value during that period of time. The fund’s price will change at the next pricing point on the following day, so provided this has been rectified before then, there will be no issue. BUT, if the fund applies a bid/offer spread, problems arise. A fund will have suffered the initial charge on purchase and therefore will have a reduced value on the sale. Buying the right fund with potentially another bid/offer spread will reduce the value even further. The client in this circumstance will therefore have suffered a loss in value and as such will need to be compensated. If the error is not picked up immediately, then this could be a bigger issue. First, the error needs to be rectified as soon as you are aware of it. In the meantime, the client may have seen the fund fall in value. In order to calculate customer detriment

Jo Rigby FPFS Chartered Financial Planner Head of Technical Services and Research

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Is the global economy losing steam?

The second quarter of 2018 saw the release of a raft of positive economic >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44

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