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QROPS and Non Mainstream Funds

March 14, 2019

We make no apologies for returning to this topic which was flagged as a major issue of concern last year. Indeed if anything the problem has become worse with revelations that one of the suspended funds was paying advisers an annual fee of 3% on investments made and that the UK regulator has issued a warning to advisers encouraging clients to invest their pension in unregulated products through SIPPs.

Shall we go back to basics? A retirement plan be it QROPS or SIPP or QNUPS is primarily put in place to provide a tax efficient structure that offers tax free growth and a favourably taxed income stream to the beneficiary-probably YOU! Of course there may be all sorts of fancy add ons that might enable a lump sum to be paid, income to be taken on a temporary annuity basis, protection against IHT or local succession taxes but these mean very little if the adviser you rely on recommends that you invest your money in high risk non mainstream funds. Many people have found their retirement plans in tatters and are no longer sure how they are going to make ends meet because of poor investment advice.

What drives an adviser to look at non mainstream investments in the first place? Aren’t there plenty of options with thousands of well-known and respected funds, where depending on risk appetite, an independent adviser can construct a sensible portfolio with a mixture of cash, bond and equity funds that are all managed by large investment houses and which have been around for donkeys years?

We receive unsolicited emails every month from firms suggesting we use this fund or that fund which will pay extra commission or fees. And what happens to these recommendations- they all go in the bin or get deleted.

Of course the asset allocation we recommend may sometimes go awry and markets don’t always behave in the way one expects them to, but by and large it is quite feasible to build and monitor a client portfolio using best of class established funds with a decent track record.

Perhaps we do some of our competitors an injustice. Maybe it is you Mr Client who driven by greed or desire, wants somewhere racy and exciting to invest your pension fund. You know what, we wouldn’t let you; your pension fund is too precious to expose to high risk. Do you really want to play Russian roulette with your hard earned retirement plans? After all it’s not as if you get a second chance to go back thirty or forty years and start again.

For a proper approach to retirement planning speak to an expert at Fiduciary Wealth on 900 102 374 or by email enquiries@fiduciarywealth.gi.