ADVISERS GUIDE TO THE PORTFOLIO MANAGEMENT SERVICE

Transcription

1 RETIREMENT ACCOUNT ADVISERS GUIDE TO THE PORTFOLIO MANAGEMENT SERVICE This information is for UK financial adviser use only and should not be distributed to or relied upon by any other person.

2 INTRODUCTION THE RETIREMENT ACCOUNT FROM SCOTTISH WIDOWS IS DESIGNED TO HELP YOU MEET YOUR CUSTOMERS RETIREMENT NEEDS. RETIREMENT ACCOUNT OFFERS A WIDE CHOICE OF INVESTMENT SOLUTIONS FROM OUR SIMPLE GOVERNED INVESTMENT STRATEGIES TO OUR PANEL OF DISCRETIONARY FUND MANAGERS. OUR ADVISER PORTFOLIO MANAGEMENT SERVICE WILL ALLOW YOU TO CREATE AND STORE YOUR OWN PORTFOLIOS FOR EXCLUSIVE USE BY YOUR FIRM FOR YOUR CUSTOMERS. This guide provides the information you need to know about our Portfolio Management Service and creating and managing portfolios for your Retirement Account customers. This guide should be read in conjunction with other Retirement Account literature. If you have any further questions, please speak to your Scottish Widows Account Manager or, alternatively, visit our website 1

3 PAGE 3 SECTION 1 WHY CREATE YOUR OWN PORTFOLIOS? PAGE 5 SECTION 2 ROLE OF THE PORTFOLIO MANAGER PAGE 6 SECTION 3 ADVISER PORTFOLIO CREATION PAGE 15 SECTION 4 CONTROL ACCOUNT PAGE 16 SECTION 5 ONGOING ADVISER PORTFOLIO MANAGEMENT PAGE 19 SECTION 6 TRADING PRINCIPLES PAGE 21 SECTION 7 FREQUENTLY ASKED QUESTIONS PAGE 31 GLOSSARY 2

4 SECTION 1 WHY CREATE YOUR OWN PORTFOLIOS? One of the key benefits of the Retirement Account is the competitive range of investment choices Scottish Widows Pension Funds, a Fund Supermarket, any fixed term cash deposits we choose to make available, a choice of Discretionary Fund Managers, Commercial Property (excluding former Protected Rights) and Share Dealing. Our Portfolio Management Service provides a simple way of creating your own investment portfolios of Scottish Widows Pension Funds and the Fund Supermarket Funds for you to use with Retirement Account customers. Our Portfolio Management Service will enable you to: Define investment content for new Adviser Portfolios. Name the Adviser Portfolios for ease of identification. Store these Adviser Portfolios on our system, and recall at illustration stage. Change the investment content within existing Adviser Portfolios. Rebalance customer assets* held within an Adviser Portfolio back to the target asset allocation (target portfolio), automatically at regular intervals, or on a manual basis. The Adviser Portfolios you create will only be available to your firm. They will be hidden from other firms advisers and can t be shared with the advisers of other firms, even if your firms are linked as part of a network. Once Adviser Portfolios have been created, your advisers and staff will have additional functionality LINK POLICIES TO PORTFOLIOS ILLUSTRATE AND APPLY POLICY SERVICING Ability to link existing and new policies to an existing portfolio. Provide illustrations for existing and new business using your Adviser Portfolios. Submit new business applications online. Ability to set up system scheduled rebalances. Ability to undertake manual rebalances* and move all of your customers Retirement Accounts to a new version of an Adviser Portfolio (existing business). Move money from Adviser Portfolios to Control Account and vice versa. Ability to view Adviser Portfolio details and history. Review each of the funds that make up the Adviser Portfolio using the Asset Analyser tool (provided by Financial Express) to consider past performance, geographical split, sector etc. Retirement Account combines Retirement Planning and Retirement Income in one plan, allowing customers to consolidate their retirement savings in one account. A customer can be invested in one Adviser Portfolio in the Retirement Planning part of the Retirement Account and one in the Retirement Income part of the Retirement Account (the same portfolio or different ones), but they can t be in more than one Adviser Portfolio in either part. As well as an Adviser Portfolio a customer can invest in fixed term cash deposits, Discretionary Fund Managers, Commercial Property or Share dealing, but not other Scottish Widows Pension Funds and the Fund Supermarket Funds in that part of the Retirement Account. *Please see the important note on page 4. 3

5 HOW CAN I GET ACCESS TO THE RETIREMENT ACCOUNT PORTFOLIO MANAGEMENT SERVICE? The Portfolio Management Service can be accessed from the secure part of the Scottish Widows Adviser Extranet. Once your Adviser Portfolios have been created, all of your advisers and staff who are registered to use our eservices using Unipass will be able to access them. However, firstly you will need to decide who in your firm will be able to create and manage the Adviser Portfolios on your behalf. We call this role the Portfolio Manager and you can appoint one or more of your investment specialists to have this authority. *IMPORTANT NOTE Before investing a customer in an Adviser Portfolio, the adviser will need to hold the appropriate permissions to carry out discretionary investment management activities, or hold appropriate customer authority to invest in an Adviser Portfolio and rebalance it at agreed intervals. Advisers will need to be aware of the permission the customer has already given before making changes to the Adviser Portfolio If the adviser firm has discretionary powers, and the adviser manages clients on a discretionary basis, they will be able to carry out manual rebalances, change rebalancing frequency, change Adviser Portfolio shape or move the customer to a new version of an Adviser Portfolio without seeking further approval. If permission is on an advisory basis, the adviser will need individual consent whenever any changes are made to the Adviser Portfolio that were not explicitly covered in the original agreement. For example, a change to the agreed schedule of automatic rebalances or any manual rebalance. 4

6 SECTION 2 ROLE OF THE PORTFOLIO MANAGER WHAT DOES THE PORTFOLIO MANAGER ROLE ENTAIL? Typically the role of Portfolio Manager will be taken on by one or more of your firm s investment specialists. The Portfolio Manager will be able to Create new Adviser Portfolios by linking Scottish Widows and Fund Supermarket Funds and specifying the percentage split. Specify future automated rebalancing criteria and/or undertake manual rebalances of Adviser Portfolios. Publish Adviser Portfolios so all of the firm s advisers and staff can view the details and use with customers. Modify Adviser Portfolios, republish and move all policies into the new version as required, depending on the level of permissions the adviser has from their customers. HOW DO I BECOME A PORTFOLIO MANAGER? The firm Principal must authorise who they want to be the Portfolio Manager(s) for their firm. To provide an additional layer of security, Portfolio Managers will need to be registered for and log onto our eservice using a Unipass identity they will not be able to access the service using Username and Password. Portfolio Managers can register for a free Unipass Certificate via the following link on our website: eservices An application must be completed (available from our Adviser Extranet) to request the role, and submitted to our Web Support team. They will approve the request and register the Portfolio Manager. You can download a Request to be Portfolio Manager form from our Adviser Extranet: Once the Portfolio Manager has accepted our terms and conditions they will be able to access the Portfolio Management Service. 5

7 SECTION 3 ADVISER PORTFOLIO CREATION HOW DOES A PORTFOLIO MANAGER CREATE AN ADVISER PORTFOLIO? To create an Adviser Portfolio, a registered Portfolio Manager needs to log on to our Adviser Extranet using a Unipass certificate: Only Portfolio Managers can create and make changes to the Adviser Portfolios. Start by going to the Create New Portfolio screen. Step 1 Adviser Portfolio Details The first step is to name the Adviser Portfolio that is to be created. This needs to be a meaningful name that all the firm s advisers and staff will be able to identify, will be distinct from other Adviser Portfolios that have already been created and clear to the customer (as it will be used in some customer outputs). 6

8 Step 2 Choose Funds Any of the Scottish Widows Pension Funds or Fund Supermarket Funds may be used, excluding foreign currency funds. Funds can be selected by name. The Retirement Account system restricts the number of investments a customer can invest in to 19 (plus the Control Account), for each part of the Retirement Account (Retirement Planning and Retirement Income). Therefore the maximum number of funds you can choose for the Adviser Portfolio will depend on whether your customer wants to invest in the other types of investments available alongside the Adviser Portfolio Commercial Property, Share dealing, Discretionary Fund Management, or into a Fixed Term Cash Deposit. If a policy is linked to an Adviser Portfolio it is not possible to invest in other Scottish Widows Pension Funds or Fund Supermarket Funds at the same time in that part of the Retirement Account. 7

9 Continue to add until you have selected all of the funds you require Step 3 Select options for rebalancing The Portfolio Manager can choose to schedule automatic rebalances at quarterly, six monthly or annual intervals. As previously stated, if permission is on an advisory basis, the adviser will need to agree this schedule with the customer before investing in an Adviser Portfolio. In addition the Portfolio Manager can rebalance an Adviser Portfolio manually on an ad hoc basis, (customer/adviser permissions permitting), using the Amend Portfolio page. 8

10 Step 4 Save and Review Once the funds have been selected, the Portfolio Manager must save the Adviser Portfolio. The Portfolio Manager can then review each of the funds that make up the Adviser Portfolio using the Asset Analyser tool (provided by Financial Express) to consider past performance, geographical split, sector etc. 9

11 The new Adviser Portfolio can be reviewed and changed as necessary before it is published. Step 5 Describe the Adviser Portfolio/ amend the name This is the last opportunity for the selected funds to be amended before the Adviser Portfolio is published. The name and Adviser Portfolio description should now be updated to give more detail e.g. a description of the risk profile could be added. This is essential to allow firm advisers to choose the right Adviser Portfolio for a customer with a particular risk profile or investment approach. 10

12 Step 6 Publish Once the Portfolio Manager is happy with the Adviser Portfolio and the name of it, it can be published. The new Adviser Portfolio is then immediately available to all of the firm s registered advisers and staff for illustration purposes and existing customers Retirement Accounts can be linked to them. 11

13 ACCESSING PUBLISHED ADVISER PORTFOLIOS Advisers registered to use our eservices can select any of the firm s Adviser Portfolios for new and existing business illustrations and on-line new business applications. They can also switch any existing customers into an Adviser Portfolio. When linking to an Adviser Portfolio the system will automatically carry out the required sells, switches and buys into the appropriate funds so that the customer is invested in the target portfolio. There is no need to rebalance at this point as the customer will be in the correct position. Any regular premiums that are currently directed to Scottish Widows Pension Funds or Fund Supermarket Funds will be redirected to the Adviser Portfolio, however, any funds directed to the Control Account will remain there. When linking to an Adviser Portfolio, if the customer has existing funds that are not Sterling denominated, these should first be sold to the Control Account, and then be invested into the Adviser Portfolio when funds are realised. By selecting the manage investments screen and selecting invest into portfolio tab, you ll be able to access the Adviser Portfolios. By clicking on the red Select a portfolio button, all of the available portfolios a customer can invest in will be displayed. The adviser can select the Adviser Portfolio required. They will be directed to a screen where they will also be prompted to choose whether or not they wish to change the Control Account. 12

14 If the adviser selected no, confirmation will appear that no adjustment is required. However if they select yes, the following drop down will appear and the adviser will be able to adjust the Control Account amount. They can either invest money from the Control Account into the Adviser Portfolio or instruct that at the end of the transaction more money will be required in the Control Account. Either the monetary amount or percentage amount can be manually manipulated. The adviser can also select which policy part should be changed (Pension Fund or Former Protected Rights). 13

15 After submitting a confirmation will be displayed. The adviser must confirm the transactions are correct. The final confirmation page verifies that the policy has been linked to a named Adviser Portfolio and the amount in the Control Account that will be adjusted. It also specifies the transaction will take 2-3 days to complete: 14

16 SECTION 4 CONTROL ACCOUNT A Control Account does not form part of an Adviser Portfolio, but acts as a clearing and transactional account for all payments made to and from a Retirement Account. Any contribution or transfer paid into a Retirement Account is initially held in the Control Account and can be switched to a Portfolio or other investment. A balance usually needs to be kept in the Control Account to pay for regular charges, expenses and income payments. At different times, depending on clients circumstances, the amount of money that needs to be held in the Control Account will vary, for example, if a designation, ad-hoc income or pension encashment is requested, a higher balance will be required to cover this. WHY ISN T THE CONTROL ACCOUNT PART OF A PORTFOLIO? If the Control Account was part of a Portfolio, a set percentage of each Portfolio would have to be invested in the Control Account (effectively in cash-like investments), for all clients invested in that Portfolio. This would not suit all of the clients who might want to invest in that Portfolio as they will need different amounts of money to be available at different times and this may not give them enough flexibility and tie up money that could be invested elsewhere. For example, a client could have money in both parts of the Retirement Account but want them both invested in the same Portfolio based on their attitude to risk. In the Retirement Planning part they are not taking any income, so will only keep a minimal amount of money in the Control Account to cover day to day charges and expenses, but in the Retirement Income part they could be taking high levels of income each month so will need to keep a large balance in that Control Account. Imposing a fixed percentage on the Control Account would not suit either scenario. MOVING MONEY BETWEEN A CONTROL ACCOUNT AND ADVISER PORTFOLIO At new business stage a client can decide how much of their payments they want to keep in the Control Account and how much is to be allocated to an Adviser Portfolio. The amounts allocated can be selected independently by payment type. When linking an existing client to an Adviser Portfolio for the first time, our system will allow customers to determine how much should be invested in the adviser portfolio and how much is required to be held in the Control Account. Our system will work out if more funds or less funds are required to be held in the Control Account and sell assets to fund the Control Account or invest into the portfolio from the Control Account as required. Thereafter, any units invested in Scottish Widows Pension Funds and Fund Supermarket funds will automatically be transferred to the Adviser Portfolio, via a series of sells, switches and buys to achieve the target shape. Please note it is not possible to link a policy to a Portfolio while there are any outstanding trades on the policy. If at any time money is required in the Control Account, funds can be sold from the Adviser Portfolio. If the Control Account balance is insufficient to cover the regular charges and payments out and the Retirement Account is invested in any Scottish Widows Pension Funds (even if the Account holds other investments), we ll automatically sell units proportionately from the Scottish Widows Pension Funds held to cover the charges and/or income (if possible). Therefore, if as an Adviser, you don t wish to constantly monitor the Control Account(s), you should consider keeping some money invested in Scottish Widows Pension Funds within Portfolios to allow this disinvestment to happen. A further option is to set up a series of regular disinvestments from a particular fund or funds to top up the Control Account every month. For more details on the Control Account please see the Retirement Account Adviser s Technical Guide (45981) 15

17 SECTION 5 ONGOING ADVISER PORTFOLIO MANAGEMENT Once Adviser Portfolios have been created, they will need to be regularly reviewed and managed by the Portfolio Manager. The Portfolio Manager will be able to - Create new versions of existing Adviser Portfolios. Move ALL policies on a bulk basis to the latest version of an Adviser Portfolio. Schedule auto-rebalances. Undertake ad hoc manual rebalances of Adviser Portfolios. Rebalance ALL linked policies to the original target portfolio. To support the Portfolio Managers, the service provides the following additional functionality View a complete history of the Adviser Portfolio. At customer level, compare current fund split to target portfolio. 16

18 REBALANCING Rebalancing is the ability to return an Adviser Portfolio to the target or intended fund split (target portfolio) and the preferred level of risk exposure by buying and selling units (see section 6 for more details of how trading works). The investments in an Adviser Portfolio will perform according to the market. As time goes on, an Adviser Portfolio s current fund split will drift away from the target portfolio. If left unadjusted, the Adviser Portfolio could either become too risky, or too conservative. Our Portfolio Management Service will allow a Portfolio Manager to rebalance an Adviser Portfolio on a regular basis. This will ensure that customers will remain within the risk tolerances that the adviser has deemed suitable. HOW REBALANCING WORKS The system reviews the portfolio and calculates if there has been a drift from the target portfolio. Assuming a rebalance is required Stage 1 The system identifies the holdings that have performed better than expected, and those that have not performed as well as expected. If there is a combination of Scottish Widows Pension Funds and Supermarket Funds, transactions between funds are via the Control Account. Units are bought using money held in the Control Account and where units are sold the proceeds are moved to the Control Account. If the portfolio only uses Scottish Widows Pension Funds or only uses Supermarket Funds then units are switched between funds rather than bought and sold. The Control Account is not used for these switches. If there is a combination of Scottish Widows Pension Funds and Supermarket Funds in the portfolio, the system will then review the current value of the Control Account. The value must be at least zero for the rebalance to proceed. If the value is negative, we will sell enough funds to make the value zero. At the end of the rebalance the value of the Control Account will return to this initial value (or zero if the value was originally negative). Stage 2 The system then generates the necessary trades for the holdings that have performed better than expected. This will include some sells out of the best performing funds. The money from the sale of these funds will be added to the Control Account. At the end of Stage 2 the better performing funds are balanced. Stage 3 The system now assesses what it needs to do to get the remaining holdings into a balanced state. The system uses the extra money in the Control Account to buy units. This will comprise of a mixture of switches between holdings, and buys into the less well performing funds. At the end of this stage the policy will be rebalanced. The value of the Control Account (where used) will return to its initial value (or zero if the value was originally negative). 17

19 WHEN MIGHT A REBALANCE NOT GO AHEAD AS PLANNED? The system gives requests for money to be paid into a policy, or taken out of a policy, more priority than a rebalance. So if one of these requests is received at the same time as a rebalance is planned, the rebalance will be paused until the transaction has taken place. Once the money is invested/disinvested the rebalance process will resume, taking into account the new asset values. The rebalance will also be paused if designations, platform charge deductions or any other regular trades are happening. The system will try to restart the rebalance every day for the next eight days, but if it still can t proceed during this time, it will fail until the date of the next scheduled rebalance. Therefore if your client plans to pay a regular premium into their Retirement Account at the start of the month, it is best to avoid scheduling automatic rebalances at this time, as the rebalance will be paused until the money has been invested into the requested funds. In certain situations we need to restart a rebalance from the beginning. If a rebalance was underway when funds were sold to credit the Control Account, we will stop the rebalance and let the sells complete. The rebalance will then restart from the beginning taking into account the new lower fund values. A rebalance may also not proceed if you ask for a policy to be linked to a portfolio on or around the date that a rebalance is scheduled to start. This is because the linking activity can take a number of days to complete and also takes priority over the rebalance activity. This should have little impact on the client as the linking activity will ensure the policy is re-balanced to the correct portfolio fund allocation which will mirror that of the other rebalanced policies. 18

20 SECTION 6 TRADING PRINCIPLES PORTFOLIO MANAGEMENT SERVICE PROCESS When rebalancing or reviewing an Adviser Portfolio, a number of different transactions may be required depending on the asset classes included in the Adviser Portfolios. Below we have explained some of these transactions: BUY ONLY TRANSACTIONS This refers to transactions where money held in a Control Account is used to buy units in Scottish Widows Pension Funds and/or Fund Supermarket funds. SELL ONLY TRANSACTIONS This refers to transactions where units are sold from Scottish Widows Pension Funds and/or Fund Supermarket funds and the proceeds are moved to a Control Account. SWITCH ONLY TRANSACTIONS This refers to transactions where either: Units are sold in one or more Scottish Widows Pension Funds and the proceeds are used to buy units in other Scottish Widows Pension Funds; or Units are sold in one or more Fund Supermarket funds and the proceeds are used to buy units in other Fund Supermarket funds. In both cases, this is a one stage process the proceeds do not pass through the relevant Control Account. SELL AND BUY TRANSACTIONS This refers to transactions between Scottish Widows Pension Funds and Fund Supermarket funds i.e. movements from Scottish Widows Pension Funds to Fund Supermarket funds and vice versa. SWITCH Switch investments between funds. RE-DIRECT PAYMENTS Amend the way future payments are invested. LINK TO AN ADVISER PORTFOLIO Use an Adviser Portfolio for future investments. When linking to an Adviser Portfolio the system will automatically carry out the required buys, sells and switches into the appropriate funds so that the customer is invested in the target portfolio. There is no need to rebalance at this point as the customer will be in the correct position. Any regular premiums that were being invested in Scottish Widows Pension Funds or Fund Supermarket Funds will be redirected into the funds making up the Adviser Portfolio, and any regular premiums that were being invested in the Control Account will continue to be invested there unless you decide to alter the allocation. If you link to an Adviser Portfolio by mistake, we can t stop the trading associated with this request once it has started, but you can select an unlink which will make sure no future rebalancing is done on the policy. TIMINGS For Scottish Widows Pensions Funds, our standard trading service applies, this means that these fund trades are processed in accordance with the pricing points detailed in the policy provisions. For Fund Supermarket Funds, transactions involving buying into an Adviser Portfolio, selling from an Adviser Portfolio, linking to an Adviser Portfolio and rebalancing, will all normally be stored and forwarded to the Fund Supermarket at the end of the business day for them to start to process the following day. In certain circumstances, trades can be delayed if other transactions are being processed at the same time or are pending e.g. a rebalance could be held up until a sell from an Adviser Portfolio has gone through, so as not to delay the realisation of money into the Control Account. 19

21 REVIEWING A CUSTOMER S POLICY Advisers can review individual customer accounts and link/unlink to/from portfolios etc. using the existing business screens. There are separate tabs for the Retirement Planning and Retirement Income parts of the Retirement Account 20

22 SECTION 7 FREQUENTLY ASKED QUESTIONS How many Adviser Portfolio Managers can a firm have? There is no limit. How do I register as a Portfolio Manager? Adviser firms need to decide which investment specialists within their organisation they wish to appoint to become Portfolio Managers. The Firm Principal authorises the relevant individual (s) by completing the Portfolio Management Application Form which is available on the SW Extranet ( The application form needs to be scanned and ed to our Web Support team on websupport@scottishwidows.co.uk Once we ve received the completed form we will register the named individual (s) as Portfolio Manager (s) and provide them with access to the Portfolio Management Service. To provide an additional layer of security, Portfolio Managers will need to be registered for and log onto our eservices using a Unipass identity they will not be able to access the service using a username and password. Portfolio Managers can register for a free Unipass certificate via the following link on our website: Which FCA Register number or Firm Reference Number (FRN) should I use when registering a Portfolio Manager? If the adviser works for a Principal Agent [PA] they should input their PA FCA number. If they work for an Appointed Representative [AR] they should input their AR FCA number. It is important that the correct Firm Reference Number (FRN) is specified on the Application Form because: the number used defines who we will contact regarding registration and any amendments or queries for E-Commerce access (i.e additional access, delete access etc). it will determine who in the firm will be able to view/access the Adviser Portfolios the Portfolio Manager creates. If you need any advice on which FCA number to put on the application form please phone Web Support on this number: Here is an example of a fictitious firm and how the Portfolio Manager registration process would work for them. Independent Financial People are a PA, with FCA number They have two subsidiaries working under their PA FCA number, and also an AR. Independent Financial People PA FCA number Dougie McDougall Financial Services Organisation unit under FCA West Glasgow Financial Services Organisation unit under FCA Shetland Associates AR of Independent Financial People AR FCA Dougie McDougall Financial Services: Is an organisation unit of Independent Financial People. West Glasgow Financial Services: Is an organisation unit of Independent Financial People. Shetland Associates: Is an Appointed Representative which sits under the PA but operates as a separate company. 21

23 Based upon this: Independent Financial People have their own FCA number as they are a PA, therefore should use their PA FCA i.e FCA Dougie McDougall Financial Services do not have their own FCA number as they are organisation unit therefore they must go up to the first FCA they are a child of, i.e FCA West Glasgow Financial Services follows the same model as Dougie McDougall. Shetland Associates have their own FCA number, therefore they use their own, i.e. FCA In this case, if Shetland Associates were to register for PM access using the PA FCA number FCA instead of their own FCA number, the Access Controller / Director of Independent Financial People would need to approve this PM appointment and any subsequent access amends. It is possible that the Firm Principal of Independent Financial People knows the employees of the Appointed Rep firm and is able to confirm their registration. However, for many larger Networks, it is unlikely that the top PA Firm Principal will know all the individuals working as Appointed Representatives within the Network, which would make confirmation of their registration difficult. It is therefore preferable for AR firms to register for Portfolio Management Service using their own FCA number. For the above example the company requests two PMs to be set up: Independent Financial People PA FCA number Portfolio Manager set up here (PA level) Dougie McDougall Financial Services West Glasgow Financial Services Shetland Associates Organisation unit under FCA Organisation unit under FCA AR of Independent Financial People AR FCA Portfolio Manager set up here (AR level) Based upon this: Any Adviser Portfolios set up by a PA level Portfolio Manager will be viewable and useable by The PA (Independent Financial People), any of the organisation units under it (Dougie McDougall Financial Services and West Glasgow Financial Services) and the AR company (Shetland Associates) Any Adviser Portfolios set up by AR level Portfolio Manager will only be viewable and usable by the AR company, and they will not be available to Independent Financial People, Dougie McDougall and West Glasgow Financial Services. 22

24 Can Portfolio Managers edit Adviser Portfolios set up by other Portfolio Managers? If there is more than one Portfolio Manager operating for a firm, all the Portfolio Managers will be able to see and edit all the Adviser Portfolio versions for their firm. An Adviser Portfolio/version belongs to a firm and not a Portfolio Manager. The Adviser Portfolios you create will only be available to your firm. They will be hidden from other firm s advisers and can t be shared with the advisers of other firms, even if your firms are linked as part of a network. Is there a maximum number of Adviser Portfolios that a firm or Portfolio Manager can create? No, there is no limit on the number of Adviser Portfolios that can be created by a single Portfolio Manager or on behalf of a firm. However it may be confusing if you have multiple Adviser Portfolios with similar names or aims that will need to be managed. How do I find out who the Portfolio Managers are in my company? You will need to ask your Firm Principal who has been set up as an Adviser Portfolio Manager. Why can t I see Adviser Portfolios that my colleague has set up? There could be a few reasons why you can t see an Adviser Portfolio you were expecting to be able to use. Only published Adviser Portfolios can be used for an illustration. However, if time elapses between illustration and application it is possible for an Adviser Portfolio (version) to become suspended, or superseded. When this happens: If the Adviser Portfolio version has been suspended since the illustration was done then you will need to re-illustrate. If the Adviser Portfolio version has been superseded since the illustration was done, then on applying, you will be advised that the Adviser Portfolio is no longer the most recent one, but you can choose to continue. It may be worth contacting your Portfolio Manager to discuss alternative portfolio options that are available. If you can t see any Adviser Portfolios it may also be because of the way your company has been set up for E-Commerce access. Please contact the Web Support team at Scottish Widows on if you would like an explanation of how your company has been set up for E-Commerce access. Alternatively they may not be available because it was published by a Portfolio Manager set up under a different firm or Firm Reference Number (FRN) from you and will not be available for you to use. Can a customer be invested in more than one Adviser Portfolio at a time? A customer can only invest in one Adviser Portfolio in each part of the Retirement Account one in the Retirement Planning part and one in the Retirement Income part of the Retirement Account. Can a customer be invested in other assets as well as an Adviser Portfolio? Yes, as well as an Adviser Portfolio, a customer may invest in Commercial Property, Share dealing, Discretionary Fund Management, or into a Fixed Term Cash Deposit in each part of the Retirement Account. However, if a policy is linked to an Adviser Portfolio it is not possible to invest in other Scottish Widows Pension Funds or Fund Supermarket Funds for that part of the Retirement Account. What happens if a customer has money in both parts of the Retirement Account? If the customer has money in both the Retirement Planning part and the Retirement Income part of the Retirement Account, both parts could be invested in an Adviser Portfolio (the same one or different ones), or one part could be invested in an Adviser Portfolio and the other part could be invested in other Scottish Widows Pension Funds or Fund Supermarket Funds (or the other types of investment available). 23

25 If a customer has the same Adviser Portfolio in both parts of the Retirement Account, can I undertake a single rebalance to cover both parts of the policy or do they have to be rebalanced separately? If you are doing a manual rebalance, you will need to trigger two rebalances. If it s automatic rebalancing, the system will do the rebalance for you. The system will warn you if there is another part of the policy linked to a Portfolio to prompt you to rebalance that part if required. Can I request illustrations using an Adviser Portfolio? Yes, you can request the following types of illustrations using an Adviser Portfolio: New Business Increments Designations How can I submit new business applications using an Adviser Portfolio? You can submit applications for New Business online. How can I submit increment applications using an Adviser Portfolio? Increment applications can be submitted on-line or via Customer Services. An Adviser Portfolio can be used when applying an increment if the part of the Retirement Account (Retirement Planning or Retirement Income) being incremented is already linked to an Adviser Portfolio. If the increment is for immediate vesting and putting investment into the Retirement Income part for the first time, an Adviser Portfolio can be picked as an investment choice. Why can t I recall a new business illustration I have done? If the illustration was done more than 90 days ago it becomes invalid. If the illustration was done using an Adviser Portfolio that has now become suspended then it is also invalid and you will need to do another illustration. How do I move a client to a different Adviser Portfolio when they change their attitude to risk? To move a client to a different Adviser Portfolio you will need to unlink them and then link them to a new Adviser Portfolio. This can be done immediately after unlinking them. The online process for a link will ask you to confirm that you have secured the relevant switch authorities from your client. When unlinking a customer from an Adviser Portfolio, any regular premiums will be defaulted to the Control Account. Therefore, when linking to a new Adviser Portfolio, you will be required to re-link regular premiums should you wish them, or a proportion of them, to be invested in the Adviser Portfolio. What happens if my customer changes Adviser? If a customer informs us that they have changed adviser, and they are invested in an Adviser Portfolio, we will unlink their investments from the Adviser Portfolio and re-allocate the money to the underlying funds in the proportion they were held within the Adviser Portfolio at the time they were removed. The customer can then switch to other funds or investments as they wish. New money received e.g. from regular contributions will be directed into the Control Account to be reallocated. If automatic rebalancing had been included in the Adviser Portfolio creation, this will no longer apply to their policy. 24

26 Can a customer move out of an Adviser Portfolio themselves? Yes, if a customer informs us that they want to move assets out of an Adviser Portfolio, we will unlink all of their investments from the Adviser Portfolio wrapper, and re-allocate them to the underlying funds in the proportion they were held within the Adviser Portfolio at the time they were removed. The customer can then switch to other funds or investments as they wish. You will also receive a copy of the documentation. Can individual clients be re-balanced or is re-balancing only available at Adviser Portfolio level, thus impacting all linked clients? Three types of rebalance are available: Individual policies can be rebalanced by an adviser or a Portfolio Manager (PM). Only a Portfolio Manager can rebalance all policies in an Adviser Portfolio. The system will rebalance all policies in an Adviser Portfolio at the date specified on the Portfolio for automatic rebalancing. How can I find out what policies will be included in an Adviser Portfolio version rebalance? The following screen will allow a Portfolio Manager to request a list of policies linked to an Adviser Portfolio. This screen will also allow you to find out what policies will be moved in a bulk move to a new portfolio version. If the request is made before 8pm, the information will be available to retrieve from the Extranet for the start of the next working day. 25

27 How can I move all customers in an Adviser Portfolio to the new upgraded Adviser Portfolio? The Portfolio Manager can upgrade all customers in an Adviser Portfolio to a new version of that Portfolio using the links shown below. 26

28 Are there any summary documents that can be printed off? Yes there is a bulk data download option available to the Portfolio Manager and the customer s adviser. A Portfolio Manager can request a.csv list of all policies linked to a Portfolio Version (as above). An adviser can request a.csv file of all policies they are servicing agent for linked to a Portfolio Version. Note: if there are no policies linked to a Portfolio Version this will be shown to them on the page where they go to retrieve the results of their request. Are contract notes produced each time there is a re-balance or fund switch? Trade confirmation notes are suppressed for re-balances. You can see what units were bought/sold/switched on Investment History. For fund switches, for example linking to an Adviser Portfolio and moving to a newer version of a Portfolio, trade confirmations will be produced. The trade confirmation notes are paper based (there is no alert facility when trades are completed). What happens if an Adviser Portfolio is invested in a fund that closes or is suspended? If any funds are closed then the money intended for these will remain in the Control Account until we receive new instructions. If any funds become suspended, we ll still attempt to pay regular premiums to them. Some funds will accept these payments, while others will not (in which case the money will remain in the Control Account). We will notify you and your client if a fund closes, is suspended or any other corporate actions occur. What will happen to my Adviser Portfolios if there is a corporate action and two funds are merged? The system will reflect any fund mergers into all Adviser Portfolios, you do not need to take any action. So for example: Fund A from Fidelity is to merge into Fund B (Fidelity). At the point we update our systems with this event, all Adviser Portfolios will be automatically updated to replace Fund A with Fund B. Future regular premiums will be paid to Fund B, rather than Fund A. We will notify you and your client if a fund closes, is suspended or any other corporate actions occur. 27

29 What happens if a fund in a Portfolio is suspended and you need to fund the Control Account? Where a customer requires money to be paid out from a Portfolio and one of the funds is suspended, the system will attempt to redeem the required amount from that particular fund. Some funds will allow a sell out when suspended while others will not. For example: Mr RA Policyholder has a portfolio comprising of 100,000 held in 4 Funds in the following portfolio shape: Fund A 25% now suspended Fund B 25% Fund C 25% Fund D 25% However over time the funds have performed differently and the monetary holdings are now: Fund A 20,000 Fund B 25,000 Fund C 30,000 Fund D 25,000 When the sell request of 10,000 is transacted this is based on the current policy value and the disinvestment is proportionate across the holdings as follows: Fund A will attempt to sell 2,000 this fails as the fund is not accepting redemptions Fund B will sell 2,500 Fund C will sell 3,000 Fund D will sell 2,500 The policy will be left with monetary holdings of: Fund A 20,000 Fund B 22,500 Fund C 27,000 Fund D 22,500 And 8,000 in the Control Account, i.e a shortfall of 2,000. How can this shortfall be covered? Client Service will contact you as they will be notified of the failure to sell from fund A you can then instruct them where you would like them to sell from to cover the shortfall. 28

30 Can Adviser Portfolios link to non-sterling Funds? It is not possible to link a policy invested in non-sterling funds to an Adviser Portfolio, so the adviser will need to sell the non-sterling funds before linking to the Adviser Portfolio. Once the sale of the non-sterling funds has completed, the investment will remain in the Control Account. The adviser can then link the policy to an Adviser Portfolio and once the link is completed they can buy into the Portfolio Version from the Control Account. What kinds of regulatory permissions should I have in place to perform any bulk moves/rebalances? If the adviser firm has discretionary powers, and you manage clients on a discretionary basis, you can make any changes to the Adviser Portfolio on a bulk or individual basis e.g. manual rebalances, changing rebalancing frequency, changing Adviser Portfolio shape/moving Adviser Portfolios, at any time without seeking further permission. If you have advisory powers, and have agreed with the client that their investment is in a specific Adviser Portfolio and a schedule of rebalances, you would need additional customer consent before you perform any manual rebalances, change rebalancing frequency, change Adviser Portfolio shape or move customers on an individual basis or on mass to a new version of an Adviser Portfolio. For firms who have to get permission from their clients before re-balancing, is it possible to unlink all clients from the Adviser Portfolio, re-balance the Portfolio and then re-link the clients to it as and when they agree to the re-balance? Firms can work this way but they need to be aware that if a Portfolio becomes suspended they will not be able to link back into it. They will always need to link back at a policy level to the Portfolio, and where regular premiums are paid these will need to be directed to the new Adviser Portfolio. What happens if my customer wants to switch some of their money out of an Adviser Portfolio and into another type of investment? A customer can choose to switch some of their money out of an Adviser Portfolio they are invested in at any time. The money is taken across all funds in the Adviser Portfolio (based on the proportion of the target allocation) and directed into the Control Account to be reallocated. If an Adviser Portfolio is being rebalanced when monies are requested to be encashed, we will stop the rebalance, remove the requested funds and then recommence the rebalance. Can regular premiums be paid into an Adviser Portfolio? Yes, regular premiums are split in the same proportion as the Adviser Portfolio. The customer can also opt to leave a percentage of their regular premiums in the Control Account to fund charges on the policy. All future regular premium increments will also be paid into the split of the Adviser Portfolio, (or the Control Account), unless they tell us otherwise. Do regular premiums have to be in the same funds as the Adviser Portfolio? Yes they do, you can t change the funds that regular premiums are paid to. What can be changed is the percentage left in the Control Account, e.g. leave 5% in the Control Account and put 95% into the Portfolio funds. What will happen to future regular premiums when I unlink from an Adviser Portfolio? When a policy is unlinked from an Adviser Portfolio any future regular premiums will remain in the Control Account until we receive new investment instructions. If you choose to invest in another Adviser Portfolio, the regular premiums will need to be directed to the new Portfolio after you have linked the policy to it. 29

31 How can I designate a policy using an Adviser Portfolio? Designation applications must be submitted via Customer Services using a paper Application form. Please tell us where you want the funds moving from Retirement Planning to be invested in the Retirement Income part of the policy. In some instances, to proceed with a designation, our Customer Services team will temporarily unlink the policy from the Adviser Portfolio to allow them to carry out some manual transactions. Once complete they will link the policy back to the Adviser Portfolio. If the Retirement Account is moving into drawdown (Retirement Income) for the first time then an Adviser Portfolio can be selected as an investment choice. If the Retirement Account is already in drawdown then the investment choices used in Retirement Planning will initially be mirrored on the Retirement Income part of the policy. If there s already an Adviser Portfolio then a rebalance will occur and these funds will be moved into the Adviser Portfolio. Does the Control Account always have to be included as a percentage of a target portfolio (if including fund supermarket funds)? Will re-balancing activity include funds within the Control Account? The Control Account sits outside the Adviser Portfolio and an adviser can opt to leave nothing in the Control Account and invest everything in the Portfolio and other asset classes such as DFM, Share Dealing and Commercial Property. When undertaking a rebalance at policy level, or upgrading a policy to a different portfolio, the Control Account value can be increased or decreased as required as part of that transaction (note the Control Account is not allowed to be negative). For automated rebalances the Control Account will always stay at the same amount post-rebalance as pre-rebalance, unless it is at a negative value in which case the rebalance will need to bring the Control Account up to a zero balance so that the transaction does not fail. If the rebalance doesn t use the Control Account, (i.e. it is only inter-asset Scottish Widows Pension Funds to Scottish Widows Pension Funds or Fund Supermarket Funds to Fund Supermarket Funds) then it won t disinvest funds to bring the balance back to zero, it will leave the Control Account negative if that was the starting point. See Section 4 of this guide for more information on how the Control Account works. If a client is mistakenly linked to a model portfolio (e.g. Adventurous rather than Cautious ) are there any implications if unlinked on the same day i.e. will any trade processes have commenced? There are no implications for assets currently held in the Adviser Portfolio as an unlink does not trigger any trading, it purely takes away the Portfolio wrapper and leaves the policy invested in the underlying funds. However, any regular premiums being paid will be defaulted to the Control Account, and will need to be redirected if you decide to invest in another Adviser Portfolio. An unlink/link letter will be triggered every time a policy is linked/unlinked to an Adviser Portfolio but as this is sent to the adviser with a copy enclosed for the client, the adviser can choose not to send this on if the activity has been undertaken in error. Please note, when an unlink is selected, any future regular premiums will remain in the Control Account until the adviser provides information on where they want to invest the payments. What happens if a withdrawal request is received at the same time as an automated rebalance? The system gives requests for money to be paid into a policy or taken out of a policy more priority than a rebalance. So if one of these requests is received at the same time as a rebalance is instigated, the rebalance will be paused until the transaction has taken place. Once the money is invested / disinvested the rebalance process will resume, taking into account the new asset values. The rebalance will also be paused if designations, platform charge deductions or any other regular trades are happening. So, for example, if your client plans to pay a regular premium into their Retirement Account at the start of the month, it is best to avoid scheduling automatic rebalances or manual rebalances at this time, as the rebalance will be paused until the money has been invested into the requested funds. Similarly if the Portfolio is invested in Fund Supermarket Funds it is best to avoid automated or manually trigger re-balances running up to 15th of the month, when the monthly Fidelity platform charges are scheduled to be taken from the account. The optimum window for automated or manually triggered rebalances is between the 15th and 25th of each month. 30

32 GLOSSARY GLOSSARY OF TERMS USED IN THE TOOL Words we use Active Auto Rebalance Buying Copy Corporate actions Draft/Unpublished Link policy Link policy to latest version of portfolio Link policies to latest version of portfolio Manual rebalance Policy parts Portfolio/Adviser Portfolio Portfolio status Portfolio version Published Rebalancing Redirection Reviewing Selling Superseded Description Adviser Portfolio has been published and is available for new business. Rebalances the funds to the target portfolio automatically on a regular basis. Moving amounts from the Control Account to purchase units in Scottish Widows Pension Funds and / or Fund Supermarket Funds. Copies the portfolio you are viewing and saves as a new portfolio. Changes to funds such as a change of name, investment objective and/or charges, fund closures, mergers, splits and suspensions. Adviser Portfolio has not been published therefore not available to be used. This links a customer s Retirement Account to a portfolio. Moves the Retirement Account to the latest portfolio version. Moves all Retirement Account policies that are linked to the portfolio to the latest version. Ad hoc rebalance of a portfolio at the request of the Portfolio Manager. A Retirement Account can have two parts: Planning and Income. It can also just have a Planning part, or just an Income part. The name which describes the grouping of funds. This is the status of the Adviser Portfolio e.g. if it is still a draft or active. Every Adviser Portfolio has a version number, any changes to a portfolio creates a new version. The Adviser Portfolio is available for new business. Realigning the target allocation in a portfolio to bring them back to the target portfolio asset/fund split. An instruction to change the fund choice for any future regular contributions. A Retirement Account can have two parts: Planning and Income. It can also just have a Planning part, or just an Income part. Selling units in Scottish Widows Pension Funds or Fund Supermarket Funds and moving the proceeds to the Control Account. There is a newer version of the Adviser Portfolio available to be used. 31

33 GLOSSARY (CONTINUED) GLOSSARY OF TERMS USED IN THE TOOL (CONTINUED) Words we use Suspended Switching Unlink policy Version status Description The Adviser Portfolio contains a fund that has been soft or hard closed. Switching from one Scottish Widows Pension Fund to another (by selling units in the former and buying units in the latter) or switching from one Fund Supermarket Fund to another. This unlinks the Retirement Account from the portfolio, leaving the policy in the underlying funds. Any regular premiums will default to the Control Account. This is the status of the portfolio version. 32

34 INFORMATION The information in this guide is based on Scottish Widows understanding of current tax rules and pension legislation. These may change in the future. Charges, terms and limits may change. Full terms and conditions are available on request. For up to date information and literature supporting the Retirement Account, visit This information is for UK financial adviser use only and should not be distributed to or relied upon by any other person. 33

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