Improvements to e-suitability - paragraph library version

Transcription

1 Improvements to e-suitability - paragraph library version We are pleased to announce further enhancements to e-suitability which include significant improvements to the content. These changes have been made in response to user feedback. The most significant changes are: A new paragraph library release which incorporates the following changes: Budget changes o Maximum pension annuity age increased from 75 to 77 New wrap provider - Avalon Investment Services Improved commission and fee options Improved description of manually prepared commission statements Improved disclosure for structured products Improved disclosure for whole of life protection plans Improved text to explain purpose of whole of life personal protection Improved disclosure for protection cases where waiver of premium not included New automated property fund warning Improved regular monthly budget statements Assets under management update for Prudential Correction of error in ISA description Improvement in explanation of retirement dates for pensions Minor layout corrections Budget changes - Maximum pension annuity age increased from 75 to 77 The emergency budget included an announcement that the government will scrap the age 75 rule for pensions next year and, with immediate effect, will increase the maximum age from 75 to 77. The change will also apply to inheritance tax charges that specifically apply to pensions. Precise detail of the impact on inheritance tax provisions will be announced shortly. Also, the government has agreed to consult on finding an alternative to reduced income tax relief for high earners. In response to these changes, text to explain personal pensions and unsecured pensions has been adjusted.

2 An example of the text to explain the features of a Personal Pension follows: An example of the text to introduce the forthcoming changes to treatment of pensions for inheritance tax purposes follows: We will introduce further changes and improvements to unsecured pension text after the new provisions are clarified.

3 New wrap provider - Avalon Investment Services The list of product providers has been extended to include Avalon Investment Services. Avalon is, a wrap provider and hence expanded text is produced when selected for all investment products to explain the wrap concept as adopted by Avalon. Improved commission and fee options e-suitability already provides a large range of selectable text to quickly document commission and/or fee payment terms agreed with the client. In response to a request from a user, the fee options have been supplemented to include an option to explain the practice of collecting full commission to a fee account from which services are charged as agreed with the client. The new range of selectable fee options is shown below: Previously selectable options remain available and full commission to fee account has been added. Selecting, full commission to fee account will cause the following text to be inserted.

4 Improved disclosure for structured products For structured product recommendations, it is important to understand and quantify the overall proportion of funds invested in structured investments. Avoiding high dependency on structured products is a good general advice principle. E-Suitability text has now been enhanced to bring the automated text into line with the latest FSA requirements. The FSA now expects advisers to specifically justify situations where the recommended structured product investment represents 10% or more of the client s portfolio and to offer separate specific justification where, taking into account the latest investment, 25% or more of the client s investment portfolio is exposed to structured products. In situations where a joint recommendation is made, the client and partner investment portfolios should be analysed as well as the jointly held investments. In the event of any breaches to the above percentages, a specific justification should be documented. This implies as many as six calculations may be required. Now, e-suitability introduces text which simplifies this disclosure process by automatically prompting the adviser to properly document the situation in an approved way. An extended help function has been added to provide easy access to example text for insertion. A screen shot showing the general location of the new text follows: Selecting, less than 10pc of port in this product causes the following text to be inserted. Selecting, 10pc or more of portolio in this product causes the following text to be inserted. In cases where advice has not been given jointly, an abbreviated form of the green text will appear.

5 Selecting the green text will cause a text box to appear in the lower left portion of Report Writer as shown below: Now, clicking the long help icon, will cause a help text box to appear as follows: Clicking the Close button will cause the screen to revert to the field entry box shown above from where the text may be amended to include the appropriate percentage figures. A finished example follows:

6 A similar process is involved for documenting the percentages for all structured investments held by the client. Selecting, less than 25pc of port in struc products causes the following text to be inserted. Selecting, over 25pc of portfolio in struc products causes the following text to be inserted. The percentage figures may be inserted in the same way as described above.

7 Selecting, insert structured reason will cause the following field entry box to appear: Now, clicking the long help icon, will cause a help text box to appear as follows: This provides additional background and some suggestions for appropriate insertions. Improved disclosure for whole of life protection plans For family protection cases, whole of life cover is most often arranged as a flexible contract which requires a unit linked contract. Estate planning cases, which don t require that level of flexibility, can now be written with guaranteed premiums we are aware such contracts are available through Zurich and Legal & General. e-suitability content has now been improved to accommodate guaranteed premium contracts. Previously, text was automatically inserted to explain the possibility of a surrender value and taxation consequences.

8 Now, new content has been added so that an appropriate automatic paragraph selection will be made whether or not the plan may acquire a surrender value. The text will vary depending upon whether the guaranteed premium check box is selected at the add contract stage of building a report. Selecting guaranteed premium at the add contract stage will cause the following text to be inserted: Leaving the above check box unchecked will cause the following text to be inserted: Improved text to explain purpose of whole of life personal protection e-suitability provides core automated support for explaining the reason for the included features of the recommended plan. Previously, for whole of life cases, the reasons for providing whole of life cover did not include funeral costs. Now, this gap in the text has been remedied. An example of the new text for personal protection whole of life cases follows:

9 Improved description of manually prepared commission statements A small amendment has been made to the commission disclosure text used for manually prepared commission statements. Previously, commission disclosure text in this situation was: Now, in response to a request from a user, this has been slightly amended to: Improved disclosure for protection cases where waiver of premium not included Text to explain situations where waiver of premium benefit has not been included in a protection plan has been improved. Now, in situations where waiver of premium benefit has not been selected, a choice of paragraph selections is presented as shown below. Selecting, confident waiver of premium not needed will cause the following text to be inserted: Selecting, not eligible for waiver of premium will cause the following text to be inserted: Improved budget statements e-suitability already provides a comprehensive range of selectable statements to explain the what, if any, budgetary constraints the client has requested. We have received feedback to the effect that the existing statement set does not adequately explain situations where the client has agreed to commence a plan where the disposable income is already or will be made negative.

10 A slight adjustment is necessary by removing all references to surplus income in budget statements. An example in the new style follows: New automated property fund warning Any unusual characteristics of an investment fund should be explained to a client and subsequently documented in the suitability report. Previously, e-suitability gave support for explaining aspects of investment funds and how they fit the requirements of the client by providing an insertion point for additional points about the funds to be made. Now, the previous support has been supplemented by a property fund warning which is accessible via the Funds button as shown below. Clicking the Funds button will cause the following window to open. Notice that the usual drop down list is supplemented by a new selectable item, FUND WARNING include property fund warning. This may be selected by highlighting the item and clicking the Add button.

11 An example of a completed selection follows: The report may now be produced by clicking the Close button followed by the OK button in the normal way. Your suitability report will now automatically include text to warn about the inclusion of a property fund. An example follows: Notice that the warning text appears immediately underneath the section explaining the selected investment funds. Improved regular monthly budget statements Documenting budget restrictions expressed by a client is a useful way of constraining an overall recommendation to a client. Previously, the wording of selectable regular monthly budget statements included a presupposition that the client has surplus income available which, of course, will not always be the case. To cater for situations where the client has agreed a regular monthly budget which requires a sacrifice of some of his current monthly expenditure, all references to surplus income have been removed. An example of a new regular monthly budget statement follows.

12 Assets under management update for Prudential In response to a request from a user, we have updated the text to explain the use of Prudential as a product provider to include the most up to date figure available for its assets under management. The new text will be automatically inserted when Prudential is selected as a product provider as follows: We will update the figures for all other product providers in the next release. Correction of error in ISA description The text to explain ISA s in the current release contains an incorrect figure for the maximum IS allowance. This has now been corrected and an example of the current text is as follows: Improvement in explanation of retirement dates for pensions With effect from the beginning of this tax year, the earliest normal retirement date for personal pensions has moved from 50 to 55 years of age. Previously, e-suitability text ambiguously expressed the current position. Now, the text has been revised to the following:

13 Minor layout corrections The paragraph library has been reviewed and a number of small layout corrections have been made. In this connection, we are grateful for continued user feedback on any flaws found in the content, the correction of which will take precedence over all other development work. New paragraph library Amber Lite version Select the Data Update option from the drop down menu which is assessible immediately after launching Report Writer. Then follow the onscreen instructions. 1st Software Adviser Office version Select the e-suitability data update option from the drop down menu which is accessible from Client Management Module. Then follow the onscreen instructions. What s next on the development list Final Salary pension transfers. Discretionary Fund Manager recommendations. Support for offshore and non-regulated collective investment funds. Improved support for automated inclusion of text to document client needs and demands. Unsecured pension review reports. Fund switches within same product reports. Support for non product recommendations. Child trust recommendations. With Profits annuities. More support for network fact find risk descriptions and risk profiling tools e.g. Watson Wyatt.

14 Support for National Savings products a respectable inclusion whenever you make a lump sum encashable investment recommendation. This will be included as a new need area for ease of access. Support for mainstream investment fund management houses as product providers for Stocks and Shares ISAs, Unit Trusts and OEICs and Investment Trusts.