CREATE A FINANCIAL FUTURE THAT TRAVELS WITH YOU Old Mutual International s Wealth Portfolio with Quilter Cheviot as the Discretionary Asset Manager The portable private client wealth management solution
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contents THE PORTABLE WEALTH MANAGEMENT SOLUTION 4 IS THE WEALTH PORTFOLIO RIGHT FOR YOU? 5 THE INVESTMENT THAT CHANGES WITH YOUR LIFE 6 WHY Old Mutual INTERNATIONAL? 7 USING A DISCRETIONARY ASSET MANAGER 8 WHY CHOOSE Quilter Cheviot? 9 THE TAX-EFFICIENT WAY TO INVEST 10 TAX-EFFICIENT WAYS TO WITHDRAW YOUR MONEY ON RETURN TO THE UK 11 SETTING UP AND RUNNING YOUR WEALTH PORTFOLIO 12 FEES AND CHARGES 14 TALK TO YOUR FINANCIAL ADVISER 15 Please remember that the value of assets can fluctuate and you may not get back the full amount of your original investment. This brochure explains how the Wealth Portfolio can benefit individual investors. Many of these benefits equally apply to trustees and companies wishing to invest. Please speak to your financial adviser, who will be able to explain any important differences. Please refer to the policy terms for full details of the Wealth Portfolio. References to us, we, our and Old Mutual International refer to Old Mutual International Isle of Man Limited. 3
THE PORTABLE WEALTH MANAGEMENT SOLUTION WHAT IS THE WEALTH PORTFOLIO? The Wealth Portfolio from Old Mutual International Isle of Man Limited is a portable lump sum bond especially suitable for the medium to long-term investment needs of UK expatriates who intend to eventually return to the UK. As a lump sum investment, the Wealth Portfolio can help you create the financial future you want and is flexible and portable enough to adapt as your life unfolds. You can pay in additional amounts *, or take withdrawals ** whatever suits your evolving lifestyle. You can also use it with a trust for estate planning purposes, helping to ensure that as much of your wealth as possible is passed on to future generations in line with your wishes. It also allows you to ensure that your investment objective, whether you are investing to grow your wealth or to generate income, is in line with your changing lifestyle. * Subject to our acceptance ** An early withdrawal charge may apply WHAT DO WE MEAN BY PORTABLE? Seamless repatriation The unique design of the Wealth Portfolio means that you can invest in it while living abroad and then continue holding the same investments when you eventually return to the UK, without the current 15% deemed gain tax charge that can apply to other such investments once they are repatriated. (See page 8). A tailored investment To achieve this tax-efficient portability you must use a professional discretionary asset manager to create and manage a tailored investment. They make all investment decisions, choosing from a wide range of assets to ensure the Wealth Portfolio is invested in line with your objectives. Peace of mind Although using a discretionary asset manager means that you cannot influence the selection of assets, it can give you the peace of mind that your Wealth Portfolio is being expertly managed by an investment professional. The Wealth Portfolio provides preferential access to the services of Quilter Cheviot, one of the UK s largest discretionary asset management firms and a sister company to Old Mutual International. Different versions of the Wealth Portfolio are available to cater for your particular needs. Please speak to your financial adviser for more information about which version could be most appropriate for you.. 4
IS THE WEALTH PORTFOLIO RIGHT FOR YOU? The Wealth Portfolio could be the right investment if you: have at least US$375,000/ 375 000/ 250,000 to invest are happy for its value to be linked to assets managed by a professional discretionary asset manager on a full discretionary basis (meaning you have no influence on the choice of assets) don t want the responsibility and administrative burden of monitoring and managing investment assets are seeking potential growth, which can be accessed at a time to suit your needs want to benefit from an investment that can use a wide range of assets want to ensure that your investment objective, whether you are investing to grow your wealth or to generate income, or both, is in line with your changing lifestyle are a UK national looking to return to the UK in the future and want to maintain the investment without incurring a 15% deemed gain tax charge want access to a market-leading range of trust solutions. 5
The investment that changes with your life Reflecting your objectives Your investment objectives will change as your life evolves. That s why the Wealth Portfolio is designed to be so flexible. The Wealth Portfolio gives you the peace of mind that the assets linked to it are being managed by experts and when your circumstances or needs change, you can ask for your Wealth Portfolio to reflect that change. Whether you want more security for example, or greater potential for growth, you can change your objectives up to three times in any 12 month period, by completing a new Investment Mandate Instruction Form. SHARING YOUR WEALTH You may decide that you want someone else to benefit from your investment maybe a child (aged 18 or over) who is starting university, or another dependant. The Wealth Portfolio allows you to do this by assigning parts of it (called policies or segments ) to another person. By assigning some of your Wealth Portfolio, you only keep ownership of, and have access to details for, those policies of your Wealth Portfolio that are not assigned. On assignment, the discretionary asset manager will continue to manage all policies. The assignee then has control of these policies and can retain the same discretionary asset manager. They can choose when they want to make withdrawals or put more money in. They can even, in turn, decide to assign some of their Wealth Portfolio policies to another person. 6
WHY Old Mutual INTERNATIONAL? IN-DEPTH SUPPORT AND SERVICE As a Wealth Portfolio policyholder, you can take advantage of our experience, award-winning customer service and specialist administration team. Your financial adviser can also contact us for technical support on anything from tax information to administrative issues. STRENGTH AND STABILITY Old Mutual International has been a premier provider of offshore investment solutions for over 20 years. Old Mutual International is part of Quilter, a leading provider of advice, investments and wealth management both in the UK and internationally, managing over 100 billion of investments on behalf of over 900,000 customers (as at 31 March 2018). A SAFE HOME FOR YOUR INVESTMENTS The Wealth Portfolio is provided by Old Mutual International Isle of Man Limited. Old Mutual International Isle of Man is based in an established international finance centre with a stable and independent legal, political and regulatory framework. This means your investment is held in a secure offshore environment. AWARD-WINNING Old Mutual International has been recognised by experts in the investment industry. We pride ourselves on our customer service, support to financial advisers and innovation. For information about Old Mutual International s awards, please visit www.oldmutualinternational.com 7
USING A DISCRETIONARY ASSET MANAGER Ensuring Portability For your Wealth Portfolio to be portable back into the UK, one of the key criteria is that you (or a person connected to you) cannot, either directly or indirectly, select or influence the selection of the assets. This is achieved by us appointing a discretionary asset manager to manage the assets. For the portfolio to remain a tax-efficient vehicle on your return to the UK, it must not be viewed by HM Revenue and Customs (HMRC) as a highly personalised bond. The regulations set by HMRC stipulate that a bond will be considered to be highly personalised and thus be a Personal Portfolio Bond if it meets both the following conditions: (a) the policyholder links their bond to assets which are deemed non permissible under the regulations, for example stocks and shares; and (b) the policy provisions give the policyholder or anyone acting on their behalf the ability to select those linked assets. The Wealth Portfolio cannot be considered a Personal Portfolio Bond as it does not allow you, or anyone acting on your behalf, to select or influence the selection of the assets linked to it. This means that the UK deemed gain tax charge will not be applied on your return to the UK and the discretionary asset manager is able to invest in a much wider range of assets compared to other such bonds. 8
WHY CHOOSE Quilter Cheviot? Part of Quilter plc, Quilter Cheviot, is one of the UK s largest discretionary asset management firms providing individually tailored investments for those investing a minimum of US$375,000/ 375 000 / 250,000 (or currency equivalent). If you request that Old Mutual International appoints Quilter Cheviot as the discretionary asset manager on your Wealth Portfolio, it will receive the attention of a dedicated investment manager. This investment manager will: take time to understand your personal requirements, including your attitude to investment risk ensure the assets linked to your Wealth Portfolio are selected in line with your needs based on the information provided in the Investment Mandate Instruction Form be accountable for the performance and ongoing suitability of the investments within the Wealth Portfolio and take responsibility for all investment decisions work closely with your financial adviser, recognising that your Wealth Portfolio may form part of your overall financial planning strategy. Reduced costs With US$32 billion* in assets under management, Quilter Cheviot is able to use its strength to negotiate competitive terms with fund managers. Research capability Quilter Cheviot has a well-resourced research team staffed by analysts and sector specialists. They draw on internal and external research provided by a number of leading research providers to identify investments suitable for inclusion in the portfolios. Regular reports and online access You can request that Quilter Cheviot send clear, regular and comprehensive reports to keep you and your financial adviser fully informed about the structure of the investments which they hold. Their reports will not contain the full valuation of the bond as this information is provided to you by us. You can also request to have access to the Quilter Cheviot online portal which will give a daily valuation of the investments they manage. Established in 1771 Investment managers averaging 19 years investment experience Over 40,000 private clients * As at 31 March 2018. Exchange rate sourced from the Bank of England, 1 GBP = 1.4011 USD as at 29 March 2018. US$32 billion* in assets 9
THE TAX-EFFICIENT WAY TO INVEST WHY WE VE CHOSEN THE ISLE OF MAN AS OUR BASE As an offshore asset, your investment in the Wealth Portfolio can grow virtually free of income tax, capital gains tax or corporation tax in the Isle of Man. This in turn enables you to postpone and minimise tax payments by timing your withdrawals appropriately. The Isle of Man is a tax-efficient environment and Old Mutual International Isle of Man is not currently liable to income tax, capital gains tax or corporation tax on assets linked to policies, so your investment will be able to grow virtually tax-free. It s possible that withholding tax may be deducted from some of the dividends at their country of origin. However, once inside your portfolio they can accumulate tax-free *. Switching between funds and between assets by Quilter Cheviot will also be free of income tax and capital gains tax in the Isle of Man. * You may have to pay some tax, either on the growth of the investment or when money is paid out, depending on the taxation in the country in which you reside. The information in this document is based on Old Mutual International s interpretation of current relevant tax law. While we believe this interpretation to be correct we cannot guarantee it. 10
TAX-EFFICIENT WAYS TO WITHDRAW YOUR MONEY ON RETURN TO THE UK PARTIAL AND REGULAR WITHDRAWALS You can withdraw up to 5% of your initial premium each policy year (a policy year starts on the date of your initial investment and each subsequent anniversary of that date) and up to 5% of any additional invested amounts from the policy year when they are added, without any immediate UK tax charge, until you have withdrawn the original value of the investment(s) made. So, for example, you could withdraw 5% each policy year for 20 years, or 4% each policy year for 25 years without incurring a tax charge. This is known as the tax-deferred withdrawal allowance. WITHDRAWAL BY SURRENDER OF INDIVIDUAL POLICIES The Wealth Portfolio is split into a number of policies to give you greater flexibility. You can withdraw money either by a partial surrender (encashment) across all policies, or by the total surrender of one or more individual policies. This second option may be more tax-efficient in some circumstances, as the amount liable to tax is based on the difference between the surrender value and premiums paid where there have been no previous withdrawals. If you do not specify how you wish to take your withdrawal, we will process your request as a partial surrender across all policies. TIME APPORTIONMENT RELIEF Your UK tax liability, after you return to the UK, will be reduced in proportion to the amount of time you ve spent abroad. For example, if you decide to cash in your Wealth Portfolio after ten years but you have lived abroad for seven years during that time, you would only be taxed on 30% of the gains generated by your Wealth Portfolio. This can help you avoid higher or additional rate UK income tax on very large taxable gains. If you ve made additional payments into your Wealth Portfolio throughout the term, these will be counted as though you made them when you opened your portfolio. So, you would benefit from the maximum period of tax relief on all your payments. SAFEGUIDING YOUR INVESTMENT WITH A TRUST Your financial adviser may suggest that you help to safeguard your investment by placing your Wealth Portfolio in trust. This can help ensure that your wealth is used as you intended during your lifetime and after you die, and may offer some advantages in the future if, for example, there s a change in your circumstances. A trust can also benefit your family or beneficiaries after your death, by helping to avoid complicated probate issues. Another important benefit is that using a trust can reduce or even eliminate UK inheritance tax when transferring your wealth. Assets which are not held in trust and are above the nil-rate band threshold to which inheritance tax applies, (currently 325,000*), could be liable to 40% inheritance tax. * Tax year 2018/2019. Please note, if you take withdrawals to pay fees to your financial adviser, they will count as part of your annual 5% allowance. 11
SETTING UP AND RUNNING YOUR WEALTH PORTFOLIO CHOOSING YOUR INVESTMENT OBJECTIVES AND ATTITUDE TO RISK Choosing your investment objectives and agreeing your attitude to risk are important decisions, as the discretionary asset manager, Quilter Cheviot, will use them as a guide for their investment strategy. We recommend you discuss this with your financial adviser before completing the Wealth Portfolio application form and the Quilter Cheviot Investment Mandate Instruction Form. As previously described, you can provide information about your broad investment direction or strategy. However, to protect the tax treatment of the Wealth Portfolio, you cannot select any assets or influence the investment decisions. Any instructions or requests for changes to the Investment Mandate should be sent to us and not directly to Quilter Cheviot. CAN I CHANGE THE INVESTMENTS LINKED TO MY WEALTH PORTFOLIO? When considering the management of your Wealth Portfolio, it is important for you to understand that you own the policy, but the assets that are held within it are not owned by you. The assets are owned by us, Old Mutual International Isle of Man, and the assets determine the value of your policy. Because Old Mutual International Isle of Man owns the assets, we appoint Quilter Cheviot following your request for us to do so. Only Quilter Cheviot may therefore change the investments linked to your policy, but any change will take into account the investment objectives and attitude to risk detailed within the Investment Mandate. However, we understand that over time your personal circumstances can change and your original investment objective and/or risk profile may no longer meet your needs. The Wealth Portfolio provides flexibility to change the Investment Mandate for the Wealth Portfolio, up to three times in any 12 month period. 12
WHAT CURRENCIES CAN I USE? When you open your Wealth Portfolio, you choose a currency for reporting which can be any one of a number of major currencies. However, you can make your payments in other major currencies and Quilter Cheviot can invest in assets using other currencies. There may be currency risks if assets are denominated in a different currency to the currency of your bond. TAKING MONEY FROM YOUR WEALTH PORTFOLIO The Wealth Portfolio gives you flexible access to your capital subject to a minimum withdrawal amount of US$750/ 750/ 500 (or currency equivalent). The Wealth Portfolio allows you to take regular or lump sum withdrawals. There may be tax or charge implications to making withdrawals of any type. You should speak to your financial adviser before you instruct us to cash in any part of your Wealth Portfolio. You can also refer to the Charge Sheet and Policy Terms which are available from your financial adviser. Speak to your financial adviser before requesting a withdrawal and about our comprehensive range of trusts. 13
Fees and charges Details of the fees and charges payable by you and the amounts payable to your financial adviser are available from your financial adviser on request. THE WEALTH PORTFOLIO The cost of your Wealth Portfolio will consist of the following charges: Old Mutual International s charges Any charges on the underlying assets in your Wealth Portfolio Charges agreed with Quilter Cheviot to manage your Wealth Portfolio. Your financial adviser will provide full details and explanations, and the charges will also be listed for you in the Charge Sheet before you decide to invest. This information will be confirmed to you in the Charges Schedule which we will send to you when your Wealth Portfolio starts. You may need to pay an early withdrawal charge if you fully cash in one or more of the policies in your Wealth Portfolio in the early years. The amount of this charge reflects the cost to us of setting up the portfolio, including any payments (such as commission) made by Old Mutual International to your financial adviser. This charge may also apply if you cash in part of your portfolio and the amount remaining is less than either 25% of your total investment, or US$15,000/ 15 000/ 10,000 (or another currency equivalent). Quilter Cheviot S CHARGES Quilter Cheviot has a single management charge that is based on the value of the assets they manage which are linked to your Wealth Portfolio. There are no additional charges for transactions, custody, dividend/coupon collection, dealing with corporate actions, and reporting. When Quilter Cheviot is appointed as the discretionary asset manager, they are also appointed as the custodian of your Wealth Portfolio. This allows them to refund part of their Annual Management Charge (AMC), matching the quarterly administration charge of the Wealth Portfolio effectively a discount on their investment management charges and is a further benefit of using our sister company s investment management services. 14
Talk to your financial adviser Your financial adviser is best placed to understand your needs and objectives. Making an investment is an important decision, so Old Mutual International does not sell products directly to customers, but through financial advisers. They can recommend whether the Wealth Portfolio, with Quilter Cheviot appointed as discretionary asset manager, is suitable as part of your wider financial plans. They ll also work with all parties to help you benefit from this powerful investment solution. Speak to your financial adviser about taking the next steps towards reaching your financial goals. 15
This document was last updated in July 2018. Please confirm with your financial adviser that this is the most up-to-date document for your product or servicing needs. The value of your Wealth Portfolio can rise or fall over time and there is no guarantee that your premium(s) will be returned to you. You should view your investment in the Wealth Portfolio as a long-term commitment; if you cash in your Wealth Portfolio in the early years, Old Mutual International may make a charge and the amount you receive may be less than the premium(s) you ve paid. You and your financial adviser should satisfy yourselves that any particular asset chosen by the discretionary asset manager is suitably based on your needs, objectives and attitude to risk. You should also familiarise yourself with any particular risks associated with the assets linked to your Wealth Portfolio. There may be currency risks if assets are denominated in another currency, or liquidity and valuation risks for property funds, for example. The value of the assets linked to the Wealth Portfolio determines the value of the policy and can fall as well as rise. This brochure should be read in conjunction with the Policy Terms Details of your Old Mutual International Isle of Man Wealth Portfolio and where appropriate any additional product information. Your financial adviser will be able to provide you with a copy of this document and product literature. www.oldmutualinternational.com Calls may be monitored and recorded for training purposes and to avoid misunderstandings. Old Mutual International Isle of Man Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM 99 1NU, British Isles. Phone: +44 (0)1624 655 555 Fax: +44 (0)1624 611 715. Licensed by the Isle of Man Financial Services Authority. Old Mutual International Isle of Man Limited is a member of the Association of International Life Offices. Old Mutual International is registered in the Isle of Man as a business name of Old Mutual International Isle of Man Limited. Quilter Cheviot Limited: is a private limited company, registered in England with number 01923571, whose registered office is at One Kingsway, London, WC2B 6AN, England;is a member of the London Stock Exchange; is authorised and regulated by the UK Financial Conduct Authority; is regulated by the Dubai Financial Services Authority as a Representative Office (and its business name in Dubai is Quilter Cheviot Limited (DIFC Representative Office)); has established a branch in Jersey, and is regulated under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of investment business in Jersey, and by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 to carry on investment business in the Bailiwick of Guernsey; and has established a branch in Dublin, Ireland with number 904906, and is regulated by the Central Bank of Ireland for conduct of business rules. Accordingly, in some respects the regulatory system that applies will be different from that of the United Kingdom. SK13671/INT18-0949/July 2018