Your Investment Proposal

Transcription

1 Your Investment Proposal Your Investment Proposal Introduction This proposal provides: A concise picture of the services which we offer and how your money will be invested. The likely investment outcomes that you might expect if you choose to invest. It is based upon the information you have provided us so far. Please take time to read and understand the contents of this report and feel free to contact us on the number below if you have any questions. If you would like to proceed and set up this investment portfolio, you can do so online. We will need to ask you a few more questions of a more personal nature so we can provide you with a personal recommendation that meets the suitability requirements of the Financial Conduct Authority. When doing so we will provide you with further advice. If you want to set up this proposed investment portfolio: Go to Index/7c39dddc-5c0b-4c22-8a2b-596db9d2f36e in order for us to confirm that this course of action is suitable for you, in light of what you told us. If you need advice or assistance: us at wowmoney@thewowcompany.com Or call us on is authorised Page 1 of 19

2 Contents Your Summary page 3 This section provides a snapshot of the key information supporting your investment proposal. About this Service page 5 Who we are, what is simplified advice and the service we provide. Your Protection - Security of your investments page 6 The benefits of receiving advice rather than picking investments yourself. Your Investment Details page 7 What you have told us about yourself and the investment you would like to make. Your Risk Grade page 8 How we assessed your risk tolerance and capacity to calculate your risk grade and why this matters. Your Investment Proposal page 10 The asset classes, underlying investments and historic returns for your proposed investment. The Charges page 12 Our total charge for this service clearly explained. Setting up your Account page 14 How to set up your investment online. APPENDIX 1 - Risk Questionnaire Answers page 15 APPENDIX 2 - Investment Fund Commentary page 16 APPENDIX 3 - Important Information page 18 is authorised Page 2 of 19

3 Your Summary Your Summary Past performance should not be taken as a guide to future performance. The value of investments can go down in value as well as up, so you could get back less than you invest. You will have invested: 35, Projected return: 36, , How your money will be invested Asset Class Percentage Fixed Interest % Developed Markets Equity % UK Value and Income Equity % UK Growth % Fixed Interest Developed Markets Equity UK Value and Income Equity UK Growth Property Property % Historic returns This graph shows how your investment would have performed if you had invested twenty years ago. Portfolio Cash All Share G ilt Y ears 400% 350% 300% 250% 200% 150% 100% Performance What is this graph? This is how your optimised investment portfolio would have performed over the last twenty years compared to the three main asset classes. We have balanced the assets within your proposed investment portfolio to target the maximum potential return for the level of risk that you have chosen to take. What history tells us A gain of 20.2% in 1997 What is this graph? This graph shows how your risk grade 6 investment would have performed if you had invested it twenty years ago, highlighting the best and worst calendar year returns. A loss of -16.6% in 2008 is authorised Page 3 of 19

4 Your Summary Your details Gender Male Age 30 to 39 Working status Employed Full Time Marital status Married or in a Civil Partnership Financial dependants Yes Gross annual income 40,000 to 59,999 Our charges Initial charge 0.50 % On-going charges 0.94 % is authorised Page 4 of 19

5 About this Service About this Service Our simplified advice service does not offer a holistic assessment of your financial situation or take into account any existing investments that you may hold. Instead it provides a simple, low cost way for you to invest your income or capital to achieve the best returns for the level of risk you are prepared to take. Before committing to any investment you should be happy that your priority needs have been met. This means you should make sure: You have adequate access to liquid cash. You have adequate and appropriate financial protection for you and your family. You do not have any existing debts that would be better off repaid or reduced. If you have any doubt whether your priority needs have been met please contact us for guidance. This service offers investment through general investment accounts and individual savings accounts. If you wish to apply for a regulated pension product, you cannot do so via this service and should contact us for guidance. The return that you hope to achieve from your investment is, to a large extent, determined by the risk that you choose to take. Risk is an unavoidable component of investing in stock market linked investments. Before proceeding you should accept and agree that your investment may go down as well as up. If you accept our proposal and set up this investment portfolio we will provide you with your own online account that will allow you to track and manage your investment with us. Benefits of this service This service will provide you with seven key benefits; 1. Regulated advice- The reassurance that our advice is regulated by the Financial Conduct Authority and covered under the Financial Ombudsman scheme. 2. Tax guidance - Guidance to help you optimise the tax allowances afforded to you under the New Individual Savings Account (NISA) rules. It does not provide personal tax planning. 3. A risk graded investment portfolio - Optimised to provide the best returns for your personal level of risk. 4. On-going investment portfolio management - Regular rebalancing of your asset allocation and review and reaffirmation of underlying funds to ensure your investment portfolio is best placed to meet you expectations. 5. Your online account- An online service to allow you to track and manage your investment portfolio as well as receive on-going advice to ensure your investment remains suitable for your needs. 6. A single online valuation - The ability to hold all your ISA and GIA investments in one place, with a single valuation. 7. Advice when you need it - The reassurance that an Adviser is always in the background to offer guidance and advice when you need it. If you require advice on any of the areas not covered by this service or have a desire for your investments to take into account your ethical considerations, please contact us on Over time your personal circumstances will change. Within your online account, you are free to update your personal details as often as you wish. When you do so, we will advise you on the on-going suitability of your investment portfolio and recommend any changes to your risk grade. If you choose to accept a future recommendation we will automatically adjust your asset allocation for you at the click of a button. is authorised Page 5 of 19

6 Your Protection - Security of your investments Your Protection - Security of your investments Before we provide advice to you in the form of a personal recommendation we undertake an extensive due diligence process. As a result of our process we selected Parmenion to provide the administration and investment management that supports our simplified advice service. Parmenion is an independent and privately owned company founded in They are backed by some of the most experienced investment and technology executives in the industry. They do not take on clients directly, but only offer investment and administration solutions through professional wealth management and financial planning firms. Like us, they are authorised and regulated by the Financial Conduct Authority. Financial Services Compensation Scheme As an authorised firm, Parmenion pays towards the UK's Financial Services Compensation Scheme. This is in place to protect private individuals against losses from the failure of an authorised business. Full details are available at Regulatory protection The UK's Financial Conduct Authority (FCA) has detailed rules for the handling and oversight of client assets and money and requires extensive pre-recruitment and ongoing checks on, and the registration of, individuals involved in this area of our business. The FCA's rules place personal responsibility on such approved persons to ensure compliance with Client Asset rules and a range of sanctions exist which act as a deterrent to the misuse or careless handling of client assets. is authorised Page 6 of 19

7 Your Investment Details Your Investment Details Within the online process you provided us with sufficient information to prepare this investment proposal for you. In order to confirm it's suitability to your circumstances we will require further details from you. However, so far you have told us that you are between 30 to 39 years of age. You are Married or in a Civil Partnership, and you have financial dependants. You are Employed Full Time. Your understanding of investment matters is Very Good and you are Very Comfortable about investing in the stock market. Your investment You are planning to invest a lump sum of 5, and a monthly amount of Your objectives and time horizon You are investing for an expected period of at least 10 years. You do not anticipate needing to withdraw significant capital or income sometime in the next 5 to 10 years. You are aiming to achieve returns which correspond with the risk grade detailed in 'Your Risk Grade' section. Any income generated by the investment portfolio will be reinvested for growth. Amount contributed to your ISA by end of first year Individual Saving Account: 8, Amount contributed to your GIA by end of first year General Investment Account: 0.00 ISA G IA Your ISA allowance This service offers you the following options to utilise your ISA: You can put your full ISA allowance into a Stocks and Shares ISA within this service. Any excess contributions over your ISA allowance will then be invested in a General Investment Account. You can utilise your ISA allowances elsewhere and use this service to invest solely in a General Investment Account. You stated that you would like to use your ISA allowance. To ensure you make optimum use of your tax privileged ISA allowance, we will apply all contributions up to the current limit to your ISA. Any excess contributions will be applied to your GIA. is authorised Page 7 of 19

8 Your Risk Grade Your Risk Grade We firmly believe that the returns you receive from your investments are inextricably linked to the amount of risk you take, after all there is 'no such thing as a free lunch'. The return from any investment is simply the economic reward you hope to receive for accepting a certain degree of risk. The reward paid by a riskier investment is expected to be greater because the possibility of loss is greater. Your willingness and ability to accept risk are, by far, the most important factors in determining long-term investment returns which we have understood to be: Your Risk Tolerance questionnaire result: 7 You selected a Risk Tolerance level: 7 We propose risk grade: 6 Your Risk Profile To determine the right level of risk for your investment requires us to assess two critical factors; Risk Tolerance - Your personal sensitivity to the ups and downs of investment; and Risk Capacity - Your economic ability to manage financially in the event of a disappointing investment outcome. This assessment has been made having taken you through an academically robust 3-stage process to assess your tolerance and capacity to accept investment risk. Your results were as follows: Stage 1 - Risk tolerance questionnaire Your risk tolerance grade was 7 We asked you 9 questions that assess your psychometric willingness to accept risk. These questions are intended as a guide to provide you with an academically credible foundation from which to explore your personal tolerance to investment risk. Your answers can be reviewed in Appendix 1. provided you with 2 charts that demonstrate what the likely outcomes might be for each risk grade. At this stage we encouraged you to assess the likely outcomes from different risk grades and also target and confirm your expected investment duration and amounts. Projected Returns Years 3000k 2500k 2000k 1500k 1000k 500k You will have invested 35, There is a 90% chance your investment will be worth 36, to 66, When investing there is no guarantee of the return you will receive, however to provide a guide to what you might reasonably expect, the shaded area of the above graph highlights the returns that have historically been achieved in 90% of investment outcomes. There is a 5% chance of receiving less and a corresponding 5% chance that you could receive more. The top point demonstrates the return assuming the best outcomes whilst the lower point highlights the worst. The area shaded in red represents the period when some investors may have received a lower return than the amount invested. Historically the shorter your investment time period, the higher the likelihood of a loss. Remember investments in the stock market can go down as well as up and you may get back less than you invested. Past performance is no guarantee of future returns. Refer to Appendix 3 'Future Projected Returns' for more detail on how this is calculated. Value of investment Stage 2 - What risk means You selected risk grade 7 Your risk tolerance result provided you with a grade on a risk scale of 1 to 10 with 1 being low and 10 being high. To help you select the right risk grade for you, we is authorised Page 8 of 19

9 Your Risk Grade Potential for Loss Years When viewing projections over longer durations it is very easy to focus on overall returns. This graph extrapolates the red area in the Projected Returns graph which represents the period where the return was less than the amount invested. This is particularly relevant if your situation changes and you are forced to cash in your investment in the early years. Whilst higher levels of risk may provide the prospect of higher returns over the longterm, the flip-side is the period where a potential loss could be encountered is extended. You selected risk grade 6. Based upon the worst 90% of investment outcomes, you would be likely to receive your initial investment back after 7 years. What history tells us A gain of 20.2% in 1997 A loss of -16.6% in 2008 It is a natural human reaction to react negatively towards sudden falls in value. History tells us that many investors have a tolerance to certain levels of loss before they feel compelled to cut their losses and cash in their investments. Value of investment happy to accept a potential loss of % in any given year in return for the potential gains that the portfolio might deliver. These numbers are historic and there is no guarantee that they will be repeated. They do however provide you with a picture of the gains and losses that investors have experienced within each risk grade and highlight the concept of risk and reward. Refer to Appendix 3 'Historical maximum gain and loss figures' for more detail on how this is calculated. Stage 3 - Risk capacity questionnaire Your risk grade result was 6 It is sometimes the case that people have a tolerance to accept levels of risk that unknowingly could have a negative material impact on their standard of living. Particularly if they need to cash in their investment at an inappropriate time. To guard against this we asked you 7 questions designed specifically to assess your economic capacity to accept the level of risk that you chose in stage 2. You indicated that you are likely to withdraw capital or income from the portfolio within 5 to 10 years. Investing significantly in higher risk assets is something that should only be undertaken for longer time periods. Accordingly we would suggest that the portfolio risk grade should not exceed 6. You indicated that over a 5 year period a 10% to 20% loss in value would endanger your current standard of living. This implies some caution in the extent to which your portfolio invests in risky assets is justified. Accordingly we would suggest that the portfolio risk grade should not exceed 6. You chose to accept our proposal and selected risk grade 6 Such knee-jerk reactions can crystalise investment losses at an inopportune time. When exiting under such emotion, many investors miss the opportunity to participate in the recovery that historically is likely to follow. Our intention within this section is to help you understand the maximum gains and losses experienced by each risk level in monetary terms over the past 20 calendar years. By selecting risk grade 6 you are confirming that you are is authorised Page 9 of 19

10 Your Investment Proposal Your Investment Proposal Based on the information you have provided so far we are able to propose the following investment portfolio: Fixed Interest Developed Markets Equity UK Value and Income Equity UK Growth Property Investment Manager Investment Solution PIM Strategic PIM Strategic Passive Asset Allocation Methodology Investment Style Risk Grade 6 Initial Lump-sum Investment Amount Strategic Passive 5, Monthly Investment Amount Estimated Yield/Income 2.81 % Yield/Income Reinvested/ Paid Out Reinvested Cash on Account 2.00 % Investment solution The PIM Strategic Passive Investment solution enables clients to divide their investment across various different assets. The amount invested into each asset is dependent upon the clients' risk profile and, once agreed, is kept constant with periodic rebalancing. The investment managers do not have the authority to change the percentage weighting of the portfolio in each asset but invest for the long term in passively managed collective funds. How your money will be invested Asset Class Percentage Fixed Interest % Developed Markets Equity % UK Value and Income Equity % UK Growth % Property % Historic performance Risk Grade 6 Portfolio Cash All Share G ilt Y ears Average Annual Return = 7.25 % 400% 350% 300% 250% 200% 150% 100% The illustration above shows the returns should your investment have been made into the underlying asset classes twenty years ago. Please note this illustration is not a forecast of expected returns nor an illustration of the investment manager's performance: it solely reflects the actual historic performance of investing into an investment portfolio comprising the asset classes selected. It is not an indication of any maximum or minimum amount you may receive in the future. (Source: Parmenion calculated standard deviation of total benchmark returns in sterling over twenty discrete years ended Dec 2013.) Refer to Appendix 3 'Historical Returns' for more detail on how this is calculated. Funds selected Fixed Interest Fund % Value Performance Vanguard - Global Bond Index Hedge Inc GBP TR in GB L&G - All Stocks Index Linked Gilt Index M Inc TR in GB % % is authorised Page 10 of 19

11 Your Investment Proposal Fund % Value Vanguard - UK Government Bond Index Inc GBP TR in GB Vanguard - UK Investment Grade Bond Index Inc GBP TR in GB 5.00 % % Developed Markets Equity Fund % Value Vanguard - FTSE Developed Europe ex UK Equity Index Inc TR in GB Vanguard - US Equity Index Inc TR in GB Vanguard - Japan Stock Index Inc GBP TR in GB Vanguard - Pacific ex Japan Stock Index Inc GBP TR in GB 5.00 % % % % UK Value and Income Equity Fund % Value Vanguard - FTSE UK Equity Income Index Inc TR in GB % UK Growth Fund % Value Vanguard - FTSE UK Equity Index Inc TR in GB % Property Fund % Value Threadneedle - UK Property Inst Inc TR in GB 2.00 % Ignis - UK Property I Inc TR in GB 4.00 % L&G - UK Property Feeder I Inc TR in GB 4.00 % is authorised Page 11 of 19

12 The Charges The Charges Our simplified advice service aims to provide you with the right amount of advice to allow you to invest in confidence. Our charges are designed to ensure that you only pay for the services that are essential to provide you with the best opportunity of achieving the optimum return for your proposed level of risk. Your charge for this service is made up of two elements: An initial charge on money invested for both the portfolio recommendation advice and the administration services needed to establish your portfolio and to collect and invest the cash payments. An on-going charge to cover the costs of support, investment management, custody and administration of your portfolio. If you accept this proposal and invest an initial lump-sum of 5, and a monthly amount of , your charges will be: Charges on the investment of new money into your portfolio: Description Charge In monetary terms Reason for charge Initial charge 0.50 % on your lump-sum of 5,000.00, 1.25 on your monthly amount of Dealing charge 0.00 % 0.00 on your lump-sum of 5,000.00, 0.00 on your monthly amount of Total charge 0.50 % Portfolio recommendation advice, portfolio establishment, the collection and investment of the cash payments. Executing the purchases of securities. The initial charge is an aggregate charge covering the portfolio recommendation advice and the administration needed to establish your portfolio and to collect and invest the cash payments. The administration charges are levied by the service administrator. The administration charge has been negotiated by ourselves with the service administrator on terms we consider cost efficient and beneficial to you. The advice component of the initial charge levied on monthly payments in respect of the portfolio recommendation advice will automatically terminate after the fifth anniversary (if there has been no change to your monthly payments). Therefore, if you continue to make a monthly payment of for a five year period, the total amount deducted in respect of the portfolio recommendation advice will be Thereafter the initial charge will reduce to 0.25 % solely in respect of administration charges for the collection and investment of cash payments. Charges for the on-going maintenance on the investment of new money into your portfolio: Description Charge Reason for charge Adviser charge 0.45 % On-going service provided online and access to personal support. Custody charge 0.30 % On-going administration and safe custody of your assets. Investment charge 0.00 % The charge for the discretionary investment management of your portfolio. Fund manager charge 0.19 % The total charges levied by the funds in which your portfolio will be invested. Total Annual Charge (TAC) 0.94 % The TAC refers to the Total Annual Charge (TAC) that a client will pay to service their investment portfolio. This includes the total cost, or On-going Charge Figure (OCF), of the underlying funds in which your portfolio is invested. Your TAC is 0.94 %. is authorised Page 12 of 19

13 The Charges Your total annual charge is 0.94 %. Each month you will be charged one twelfth of this percentage. Based on your initial investment value after the first month's investment of 5, this would equate to Over the first 12 months based upon your existing investment this would be This amount could be higher or lower depending on the investment value. You have the right to cancel our advice charge at any time, at which time the services available to you through the website will be reduced to valuations and basic information only. All other support, review, investment management and advice services will be turned off. The Parmenion custody charge varies according to the total funds under management, the breakdown of these charges is shown below. From Amount To Amount Custody charge , % 300, , % 600, ,499, % 1,500, ,000, % Other charges: Description Charge Reason for charge Dealing charge (on purchase of funds) 0.00 % Executing the purchases of securities. Account closure 0.00 The charge for closing your account. Withdrawing money 0.00 The charge for withdrawing money from your account. For paper valuations 5.00 The charge for receiving paper valuations if chosen, however the default is digital valuations, which are free. Other costs may be applied by the underlying fund managers such as a Dilution Levy or additional initial charges, on an ad-hoc basis. These are infrequent but may be applied from time to time to stem inflows/outflows and stop liquidity issues. is authorised Page 13 of 19

14 Setting up your Account Setting up your Account We trust you found our proposal informative. If you are happy with our proposal and would like to set up an account and set up your investment portfolio or you would like to amend your investment details then follow the link below: Index/7c39dddc-5c0b-4c22-8a2b-596db9d2f36e If you are unsure about any aspect of the proposal, the service we offer, or require advice, then please us at or call us on is authorised Page 14 of 19

15 Appendix 1 - Risk Questionnaire Answers Risk Questionnaire Answers Your Answers to our Risk Tolerance questionnaire were as follows: Question Which of the following words do you most associate with investing money? In the past, have you come to regret important financial decisions? I prefer the certain returns of a deposit account to risky investments I am willing to take substantial financial risk expecting to earn substantial returns I see a fall in value of an investment as an opportunity for me to buy more at a lower price The possibility of a high return is well worth the risk of loss Suppose that you are considering investing 10,000. There is an equal chance that your investment will change by the amounts shown. Select the portfolio outcome you would feel most comfortable with. Answer Opportunity Seldom No Strong Opinion No Strong Opinion Agree Agree Portfolio D How would you rate your understanding of investment matters? How comfortable are you investing in the stock market? Very Good Very Comfortable Your Answers to our Risk Capacity questionnaire were as follows: Question The amount you are proposing to invest, ignoring any value in your own house, represents: Answer A very minor part of my savings I anticipate needing to withdraw significant capital or income from the portfolio: Sometime in the next 5 to 10 years Your portfolio loses 25% of its value: Over a five year period what level of loss on these investments could you sustain before it became a real danger to your current standard of living? Over the next few years, do you expect your future earnings or income to: You have time for the portfolio to recover in value 10% to 20% Rise slightly How secure are your current and future earnings or other income (e.g. salary, pension, interest)? Secure How important to your household budgets would any income from this investment be? Not important at all is authorised Page 15 of 19

16 Appendix 2 - Investment Fund Commentary Investment Fund Commentary Fund comments Vanguard - Global Bond Index Hedge Inc GBP TR in GB The objective of this fund is to provide returns consistent with the performance of a market-weighted index of global government, government-related agencies, corporate and securitised fixed-income investments. L&G - All Stocks Index Linked Gilt Index M Inc TR in GB The objective of the scheme is to track the total return of UK Government Securities as represented by the FTSE Actuaries Government Securities All Stocks Index after adjustment for management charges and taxation, by investment in a representative sample of stocks. Use may be made of optimisation techniques to construct and maintain a portfolio, the underlying value of which exhibits the performance characteristics of the Index Vanguard - UK Government Bond Index Inc GBP TR in GB This fund aims to provide returns consistent with the performance of the Barclays Capital Global Aggregate U.K. Government Bond Index, a market-weighted index of U.K. Government fixed-income securities denominated in Pounds Sterling. Vanguard - UK Investment Grade Bond Index Inc GBP TR in GB The fund seeks to provide returns consistent with the performance of the Barclays Capital Global Aggregate U.K. Non-Government Float Adjusted Bond Index, a marketweighted bond index of the pound sterling, investmentgrade bond market, excluding government bonds with an intermediate-term weighted average maturity. Vanguard - FTSE Developed Europe ex UK Equity Index Inc TR in GB This Fund seeks to track the performance of the FTSE Developed Europe ex UK Index. Vanguard - US Equity Index Inc TR in GB The aim of this fund is to track the performance of the S&P Total Market Index. Vanguard - Japan Stock Index Inc GBP TR in GB The fund seeks to track the performance of the index, which emphasises stocks of companies located in Japan. Vanguard - Pacific ex Japan Stock Index Inc GBP TR in GB The fund seeks to provide long-term growth of capital by tracking the performance of the index, which is made up of common stocks of companies located in Australia, Hong Kong, New Zealand and Singapore. Vanguard - FTSE UK Equity Income Index Inc TR in GB The aim of this fund is to track the performance of the FTSE U.K. Equity Income Index. Vanguard - FTSE UK Equity Index Inc TR in GB This fund aims to track the performance of the FTSE All- Share Index. Threadneedle - UK Property Inst Inc TR in GB The Fund aims to provide Unitholders with an indirect investment exposure to a diversified portfolio of property assets in the United Kingdom. Ignis - UK Property I Inc TR in GB To achieve income and capital growth through investment predominantly in UK real commercial property. L&G - UK Property Feeder I Inc TR in GB The trust is a bricks and mortar property fund that takes a top down and bottom up approach to selecting properties for inclusion in the portfolio. The former looks at which sectors e.g. offices, retail and geographies in which to invest. The latter examines the individual properties and the potential to add value through management. A target rate of return is set for each property to reflect its risk. The fund maintains a liquidity level of 15%. General risks which can result in a fall in the value of funds Economic factors such as inflation, changes in interest rates and supply and demand can affect all investments. Your investment portfolio is designed to be held for the longer term as any investment in the stock market is not is authorised Page 16 of 19

17 Appendix 2 - Investment Fund Commentary suitable for money that may be needed at short notice. Where income is the focus of the investment portfolio, this can reduce the prospects for capital growth and in some cases the capital value may fall. Governments can change the way ISAs, (Individual Savings Accounts) and other investments are taxed and the value of these tax shelters will depend on your own circumstances. The value of investment and the income you receive can fall as well as rise. Stock market investments should always be regarded as long term investments. Past performance is not a guide to future returns and you may get back less than you invested. Risks which can result in a fall in the value of specific funds a) Income funds (and some bonds) usually take part or all of the annual management charges from capital rather than income. b) Emerging markets are generally less well regulated than the UK and it can sometimes be difficult to buy and sell investments in these areas. There is also an increased chance of political and economic instability and so these funds carry higher risks than those invested in larger, more established markets. c) Smaller Companies Funds invest in a relatively small number of companies and so carry more risk than funds which are more diversified. They are also more volatile and sometimes more difficult to trade than larger companies. d) Funds that invest in high yield bonds, carry a greater risk of default than investment grade corporate bonds. Economic conditions will also have a greater effect on price. e) Funds which invest in specific sectors may carry more risk than those diversified across a number of different sectors. f) Funds which are permitted to use geared investments such as warrants, options and derivatives to magnify returns carry a higher degree of risk than other equity investments. It is possible that the fund may suffer sudden and large falls in value and could even equal the amount of the investment, in which case you would get nothing back from this part of your investment portfolio. more difficult than trading other types of assets. Therefore in exceptional circumstances, dealing in property funds may be suspended and there may be a delay in selling. h) Funds that invest in derivatives, capital shares, income shares or zero dividend preference shares may carry higher risks and may suffer sharper falls than other funds because these types of investments do not rise and fall in the same way as other stock market investments. i) Funds that invest in Hedge Funds may have risks due to speculative investment practices, complicated tax structures, high charges, and in some cases lack of transparency. j) As the underlying holdings of Exchange Traded Funds are openly traded securities, they will be vulnerable to market price fluctuations and the value of the investment may rise or fall in value and neither the capital or income is guaranteed. Although ETFs will closely track an index, during times of market volatility, the tracking accuracy of an ETF may be affected. k) Only investments/funds that are authorised and regulated by the UK Financial Conduct Authority are eligible funds in respect of the UK Financial Services Compensation Scheme (FSCS). This means if an underlying fund is regulated under say the Irish regulator, for example, the FSCS compensation limits, should the fund default, will not apply. l) On occasion an underlying stock holding within a fund may be classed as illiquid for a period of time. Should this be the case at the time you wish to cash in your investment, the illiquid portion may not be able to be paid out as cash. It is because of all these underlying risks that Parmenion carry out such vigilant due diligence and research into the funds that we use. All the underlying risk factors are taken into account when assessing and researching funds and the funds selected for your investment portfolio fit with your overall stated tolerance and capacity to risk. If you disagree with any of the investments that make up your investment portfolio (and the associated risk) it is important you discuss this with us before proceeding. g) Where funds invest in property, valuations are made by independent agents and are based on subjective opinions. Buying and selling property is usually more expensive and is authorised Page 17 of 19

18 Appendix 3 - Important Information Important Information This Investment Management Proposal is produced at this stage of the Online process to provide you with an initial overview of asset allocation and information about the types of underlying investments for this risk grade. It also gives you time to digest information and think about the risks and commitments before proceeding. The Online process has not, at this stage, assessed whether or not this investment is suitable for you in light of your personal circumstances, this is undertaken during the second part of the Online process. You will need to log back into the system and complete the process to the end in order for a suitability assessment to be made that is tailored to your personal circumstances. If you decide to purchase the underlying investments through a third party and not complete your investment using the Online process, you must understand that the investment may not be suitable for you and accept that there may be factors not taken into account as yet that would make you re-consider the investment choice or affect the risk grade chosen. Any assumptions that have been used were set out earlier in this report, and we would wish to remind you again that the proposal has not taken into account any of your other existing investments and assumes your primary needs have already been met. We would also wish to point out the following to you, which again, is vital you understand before proceeding with any investment. Understanding your Investments This report is prepared on the basis of the proposed asset allocation shown earlier in this document. Should you decide to proceed with us, it is important to understand that it is the responsibility of the investment portfolio managers (Parmenion Investment Management - PIM) to research and select investments within each asset class, to execute the required trades on your behalf (as you will give them your authority to act at their discretion), to monitor the investment portfolio and to make changes as when necessary. It is the portfolio managers' job to make sure that the portfolio remains in line with the agreed risk grade by undertaking periodic rebalancing. You should also understand the differences in risk and reward within your proposed investment, as it is this that will ultimately determine the overall return from your investment portfolio. At the broadest level you will be investing in a range of asset classes; investments into units within collective investment vehicles both in the UK and internationally, fixed interest investments into government and corporate loan stocks, property investments and investment into cash deposits and similar cash vehicles. Each asset class can be sub-divided into smaller components but fundamentally, each offers a different potential return for any given level of risk. The correct division of the investment portfolio between asset classes, or even a decision to invest in just one asset class, is determined by your risk profile and investment objectives. This balance may, of course, be varied should your circumstances change at any time in the future. Riskier investments may be expected to produce higher returns over the longer term, but with a proportionally greater possibility of loss. The value of all investments and the income you receive can fall as well as rise. Stock market investment should always be regarded as long term investments. Past performance is not a guide to future returns and you may get back less than you invested. Governments can change the way ISAs, and other investments are taxed and the value of these tax shelters will depend on your own circumstances. Future projected returns - How this is calculated Parmenion have forecast portfolio performance, based on 90% of simulated outcomes using various rolling investment horizons over the last 20 years. The top and bottom 5% of outcomes are excluded, to make the chart more realistic and useful to potential clients. These figures are based on your investment solution as highlighted in 'Your Investment Proposal' section. These forecasts have been calculated net of all initial and on-going charges payable to both Parmenion and your Adviser as listed in the 'Charges' section, with the exception of on-going dealing charges which have been excluded as they are not charged on passive solutions and are variable in nature for active solutions. The charges are combined to calculate a Total Annual Charge (TAC). This is then converted to a monthly figure, and then deducted from the forecasted monthly returns, to provide a net return per month. Tax is not taken into account within this analysis, as it will depend on your personal circumstances. is authorised Page 18 of 19

19 Appendix 3 - Important Information Historical maximum gain and loss figures - How this is calculated The maximum gain/loss figure demonstrates the maximum gain/loss in value (including capital and income return in % terms) that any client could have experienced over a rolling 12 month period, from 31st December 1992 to 31st December These figures implicitly assume an initial lump-sum investment from the beginning of any month. Performance data is based on the simulated performance of the relevant market indices, in the proportions equal to that of the existing underlying investment portfolio structure, and as such exclude any impact from charges, on-going cash flows or taxation. These figures are shown by Parmenion to demonstrate the extremes of the returns distribution that could have been experienced by clients over a sufficiently long period in the past, to cover the majority of market cycles and various extreme scenarios and inform client discussions. This data is purely based on historic figures and should not be taken as any guarantee of the future or likely returns. Historical returns - How this is calculated The illustration shows the returns should your investment have been made into the underlying asset classes twenty years ago. Please note this illustration is not a forecast of expected returns nor an illustration of the investment portfolio manager's performance: it solely reflects the actual historic performance of investing into an investment portfolio comprising the asset classes selected. It is not an indication of any maximum or minimum amount you may receive in the future. (Source: Parmenion calculated standard deviation of total benchmark returns in sterling over twenty discrete years ended Dec 2013.) is authorised Page 19 of 19