International Delegation A summary for financial advisers

Transcription

1 Iteratioal Delegatio A summary for fiacial advisers

2 Cotets Please ote For fiacial adviser use oly. It should ot be distributed to, or relied upo by, retail cliets. AXA Wealth Iteratioal is the brad used for the promotio of iteratioal ivestmet products offered by AXA Life Europe Limited ad AXA Isle of Ma Limited. Delegatio TM is issued by AXA Life Europe Limited. Delegatio is a registered trade mark of members of the AXA Group who claim rights to this ame. 03 What is Delegatio? 04 How could Delegatio help your cliets? 05 How does Delegatio work? 07 Delegatio Illustratios & Charges 08 The applicatio process for Delegatio 10 Cotact us Please read this documet together with the Delegatio Product Guide, Key Features Documet ad our Charges Guide. A recommedatio to ivest should ot be made o the basis of this documet aloe. You should use this iformatio together with other supportig literature to prepare a recommedatio for your cliet, alog with the cliet s persoal illustratio showig the appropriate product charges. The iformatio i this guide is based o our iterpretatio of curret law ad taxatio practice i the UK ad Irelad as at 1 December 2015, ad is depedet o idividual circumstaces.

3 Iteratioal What is Delegatio? A sigle premium life assurace ivestmet bod liked to a exteral accout maaged by a Discretioary Fud Maager. Delegatio is desiged for UK residet idividuals or trustee ivestors who wish to have their ivestmet maaged by a Discretioary Fud Maager (DFM). Uder Delegatio, a policyholder caot ifluece the selectio of assets liked to the bod. As a result of this restricted ifluece, the DFM ca access a much wider rage of assets i lie with their usual ivestmet process, ad ot available through a covetioal ivestmet bod. The DFM will maage the exteral accout i lie with a broad ivestmet madate set by the cliet, which icludes ivestmet objectives ad a risk profile. Ivestmet objectives set by the cliet must be clear ad broad eough to eable the DFM to idepedetly maage the exteral accout. The policyholder must ot idicate ay specific assets they wish to ivest i. However, they ca stipulate those types they morally object to. The cliet ca alter the ivestmet madate up to a maximum of three times i ay rollig 12 moth period. The maximum umber of chages is i relatio to the whole bod ad ot the idividual exteral accout, so where multiple DFMs are appoited the maximum umber of alteratios is still three. PLEASE NOTE Exteral accout refers to the custody accout that holds the assets maaged by the DFM. It is importat that your cliet uderstads how this bod is structured ad its restrictios before applyig. If your cliet wishes to have ay ivolvemet i the selectio of assets liked to their bod, the Delegatio is ot a suitable ivestmet optio for them. The value of the bod ca fall as well as rise ad your cliet may get back less tha ivested. Some of the fuds i which the DFM ca ivest may carry additioal risks because of the types of assets they ivest i. Please see the Product Guide for more iformatio. 3

4 How could Delegatio help your cliets? Delegatio could help your cliets by providig: Gross roll-up, which offers tax efficiet growth without the same ivestmet costraits as a covetioal bod. Tax deferred withdrawals ad assigmets. These ca allow additioal cotrol over whe ad where your cliet pays tax. Access to a broader rage of ivestmets ot available to covetioal bods. A product that removes the eed for day-to-day admi, leavig the maagemet to a DFM. Additioal features of a iteratioal bod: FOR INDIVIDUAL INVESTORS: The bod is a o-icome producig asset, therefore UK tax residets will ot eed to declare ay tax liability util after a chargeable evet is triggered. This ca be useful ot just for UK residet ad domiciled cliets, but also for o-domiciled UK residet cliets who may ow have to pay to use the remittace basis of taxatio. By usig a bod they ca potetially defer ay tax util a later date. FOR TRUSTEE INVESTORS: I additio to the above, a iteratioal ivestmet bod held i trust will ormally remove the eed for probate o the death of the last life assured, which meas the trustees ca access the bod ad distribute ay proceeds without ay uecessary delay. For more iformatio about the taxatio of our products please see A guide to the taxatio of offshore bods. PLEASE NOTE Please be aware that the death of the last life assured will trigger a chargeable evet. If your cliet is perceived by HMRC to ifluece the selectio of assets, this could create adverse tax cosequeces. 4

5 How does Delegatio work? For a bod to provide potetial tax efficiecy to ay UK residet cliet, it must ot be viewed as highly persoalised. A bod would be deemed to be highly persoalised ad regarded as a Persoal Portfolio Bod (PPB) if it met both coditio A ad B of s516 of chapter 9 of the 2005 Icome Tax Tradig ad Other Icome Act (ITTOIA). The followig table shows how both Delegatio ad covetioal bods are ot cosidered PPBs uder these rules. A Assets which are ot deemed acceptable uder the exemptios give i s517 (the permitted categories listed i s520) are allowed to be ivested i. B The policyholder, or ay related perso, has the ability to select the liked assets. CONVENTIONAL BOND 8 4 DELEGATION 4 8 Delegatio fails to meet coditio B as the policyholder, or ay coected party, is uable to select the assets which are liked to the bod. Istead a DFM is appoited to maage the assets held by the bod o a full discretioary basis. As a result, the relatioship betwee the cliet, fiacial adviser ad DFM differs from that of a covetioal bod. The images below show how the relatioship betwee these parties is structured for both Delegatio ad a covetioal bod. Covetioal bod Delegatio The cliet, or ay coected party, caot select or ifluece Cliet Cliet IFA AWI! AWI! DFM IFA DFM 5

6 How does Delegatio work? Permissible assets compariso: Delegatio ad a covetioal iteratioal bod. ALLOWABLE ASSETS CONVENTIONAL BOND DELEGATION Collective ivestmet schemes (approved exteral fuds) Cash deposits NON PERMITTED ASSETS Collective ivestmet schemes Cash deposits Equities, covertibles ad warrats Govermet ad Corporate Debt of ivestmet grade Medium Term Notes Partly Paid Shares Bods Tradig i derivatives is possible, subject to beig explaied i the Ivestmet Madate ad ot creatig udue risk i the portfolio that may place capital greater tha the amout ivested at risk The DFM must trade i lie with the Cetral Bak of Irelad s allowable assets rules as well as AXA Life Europe s Ivestmet Guidelies. I either case the bod caot be liked to the followig asset classes: Private compay shares. Private equity fuds (stadaloe fuds with o capital cotributio may be acceptable). Closed eded fuds are geerally ot acceptable (approved UK Ivestmet Trusts will be acceptable). Physical assets such as fie wies, yachts, property or works of art. Collectives from territories blacklisted by FATF, OECD or other similar bodies. Delegatio, much like a covetioal bod, has a dealig accout that is set up to hold cash, used to pay charges ad withdrawals. However, Delegatio will also have a exteral accout i every istace. The exteral accout is maaged by the DFM ad is used to coduct trasactios ad hold the bod s liked assets. 6

7 Iteratioal Delegatio Illustratios & Charges Whe preparig a recommedatio for your cliet, you will eed to obtai a persoal illustratio. The illustratio will detail product charges together with the omiated DFM s charges. However, due to the ature of these services, the charges made by the DFM ca vary sigificatly. For more iformatio o our product charges, please see our Charges Guide. NOMINATED DFM S CHARGES VAT INTERPRETATION FOR DISCRETIONARY MANAGEMENT SERVICES DFMs will typically charge a iitial fee for settig up the portfolio of assets ad a aual fee for maagig the portfolio. The level of these charges will ofte be tiered i relatio to the value of the exteral accout whe the specific charge is take. The omiated DFM may make separate charges for each trasactio (purchase/sale), or budle charges such as dealig, custodia ad maagemet fees together. There may also be additioal charges made, for example, the purchase of certai assets ca icur stamp duty. The method ad amout of charges differs betwee DFMs. For more detailed iformatio o these charges, you should cotact the DFM(s) that your cliet is cosiderig omiatig. VAT is applied withi the jurisdictio where the recipiet receivig the service is located. Curretly the Irish Reveue classifies Delegatio as a Special Ivestmet Fud, as a result the charges for discretioary maagemet services provided by the DFM to a Irish cliet are VAT exempt. Delegatio is sold by AXA Life Europe, located i Irelad. As AXA Life Europe is the legal ad beeficial ower of the uderlyig assets, AXA Life Europe appoit the DFM ad are cosidered their cliet. ILLUSTRATING ON DELEGATION We have developed a specific system to help illustrate for Delegatio bods. Whe you geerate a persoal illustratio, you ca show the DFM s iitial ad aual fees separately, for both collective ad o-collective assets. For the purposes of these illustratios we have assumed the DFM has budled their charges (icludig trasactio charges). If you are uable to provide this iformatio we recommed that you use a aual represetative cost, based o typical market practice. Where the illustratio suggests a represetative cost, based upo our iterpretatio of market practice, it remais your resposibility to esure that the actual charge used i the illustratio is appropriate to your cliet s circumstaces. PLEASE NOTE The iformatio i this guide is based o our iterpretatio of curret law ad taxatio practice i the UK ad Irelad as at 1 December 2015, which could chage i the future ad is depedet o idividual circumstaces. 7

8 The applicatio process for Delegatio If you ad your cliet have decided that Delegatio meets their eeds, here are some subjects for discussio: The ivestmet objectives ad attitude to risk that make up their ivestmet madate. Has the DFM you, or your cliet, have i mid bee approved? The DFMs charges for maagig the exteral accout. The currecy the bod is based i. How AXA s product maagemet charge will be paid. If they require withdrawals (frequecy ad amout to be paid via AXA). How they wish to pay your charges. 1 Apply 2 Review 3 Start Cliet ad adviser complete: The appropriate applicatio form. The ivestmet madate for the omiated DFM. Where applicable, the Ivestor Declaratio ad No-Maistream Pooled Ivestmets (NMPIs) opt i form. These should be submitted together with the cliet s persoal illustratio i additio to evidece ad documetatio as required. Before submissio, you should esure: You have gathered all required documetatio. Your firm s details ad charges alog with the fully completed omiatio of DFM have bee captured withi the applicatio form. Oce these steps have bee completed, ad the required applicatio, documetatio ad omiatio of DFM has bee accepted by us, a ew exteral accout will be created. Followig this the bod will be issued. PLEASE NOTE For a full list of approved DFMs please see our Delegatio - Approved Discretioary Fud Maagers documet, or cotact our customer support team o

9 The applicatio process Applyig for a Delegatio bod Cliets who are applyig o a sigle or joit basis must complete the Delegatio applicatio form for Idividual applicats. Cliets applyig as a trustee must complete the Delegatio applicatio form for trustee ad corporate trustee applicats. All applicatio forms are available whe you are registered o our website or from us o request. I these applicatio forms your cliet will: Specify the umber of lives assured. Supply the details of the trust if applyig as a trustee. State the ivestmet amout. Nomiate their chose DFM. Cofirm their ivestmet objective ad attitude to risk. Provide evidece of the source of wealth. Provide suitable idetificatio ad address verificatio. Specify how our product maagemet charge is take from the bod. Specify the amout ad frequecy of your adviser charge. If your cliet would like to set up ay additioal adviser charge agreemets, they must complete our Adviser Charges Pack, available from our website SOPHISTICATED OR PROFESSIONAL INVESTORS Sophisticated or professioal ivestors wishig to ivest i No- Maistream Pooled Ivestmets (NMPIs), icludig Uregulated Collective Ivestmet Schemes (UCIS), must complete ad submit the Ivestor Declaratio ad No- Maistream Pooled Ivestmets (NMPIs) Opt I form alog with their applicatio form. If this form is submitted, the adviser must collect ad retai evidece that cofirms the cliet s suitability to do so. PLEASE NOTE If we are asked to facilitate a iitial adviser charge outside of the bod, it will oly be paid to you whe the case issues ad i the meatime o iterest will accrue to you or your cliet. The bod will ot be issued util the DFM exteral accout has bee set up ready to accept the premium. This could be delayed if: Your cliet does ot iclude a acceptable DFM Ivestmet Madate with their applicatio. Ay part of the applicatio, icludig ay additioal forms where applicable, are ot properly completed ad submitted. The omiated DFM s cotrols have ot bee pre-approved by us i order to maage a Delegatio bod. 9

10 Cotact us To fid out more about Delegatio please cotact us Telephoe +44 (0) Visit AXA Life Europe Limited Please ote that s are ot secure as they ca be itercepted, so thik carefully before sharig persoal or cofidetial iformatio i this way. AXA Life Europe Limited 3rd Floor, Guild House, Guild Street, IFSC, Dubli 1, Irelad AXA Wealth Iteratioal is the brad uder which the products of a umber of AXA compaies are marketed. AXA Life Europe Limited is authorised by the Cetral Bak of Irelad ad subject to limited regulatio by the Fiacial Coduct Authority ad Prudetial Regulatio Authority. Details about the extet of our regulatio by the Fiacial Coduct Authority ad Prudetial Regulatio Authority are available from us o request. Registered i Irelad uder umber Head Office: 3rd Floor, Guild House, Guild Street, IFSC, Dubli 1, Irelad. Telephoe: ifo@axalifeeurope.ie Web: Member of the AXA Group. Telephoe calls may be recorded. ALEDIFA/December 2015/MC002797