Investment Products
Heritage Financial Services offer a low cost, non-advisory route into collective investments and bonds.This is sometimes called a discount broker service. Most of the charges for taking out an ISA or an OEIC or a Unit Trust are levied at the point of investment and are known as the Initial Charge. This charge includes the fund manager and administrative costs. When a broker such as us introduces business to the investment house, the broker is remunerated by way of an Initial Commission varying from 0-4% and is paid out of the Initial Charge. Introducers have the option to rebate part or all of their Initial Commission, hence the 'discount'. The Initial Charge is levied whether or not you are recommended to a particular fund or go direct yourself. Heritage rebate all of the Initial Commission we receive from ISAs, OEICs, Unit Trust and PEP transfers & re-registration to the investment company so more of your money can be invested. A typical example would be a fund with an Initial Charge of 5%. We are paid 3% Initial Commission and after rebating our 3% the net Initial Charge will be 2% - a 3% discount. Brokers are also paid a Servicing Commission which is typically 0.5% p.a. of the fund value and is paid from the Annual Management Charge (AMC), not in addition to it. Heritage will not rebate the Servicing Commission from collective investments. We retain only 1% commission for bonds and will not receive any Servicing Commission. Because of the volume of business that we give to the investment companies, we have been able to negotiate further discounts out of their profit margin to get the best investment deals for you. That is why it is cheaper to invest through Heritage.
Heritage Financial Services uses the FundsNetwork investment platform beause it offers the highest number of investment houses and funds and maintains an excellent website from which to obtain information and make any future funds switches.
Products Available
Individual Savings Accounts (ISAs)
Because of their advantageous tax position, the annual ISA allowance in most cases should be used first of all. There is no Capital Gains Tax (CGT) to pay on switching funds, partial or full surrenders. ISAs cannot be covered by Trusts for Inheritance Planning (IHT). Applications can only be made on a single life basis by anyone 18 years or older.
Open Ended Investment Companies (OEICs) & Unit Trusts
OEICs are not as tax efficient as ISAs, but there are alternative benefits. Everyone has a CGT allowance and when surrendering or taking regular withdrawals, as long as any gains made from inception do not exceed the CGT limits, there will be no additional tax liability. Unlike ISAs or PEPs switching funds will trigger a potential CGT liability. Unit Trusts, like OEICs, are open ended companies that can expand and contract according to market conditions. OEICs have a single pricing system in other words, the buy and sell price are the same. Unit Trusts have a dual pricing system known as the bid – offer spread, meaning there is a difference between the unit price you buy and the unit price you sell at. OEICs and Unit Trusts cannot be covered by Trusts for Inheritance Planning (IHT). Applications can be in single or joint in the name of anyone 18 years or older although children under the age of 18 can be nominated to benefit from the investment once they reach the age of 16.
Personal Equity Plans (PEPs)
Although PEPs have now been succeeded by ISAs, they retain the same tax free investment status, with many people still holding monies in PEPs, perhaps thinking that, as there is no longer any new monies going in, the market is no longer liquid. This is a misnomer – the transfer and re-registration of PEPs is a buoyant market. Find out more about re-registering or transferring your PEP here.
Investment Bonds
Bonds are lump sum investment vehicles and can be tailored to provide an income or growth depending on a client’s circumstances. In order to entice investors into investing money with them, Life Offices often offer an additional amount of units in excess of the initial premium (100%+ allocation). Bond commissions paid to introducers can be more generous than for collectives and the rebated element combined with the extra unit allocation provides a healthy start for the initial investment.
SIPPs
Self Invested Personal Pensions (SIPPs) are fast becoming the most popular way to manage your financial affairs in preparation for, and during, retirement. Investors now expect the flexibility available to them in their collective investments to be available in the pension plan. SIPPs deliver that flexibility. Set up your SIPP through Heritage and you will have access to over 1000 funds from 55 providers. If you so choose, you can also invest directly in commercial property and stock and shares.
