QUILTER INTERNATIONAL

EXECUTIVE INVESTMENT BOND

(FORMERLY OLD MUTUAL INTERNATIONAL)

Summary

Quilter International (formerly known as Old Mutual International) is one of the leading providers of advice, investments and wealth management both in the UK and internationally.

Quilter International is a part of Quilter plc and manages around £107.4 billion of investments (as at 30th June 2020). Quilter plc is listed on the London and Johannesburg stock exchanges.

> Widely sold and popular investment plan.

> Some tax advantages in certain jurisdictions.

> Strong parent company brand.

> Popular choice among expat financial advisers who seek commissions.

> Can be a very inflexible option.

> High risk of hidden commission.

> Often mis-sold.

> Many countries do not recognise any tax concessions.

Key Features

  • Can be set up in 1 of 7 currencies: GBP, USD or EUR, CHF, AUD, HKD and JPY.

  • The Quilter International Executive Investment Bond is issued in either a single policy or a “cluster of polices” to enable tax planning benefits.

  • The initial charging term is fixed (based upon the commission and charging structure agreed) at the time of the policy activation. 

  • Wide choice of funds are available via an approved list and the option of open architecture. However, funds must be approved by Quilter International, including in-house and external funds and some funds are “mirror funds” which means you are buying a replication of a fund manager’s fund, not the underlying fund, which does lead to price discrepancies and significant underperformance (of the mirror fund) over time. We note too, that some funds on the platform are unregulated and very high risk. 

  • As a whole-of-life contract, Universal Personal Portfolio does not have a fixed term – it will continue for as long as the lives assured are alive, or until the contract is surrendered.​

  • The Quilter International Executive Bond is a regular premium, whole of life, life assurance contract issued by Quilter International. It is available to most international investors outside of the main regulated territories such as the UK, the USA and Australia.

Charges

Quilter International offers financial salespeople the flexibility to create their own charging structure. 

This means the fees and charges you pay for an Executive Investment Bond will depend entirely on how much money your 'adviser' wants to earn from your investment. 

What you pay for your EIB, compared to what someone else pays for exactly the same product, can vary massively.

Try searching for transparent charging information from Quilter International about what exactly you’ll pay, and you’ll come up short. All you’ll find is wording in brochures such as:

“the charges for setting up and maintaining your executive Bond will depend on the kind of assets you choose, your agreement with your financial adviser, and other variables.” 

 

And:

 

“your financial adviser will provide details and explanations, and the charges will also be listed for you in a charges’ schedule.”

The good news is, we’ve managed to acquire a range of charging documents, and we’ve reviewed them for you. The bad news is, the total fees the average investor pays, and the way the fees are structured, means the Executive Investment Bond is an expensive and inflexible product.

Here are real examples of fees and charges executive professionals are paying for the EIB from Quilter International.

Establishment Charge

 

Regular Management Charge

Administration Charge

Dealing charge (applied to every single sale or purchase of a fund or asset and placement and renewal of fixed deposits)

Currency dealing charge

Early withdrawal charge

Ongoing service charge (also known as trail commission)

Other charges

5-year Charging Structure

 

One off charge taken in year one only, quarterly in arrears.

For Example, an 8 year 1% per annum establishment fee is 8% initial fees taken up front.

 

1.80% per annum for 5 years reducing to 0.2% thereafter, based on premium

(which equates to 9% of your money taken over 5 years, and then 0.2% thereafter for the lifetime of the bond). 

Note, this charge is also levied against every top-up you make.

£110.50 per quarter every quarter - for the lifetime of the bond.

£18 a time (subject to annual review)

Quilter International reserves the right to charge this and review it annually

9.00% in the first quarter, reducing by 0.45% per quarter to 0% after 5 years

Decided by your adviser. This percentage charge is taken proportionately each calendar quarter in arrears.  Where it is levied it is typically between 0.5% and 1% per annum

Investors are asked to sign to confirm agreement with this statement:

I understand and accept that other charges may apply to my account. These charges may be made by third parties, for example an annual management charge on a selected fund or by Quilter International for additional services I request.

8-year Charging Structure

One off charge taken in year one only, quarterly in arrears.

For Example, an 8 year 1% per annum establishment fee is 8% initial fees taken up front.

 

1.175% per annum for 8 years reducing to 0.2% thereafter, based on premium

(which equates to 9.4% of your money taken over 8 years, and then 0.2% thereafter for the lifetime of the bond).

Note, this charge is also levied against every top-up you make.

£110.50 per quarter every quarter - for the lifetime of the bond.

£18 a time (subject to annual review)

Quilter International reserves the right to charge this and review it annually

9.40% in the first quarter, reducing by 0.29375% per quarter to 0% after 8 years

Decided by your adviser. This percentage charge is taken proportionately each calendar quarter in arrears.  Where it is levied it is typically between 0.5% and 1% per annum

Investors are asked to sign to confirm agreement with this statement:

I understand and accept that other charges may apply to my account. These charges may be made by third parties, for example an annual management charge on a selected fund or by Quilter International for additional services I request.

10-year Charging Structure

One off charge taken in year one only, quarterly in arrears.

For Example, an 8 year 1% per annum establishment fee is 8% initial fees taken up front.

 

0.950% per annum for 10 years reducing to 0.2% thereafter, based on premium

(which equates to 9.5% of your money taken in 10 years, and then 0.2% thereafter for the lifetime of the bond).

Note, this charge is also levied against every top-up you make.

£110.50 per quarter every quarter - for the lifetime of the bond.

£18 a time (subject to annual review)

Quilter International reserves the right to charge this and review it annually

9.50% in the first quarter, reducing by 0.2375% per quarter to 0% after 10 years

Decided by your adviser. This percentage charge is taken proportionately each calendar quarter in arrears.  Where it is levied it is typically between 0.5% and 1% per annum

Investors are asked to sign to confirm agreement with this statement:

I understand and accept that other charges may apply to my account. These charges may be made by third parties, for example an annual management charge on a selected fund or by Quilter International for additional services I request.

If you purchase your Executive Investment Bond from a financial adviser who takes commission, you will be paying a very high price to invest your lump sum.  It’s entirely possible the fees you pay will outstrip any gains you make. If you top up, change your underlying investments, or access your capital within the early years, the real cost of your bond will increase.

Executive Investment Bond Within a QROPS or SIPP

In some cases, international executives are encouraged to use the EIB within a QROPS or SIPP.

It’s critical to note that there will be additional set-up charges and ongoing fees levied for the life of the policy - in addition to all of those discussed and detailed above.

This would make the Executive Investment Bond even more expensive in real terms, thus highly likely to undermine the QROPS or SIPP. For that reason, if you have an EIB wrapped within your pension, you can get in touch with us to uncover exactly how much you’re paying, and where you can make significant savings for the long-term benefit of your wealth.

It makes no sense to embed the bond within a QROPS or SIPP, other than to generate additional fees for the adviser or salesman.

Himalaya

Get in touch

Whether you need a second opinion, want to find a qualified adviser, or just have some questions, Expat Money is here to help.

We'll call or email, learn about you and take you through your options.

Final Verdict

The Quilter International Executive Investment Bond is a good investment product that stands up very well against its direct competition. It potentially reduces some of the administrative burden associated with international investment and can be used for sophisticated tax planning purposes, if used properly.

Quilter has invested in technology and has strong administrative, technical and adviser support services. The Executive Investment Bond is one of their most popular investment vehicles. However, it is also easily mis-used and is normally available at a much lower cost than many international clients are aware.

Very high hidden charges and a high degree of risk make the investments within this product unsuitable for most.

Regulated distributors are often held to different standards overseas and a high number of clients have received unsatisfactory outcomes through the use of this product.

You should be particularly wary if you have moved a pension into this product via a QROPS or SIPP transfer and make entirely sure you fully understand (and double check) any purported tax benefits which are listed as well as the exact charging structure you have agreed to.


Our advice is to incept such a plan only after receiving advice from an experienced, trusted and qualified planner and to opt for a cleanly priced option without any form of establishment charge or lock-in period (zero-exit penalties).

If you already have an EIB from Quilter International, we suggest you get a second opinion to ensure you know exactly how much you are paying and how your investments are structured.