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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.
The Quilter International Executive Investment Bond (EIB)
The Quilter International Executive Investment Bond (EIB) is an offshore, single premium, whole of life assurance policy providing benefits on death of the relevant life assured (or ‘bond’).
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.
This cannot be varied or waived; therefore, early encashment of the policy results in a “surrender charge” or “early withdrawal charge” unless you ensure you have a zero commission/cleanly priced version.
The Quilter International Executive Investment Bond (EIB) Key Features
Unlimited Choice of Funds – These are available via an approved list and the option of open architecture.
However, funds must be approved by Quilter International (formerly known as OMI), 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.
Minimums - Lump sum minimum of £50,000/$75,000/€75,000.
You can make additional lump sum payments into your policy at any time with a minimum of £2,500. However, you will pay any initial fund charges on all contributions.
Payments can be made in a choice of 13 currencies.
Currency - The Quilter International Executive Bond (formerly known as Old Mutual International) can be set up in 1 of 7 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD) Swiss franc (CHF), Australian dollar (AUD), Hong Kong dollar (HKD) and Japanese yen (JPY).
Eligibility - 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 - Will depend on the type of plan you take out from Quilter International as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser.
Refer to the FAQs section of the page for more details on fees and charges.
Pensions (QROPS and SIPP): If the Quilter International Executive Bond is used within a QROPS or SIPP then there will be additional set up and ongoing fees for the life of the policy.
It makes no sense to embed the bond within a QROPS or SIPP, other than to generate additional fees for the adviser or salesman.
Early Surrender: A full encashment will result in exit penalties being applied in the early years, through surrender charges linked to the term of the policy. In effect, this means that on polices the first 5 or more typically 8 – 10 years, high surrender charges will be imposed.
These can be eye watering.
Annual Policy Charges:
The annual policy charge is a fixed fee and this can be upped at any time.
There may also be a percentage charge on the value of your fund to cover management costs in the early years which typically is between 1%-1.5% per annum and will last for 7 years sometimes through lifetime.
Other Charges: Fund management charges are typically between 1 – 2.5% per year depending on the funds selected.
Alternatively, if you use the open architecture option, there will be stockbrokers fees when you buy and sell certain assets, and can range from 0.5% to 2% typically.
Additionally, there may be an adviser charge to manage the portfolio, this is also typically between 0.5% to 1.5% per annum depending on the chosen advisers service provided.
The treatment of your policy when a death occurs depends on whether there are surviving policyholders and/or lives assured.
Note that policyholders are the owners of the policy whereas lives assured are the people whose lives are covered in the insurance contract.
Therefore, the insurance contract will end when the last life assured dies.
Different scenarios are explained below:A policyholder has died and at least one policyholder is still alive.
If at least one life assured is still alive, the bond will continue and will automatically transfer to the surviving policyholder(s).
If all lives assured have died, the bond will come to an end. The surrender value is paid when the policy is surrendered. The death benefit is paid when the last life assured dies.
If at least one life assured is still alive, the bond will continue and ownership will be transferred to the legal personal representatives of the deceased policyholder’s estate or nominated beneficiary where the nomination takes effect on the death of the last policyholder.
If all lives assured have died, the bond will come to an end and the death benefit will be payable to the deceased policyholder’s legal personal representatives. If the bond is subject to a trust or nomination, the death benefit will be payable to the trustees of the trust* or beneficiaries of the nomination.
* The legal personal representative of the last trustee would appoint replacement trustees when the last trustee dies.
Placing your Executive Bond in trust can help ensure that your wealth is used as you intend during your lifetime and after you die.
It may also offer some advantages in the future, for example if you are self-employed or get divorced, or if you have an estranged family.
And it can benefit your family or beneficiaries after your death as a trust can remove the requirements of probate.
Seek qualified advice from a fiduciary.
I bought this thinking I was doing the right thing for the long-term - my EIB is in my QROPS. I've realised now that I have ended up with a tax wrapper in a tax wrapper.
The Quilter International (formerly known as Old Mutual 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.
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.
When we have compared the charges that fee-based clients would pay, against those working with commission-based advisers – it is clear to see that the latter may pay anywhere from 100-1000% more.
These hidden costs also cause a lock-in period of up to 8 years that substantially reduces the flexibility and liquidity which clients would otherwise benefit from with other forms of offshore investment.
Our advice is to incept such a plan only after receiving advice from a fully regulated financial 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 recommend you get a Second Opinion to ensure you are on track to get and keep the life you want.