Independent review of Friends Provident Premier Advance Savings Plan

Premier Advance is a unit-linked regular payment savings plan designed to be held as a medium to long-term investment.

It is available if you are at least 18 years of age but less than 70 at the commencement date. There is no minimum or maximum age for the lives assured, but one of them must be less than 76 at the end of the original payment term.

The minimum regular payment would depend on the chosen frequency for FPI's Premier Advance savings plan. This can be summarised below:

Frequency	USD	GBP	EUR	HKD
Monthly	300	200	300	2,400
Quarterly	900	600	900	7,200
Half-yearly	1,800	1,200	1,800	14,400
Yearly	3,600	2,400	3,600	28,800

The features of Friends Provident International's Premier Advance savings plan are as follows:

Premier Advance is a unit-linked regular payment savings plan that gives you access to some leading fund managers through its broad range of professionally managed funds.
It includes an element of life cover.
It offers an ongoing loyalty bonus after the tenth year, provided you continue to make your payments.
You can set up the plan on your own life, on another person’s life, or jointly on up to four lives.
You choose how long you wish to pay for – the minimum term is 5 years and the maximum 25 years.
The currency in which you make your payments and the currency in which you would like your plan denominated can be selected by you. This can be in: USD, GBP, EUR and HKD.
Payments can be made monthly, quarterly, half-yearly or yearly. The frequency of your payments can be changed on any payment due date in-line with the new frequency.
Premier Advance allows you to make additional lump sum payments into your plan at any time providing there are at least five years of the payment term remaining.
You can take regular or one-off withdrawals.
It allows you to switch between funds.
FPI's Premier Advance claims to allow you to cash-in your plan at any time (although a cash-in charge may apply).

Premier Advance Investments:

Your payments will be invested in the funds you choose if you have a Friends Provident International Premier Advance savings plan.

They offer a wide range of funds which have been selected by our in-house investment experts.
You can invest in up to ten funds at any one time. The funds are denominated in GBP, USD or EUR.
They divide each fund into units and your payments buy units in the funds you choose. The price of a unit depends on the value of investments in the fund.
Units within your funds are allocated as either ‘initial units’ or ‘accumulation units’.
Your payments for the first 18 months (and the first 18 months of any payment increase) are allocated to initial units. After this 18 month period, payments are allocated to accumulation units.
You can switch funds at any time.

The Premier Advance savings plan charges can be summarised below:

Charge	Description
Initial charge	An initial charge of 1.5% is taken each quarter from your initial unit holding over the term of your plan. This charge is taken by cancelling initial units on the quarterly anniversary of the plan commencement date.

Monthly plan charge	There is a monthly plan charge of USD 6 (GBP 4, EUR 6, HKD 48). This charge is taken by cancellation of accumulation units at monthly intervals based on the plan commencement date.

Annual administration charge	An annual fund administration charge of 1.2% of the plan value is applicable. Annual management charges and other fund expenses are imposed by the underlying fund manager and the amount depends on which fund is chosen.

Credit card charge	If you make a payment by credit card, they will make a charge of between 1% and 1.95% of each payment to cover the charges imposed by the credit card company. The exact amount of the charge depends on your country of residence.

Switch between funds	No charge

Other	If you make a lump sum payment, a one-off initial charge of 7% will be taken.

Your plan is designed to run until the end of the payment term. If you cash-in your plan before the end of the term a cash-in charge will apply.

You’ll get back the value of the plan at the time you decide to cash it in. However, this value would depend on several factors and they do not guarantee you the money back.

Withdrawals from FPI's Premier Advance savings plan:

You can make one-off or regular withdrawals that would be taken from your plan, depending on your needs.
The minimum withdrawal depends on the plan currency as follows:

Currency
Withdrawal

USD 750

GBP 500

EUR 750

HKD 6,000
Regular withdrawals can be taken monthly, quarterly, termly (every four months), half-yearly or yearly.
Withdrawals are free of charge, but can only be taken from accumulation units.
The withdrawal will not be made if there are insufficient accumulation units, or if the plan falls below the minimum plan value as a result of the proposed withdrawal.

NOTE:

The value of the plan can go up and down. You may get back less than you’ve paid in.
Inflation and currency exchange rate (depending on which country you move to) can further affect the value.
We would highly recommend reading the 'expert verdict' section of this review to make an informed decision.

Additionally, here's a free guide that can help you achieve better results. In this guide, you'll learn:

Academic evidence only shared with a select few firms across the world
A real-life example of why you should never try to outguess the market
Why a fund's past performance is not enough to predict future returns
Why you need to focus on what you can control and why this leads to a better investment experience
Why you should accept the markets for what they are
What can impact behaviour and make people seek instant gratification

The Pros

> Widely available and marketed

> Size and administrative capability

> Offers some tax protection to an extent

> Potential for better than bank rate return if all contributions are made throughout the term

The Cons

> Inflexible and high penalties

> Opaque and complex charging structure

> High commissions that make this an expensive way to invest

> Easily mis-represented at the point of sale

What happens if I die?

If you set the plan up on your life, the plan will end if you die. They will pay an extra 1% on top of the cash-in value of your plan at your death.
You can set up the plan on up to four lives, so it continues after the first death.
They will pay an extra 1% on top of the cash-in value of the plan on the death of the last survivor only and the plan will then end.
The death benefit is not a guaranteed amount as it will depend on the plan value.

Is there an early encashment penalty?

The plan will not have a cash-in value until you have paid at least 12 months’ worth of payments.

We understand that there are also heavy encashment penalties after 12 months depending on the original term of the policy and when you want to access it.

These penalties pay for the commissions earned up front by your salesman.

The Friends Provident International Premier Advance is expensive compared to the alternatives and far less flexible.

The supposed tax benefits can also be outweighed by charges and lost through these early encashment penalties.

The penalties in the first 12 months are extremely high and will effectively wipe out any money saved in that time.

How can I apply for the Premier Advance savings plan?

Simply complete the application form and return it to your financial adviser.
Include any other relevant supplementary forms as well as documentary proof of identity and address.
Your plan documents will be sent to you as soon as your plan has been set up.
They will then send you a statement each year, on your plan anniversary, to show how your plan is performing.

I have the Premier Advance savings plan - can I suspend my payments for a while?

After the first 18 months you can:

suspend your payments if you would like to. You can suspend payments for a period of up to 12 months and they can be restarted at anytime.
make your plan paid-up and make no further payments.

In both these scenarios your plan value will continue to rise or fall in-line with the investment performance of the funds you invest in.

Charges will continue to be taken from your plan and this may erode the overall value of the plan.

You may also be subject to an ‘enhanced initial unit recovery charge’.

Try communicating with FPI and you get nowhere

I signed up to a 25 year term, thinking I could get out earlier if I wanted to.

The reality is far from that - and when I couldn't get hold of my adviser, I contacted Friends Provident directly for information about why my charges were much higher than I was told and they totally fobbed me off, telling me to go back to the adviser.

I found it very expensive and got out

The fees have just eaten up everything I've invested. I was lucky I figured this out early on and quit while I was ahead.

Expert assessment of Friends Provident International Premier Advance Savings Plan

The outdated construction of this plan makes it unattractive for international investors who wish to maximise their returns.

More cost effective, more flexible and less complex options are now available.

If you already have a Premier Advance savings plan from Friends Provident International and it is worth approximately £500,000 or more, we strongly recommend you seek a Second Opinion to ensure you are on track to get and keep the life you want.

Friends Provident International has over 40 years of experience in the international life assurance market. They provide savings, investment and protection solutions to customers in Asia and the UAE.

They have offices in Dubai, Hong Kong, Singapore and the Isle of Man.

Friends Provident International is part of IFGL.

IFGL provides investment, savings and protection solutions to international investors around the world and the group comprises RL360, RL360 Services, Ardan International and Friends Provident International.

The group employs 650 staff and administers assets of US$24 billion for 210,000 customers (figures as at 31/12/2020).

Friends Provident International Premier Advance Savings Plan

An independent review by our team of experts

REVIEW SUMMARY