Top tips for illustrations
New business illustrations
- Illustrations must be generated from the adviser extranet.
- All new business illustrations will be generated on Charge Basis 3.
- Illustrations cannot be generated after an application has been submitted. Illustrations that were previously generated can be accessed on the documents library for the account/bond.
- Illustrations will disclose the ongoing fund data used in the calculations, eg TER, up-front charges such as bid/offer spread or initial charge are provided in Old Mutual Wealth's platform Funds List.
- Illustrations do not calculate or show an average TER. The reason for this is that an average TER is only valid at a snapshot in time, and will constantly be changing when different funds have different growth rates. As illustrations present a consolidated view of the projected figures over the whole period, it is not appropriate to show an average TER on this document.
- Illustrations will no longer use a ‘weighted average’ for the growth rates. Instead, each fund will be projected at the applicable growth rates assigned to it. (Further details about Fund Specific Growth Rates is available at http://www.oldmutualwealth.co.uk/Adviser/investment-and-funds/Fund-Information/)
Illustrations for ISA and CIA transfers
- CIA illustrations do not currently allow transfers to be input separately. As an interim measure, these transfers can be input as lump sum investments or top ups to obtain an illustration or EBQ.
- If adviser intends to take an ad-hoc fee for a CIA transfer, the effect of the ad hoc fee can be included in the illustration by treating it as an initial fee. Despite the differences in how & when the fee is administered, this will have an insignificant effect on the illustration.
- This functionality is provided for illustration purposes only. Any online application that includes an ISA or CIA transfer cannot be submitted to Old Mutual Wealth or converted to an online New Business application. ISA and CIA transfers can only be submitted to Old Mutual Wealth on a paper application form.
- The system will now determine the CRA illustration type (Annuity Purchase or Income Withdrawal) from the crystallisation of existing or new contributions. If both crystallised and uncrystallised monies (which are not immediately crystallised) are in the illustration, they will both be shown in the Income Withdrawal illustration – with tax free cash at retirement shown for the uncrystallised part.
- When entering a lump sum or transfer that you wish to crystallise immediately, select “immediate maximum tax free cash required” on the contribution summary page. This will crystallise all lump sums and uncrystallised or partially crystallised transfer contributions.
- Whilst you are able to input an application having multiple transfers with crystallised funds, the regulations do not allow this to be done. If an illustration is requested for this scenario, it will produce an error. Each transfer of crystallised units must be illustrated separately, and must be submitted as separate applications.
- You can now include a regular investment and a crystallised transfer in the same application. These can be illustrated together and submitted as one application.
- Income Drawdown Critical Yield calculations can now be requested as part of the illustration, rather than via a separate tool.
- We do not produce illustrations for uncrystallised funds where the selected retirement date (or age) is less than 6 months away. If requested, this will produce an error. Income drawdown illustrations will not produce an error but will produce an illustration only to 10 years.
- There are some fields on web screens that can be ignored, as they do not get used anywhere. These redundant fields will be removed in due course:
- – When entering an uncrystallised contribution you are asked for a tax free cash
“assumption for illustration purposes”. The illustration will always show
the annuities with and without a fixed 25% tax free cash lump sum at retirement.
- – When the illustration type is “income withdrawal” for new business and top ups, there is
an option to include/exclude the income withdrawal charge in the illustration.
This option does nothing, as the illustration will correctly apply the charge
Existing business quotes (EBQs)
- The following existing business quotes can be produced:
- – Top-up EBQs
- – Account maintenance EBQs
- – CRA ‘What-if’ EBQs (these can be requested by contacting Old Mutual Wealth)
- – ‘No change’ EBQs
- All EBQ's will provide a projection that takes into account all holdings and details of the existing account or bond, together with the changes that are being considered. For example, top-ups will now be illustrated as an EBQ that provides a combined projection for the existing investment and the planned increment.
- Top-up EBQs cannot be generated for accounts on Charge Basis 1 (ie remaining on commission), without including conversion to Adviser Charging. This is because top-up EBQs are deemed to support the advice process, which would trigger a mandatory conversion to Adviser Charging.
- EBQs can be generated online from the ‘View/Edit account details’ option to illustrate the effect of converting to Adviser Charging and/or product/service charging, or of changing the adviser fees being paid.
- ‘No change’ EBQs can be generated for an existing account or bond as a comparison to a ‘Change’ EBQ.
- If a standalone ‘No change’ EBQ is required, this can be generated from the top-up or account maintenance online applications, by selecting only the ‘No change projection’ option.
- Every illustration and EBQ that is generated is stored on the documents library for the account or bond.
- It is not possible to generate a new illustration or EBQ for an application after it has been submitted.
- New EBQs can be generated on existing accounts at any time, except when there are certain trades in progress on the account which affect the current value of the account.
- If doing a top-up on an account with an existing regular investment, which includes conversion from Charge Basis 1 to Adviser Charging, it is not currently possible to enter the intended Adviser Initial Fee for the regular investment.
- ‘What if’ EBQs for CRA can be requested from Old Mutual Wealth Operations – these EBQs can provide a projection for a combination of changes to a CRA, eg top-up, benefit crystallisation, changes to income etc.
- EBQs do not provide a Reduction in Growth figure. This is because the figure would not include any initial costs that were previously incurred. A Reduction in Growth figure for an existing account may be confusing or misleading, as it would not be consistent with a Reduction in Growth figure for a new investment, for which costs would be taken into account.
- EBQs can be used to compare the effect of charges on different charge bases for an existing account, by obtaining a separate EBQ for each charge basis, and comparing the projected value for each one.