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05/02/2014

The majority of financial advisers in the UK, 58%, want product providers to facilitate trust advice fees from the investment held within the trust according to a new* adviser survey conducted by Skandia International, part of Old Mutual Wealth. The remainder, 42%, want the trustee or client to write them a cheque rather than be facilitated by the provider.

Not all product providers are able to facilitate advice fees from the trust, so some advisers will have no choice but to ask the settlor of the trust or trustee for a cheque at review time. Where the adviser does have a choice, it is important they understand what the options are.

Being able to take fees from the product inside the trust can be much simpler from an administrative perspective for all parties. If fees are taken from the trustee’s bank account then the trust becomes subject to self-assessment, whereas fees taken from the investment within the trust may not be subject to self-assessment (depending on the underlying investment and the amount encashed). Setting up a trustee bank account for the trust is also difficult to achieve, and can take a long time.

Clients and trustees may prefer to pay the advice fee from the trust rather than pay additional fees from their own bank account. Where there are multiple personal trustees, having the payment come out of the trust may be easier to manage and administer, rather than trying to split the costs proportionately between them. Taking fees from the trust also means that on the death of the client, the adviser can continue to provide advice on the trust knowing they will continue to receive their fee directly from the provider.

Advisers and their clients will need to consider the best approach to take when it comes to paying fees to ensure they mitigate any adverse tax consequences. For example, where the settlor is not able to benefit from the trust, any advice fee taken from the trust could impact the IHT efficiency of the trust if they are advising the settlor. However, the adviser could take fees from the trust if they are advising the trustees without impacting the IHT efficiency of the trust.

 

Paul Schrijver, technical specialist at Skandia International, comments:

“In this new world of paying fees rather than commission, many advisers and their clients still prefer to facilitate the advice fee through the product inside the trust rather than by cheque from the trustees or the settlor. We have ensured we can meet this demand by making sure our trust range can facilitate fee payments in this way.  Taking a fee from the product can help all parties better manage and administer the trust, and ensure continuity of trust management and fee payment even after the client has passed away.”

 

*The quarterly international adviser confidence barometer was conducted by Skandia International, part of Old Mutual Wealth, in Q1 2014, responses from 498 advisers from around the world.

For more information contact

Sophie LentonOld Mutual Wealth02380 916 77007834 499 558
Amelie ShepherdOld Mutual Wealth02380 916 09107834 499 596

Notes to editors:

Quilter is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

On a ‘go forward basis’, Quilter oversees £ 111.6 billion in customer investments (as at 31 March 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

The Quilter businesses will be re-branded to Quilter over a period of approximately two years following separation from Old Mutual:

  • Intrinsic to Quilter Financial Planning
  • Private Client Advisers to Quilter Private Client Advisers
  • The Multi-Asset business to Quilter Investors
  • The UK Platform to Quilter Wealth Solutions
  • The International business to become Quilter International
  • The Heritage life assurance business to Quilter Life Assurance
  • Quilter Cheviot will retain its name.

On 19 December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Quilter is part of Old Mutual plc, a FTSE 100 group that provides investment, savings, insurance and banking. For the year ended 31 December 2017, Old Mutual reported an adjusted operating profit before tax of £2.0 billion. For further information on Old Mutual plc and the underlying businesses, please visit the corporate website at www.oldmutualplc.com.

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