Important Notes on Investments - last updated 19th January 2011

Charges and Expenses for your Investment   Our discounts, or premium enhancements, are given mainly by commission sacrifice, and in some cases by extra discounts we have negotiated for our clients as well. Please refer to the investment company’s literature and key features for the charges and expenses for any investment you are considering.   Our discount lists give details of how to obtain investment company literature. 
Please feel free to ask us if you would like to know how much commission we would be receiving for any investment you are considering.    Details of the amount of commission Power Robbins have received / will receive, will be given on your contract note (OEICs, Unit Trusts, ISAs, ISA transfers), or on your cancellation documentation (capital investment bonds, structured products, some term life policies, and whole of life insurance).

Power Robbins are not investment managers   Power Robbins do not manage any of the investments on our discount lists.   The names and addresses of the fund managers are given in investment companies’ literature.   Our discount lists give contact details by telephone and/or internet for investment companies, except where we will provide you with the literature.

Product literature  In the event of any conflict between product literature and information provided by Power Robbins, the product literature shall prevail.

Tax treatment of investments   Where investments currently carry taxation allowances, these are subject to statutory change.  The value of tax relief (if any) will depend upon your individual circumstances.

If you should change your mind after investing    People who invest after having received advice from the person or organisation that has placed the business for them, are entitled to cancellation rights.  This right does not extend to investors who have not required or received advice, and have therefore invested on an execution only basis. Our customers who place investments through Power Robbins on an execution only basis should, therefore, be aware that they will not be entitled to cancellation rights.   

What does “execution only” mean?    Execution only means that the investor has chosen their own investment, and has not required, or received, any advice either now or in the future.   The investor therefore accepts full responsibility for both the merits and the suitability of the investment.

Most investments fluctuate in value   This means that you might not get back the full amount of your investment.

Higher volatility funds   When reading the literature from the investment company you are considering, you will see that some funds carry a high risk.   These investments may be subject to sudden and large falls in value, and you could get back nothing at all.

The higher the return advertised, the higher the risk that you may lose capital   The higher the rate of return you are promised, the higher the risk that you may not get back all of your capital at maturity.

It could be some time before you may see a return    When making investments that do not have a fixed term, it should still be borne in mind that it could be some time before you may see a return on your investment.

If you are looking for income from your investment   Taking withdrawals for “income” may erode the capital value of your fund, especially if the level of “income” taken is higher than the investment’s growth.    Rates of income that you see advertised (headline rates) may depend on certain conditions being met, they are not usually guaranteed.   Often, if the rate of “income” during the term of an investment is guaranteed, the return of your original capital is not.
If you intend to purchase an annuity with the eventual proceeds of any investment, your eventual income could be lower if you had taken more in withdrawals from the previous investment than its growth, or if annuity rates were low when your annuity was eventually purchased.

Investment funds investing in shares denominated in foreign currencies   Changes in the rates of exchange between currencies may cause your investment / the income to go down or up.

Front-end loaded contracts (investments where most of the charges are taken at the start)   With some investments, most of the charges are taken in the early years.   This means that if you withdraw during the early years you may get back less than you invested.    You should bear this in mind when reading the key features of any investment you are considering, to see how the charges are taken.

Fixed term investments   If an investment has a fixed term, you should check the investment company’s literature for what would happen if you needed your capital back before the end of the term.   The investment company’s literature would tell you whether you would be able to have your capital back early, and whether you might receive a very poor return on your capital if needed during the term.

For UK residents only   Power Robbins Investment and Life Insurance discounting services are for UK residents only.

ADDITIONAL NOTES FOR INVESTORS CONSIDERING THE FOLLOWING KINDS OF INVESTMENTS

(Corporate) Bond Funds    Yields offered by bonds often reflect in part the risk rating of the issuer.   Investment in such bonds brings an increased risk of default on repayment, and this in turn means there is a risk that the capital value of the fund will be affected.   The yield and / or the capital values of bond funds can fluctuate.

Equity Funds    Prices of units in equity funds, and incomes from them, can fall or rise, and you may not get back the amount invested.    With unit trusts, the manager’s initial charge is part of the bid / offer spread.   Funds invested in emerging or smaller markets, such as Latin America or some of the markets in the Asia Pacific region, may have a higher degree of risk and volatility than those in more traditional markets such as the UK, Europe and the USA.   Such risks may be associated with failed or delayed settlement of market transactions, with registration and custody of securities, and a possible lack of liquidity and efficiency in certain of the stock markets or foreign exchange led markets.

Investment Trusts    Discount brokers cannot normally save investors money on investments into ongoing investment trusts, because with this type of investment the charging structure works differently, and any commission paid to the broker makes an extra charge for the client.   We can, however, normally help with cashback offers when NEW investment trusts are being launched, because normally at that time our commission is a management expense, so we can receive this without adding to your charges, and then send you a cashback cheque.

Investment bonds – including capital investment, distribution, property and with profit bonds  
Our understanding of current legislation and Inland Revenue practice, which may change, as at 03.08.2007 is that you can withdraw up to 5% of your initial investment each full year the bond is in existence, up to a maximum of 20 years, without incurring any personal liability to UK income tax or capital gains tax at the time.  However, if withdrawals exceed the 5% allowance, higher rate taxpayers will be liable for the difference between the higher rate and basic rate of income tax on the excess over 5%.   If the maximum withdrawals allowed by the Inland Revenue are taken, high income withdrawals may not be sustainable during the deferral period.  You are strongly advised to read all information about taxation in the literature supplied by the insurance company of your choice.

ISA transfers (including old PEP investments)    You should consider whether your existing ISA  manager will make exit charges.   You should also consider the effect of the difference between the buying (offer) and selling (bid) price of units for unit trust ISAs, and initial charges from your new ISA manager.   When transferring from one ISA manager to another, the holdings are liquidated and a cheque sent from your old ISA manager to your new one.   There could be a loss of income, or a reduction in the value of the investment you were transferring, if stock markets rose whilst your ISA transfer was being carried out.   To transfer a ISA, you should complete a transfer application form supplied by your new manager.   The old and new managers will arrange the transfer between them.  
Re-registration of ISAs (also investment funds) means changing the ISA administration manager but keeping the same funds.  For example if you move existing holdings to a fund market, the units will be moved intact, and will not be affected by stock market movements.  
If you contact your old manager yourself and tell them to sell, you will lose the ISA status of your investment.  

Property Funds   Property funds invest in property and land.   This can be difficult to sell – so you may not be able to sell / cash in a property fund investment when you want to.   The investment company may not be able to act on your instructions to sell your investment quickly.   The value of property is generally a matter of a valuer’s opinion rather than fact.  With some property funds, the majority of the charges are taken in the early years.  This could have the effect that if you cash in your investment during this time you may get back less than you invested.   On cashing in your bond at any time, you might not get back the amount invested.

Self Invested Personal Pensions
The wide investment choice offered under SIPPs means increased complexity.  Active management is needed.   A Revenue approved administrator and trustee are required, resulting in SIPP schemes having higher setup and annual fees than other personal pension plans.   Fund markets offer SIPPS with a wide choice of collective investments, but without the option for investing in property or single shares.  Some pension companies offer deferred SIPP plans with standard personal pension plan charges, and an option to convert to a SIPP with a wide investment choice and higher charges, should this be required.

Structured or `capital at risk’ Products
Levels of risk for return of capital are described by investment companies in their literature.
Please read the investment company’s sales literature very carefully.

The word “income” is often used to describe regular payments to the investor during the term of one of these plans.   It should be borne in mind that the more money taken as regular withdrawals (“income”) during the term of one of these plans, the less capital growth (if advertised) would be achieved, and the greater the risk to capital return at maturity.

To provide you with the advertised combinations of potential growth / advertised income, and repayment of capital, investment companies enter into agreements with other UK financial institutions. Whilst the investment companies concerned believe these institutions to be financially sound, it is important to note that if they are not able to meet their obligations you may not get back your original capital or achieve any growth.   
References to ‘stock market growth’ exclude any form of income payment. With these plans, not all of the capital is invested at the outset. It should be borne in mind that ‘gross’ returns will not be paid to investors,  as maturity benefits will be paid after the deduction of tax, which is not recoverable.
Please read the investment company’s literature carefully with regard to taxation, especially whether the return will be treated as income or capital gains, where the investor may be entitled to a tax free exemption limit with the added benefit of indexation.
Most of the investments listed by Power Robbins are NOT guaranteed investments, unless they are described as GUARANTEED INVESTMENTS in the investment company’s own brochure.  The investment company’s literature for any guaranteed product will say who the guarantor(s) are. For all other investments, you should note that your capital is at risk.  
The Financial Services Authority has produced a booklet for potential investors to read about Capital-at-Risk Products.   We enclose a copy of this booklet every time a client requests information on one of this type of investment from us.  
Availability dates in our lists could change, particularly if a product is fully subscribed before the advertised closing date.
For ISA transfers, where available, you will need to submit your application earlier than for lump sum investments.   The latest dates for ISA transfer applications will be given in the investment companies’ literature.   We recommend applying for transfers as early as possible in the offer period.
These are fixed term investments.  If you need to withdraw your capital before the bond matures, you could have a very poor return on your capital.

With profit funds / with profit bonds   These are not like building society or bank accounts. They are not deposit funds. They are intended as medium to long term investments, i.e. 5 years or more. Taxes on with profit funds are paid by insurance companies. Investors who pay lower rate income tax, or no income tax, would not be able to reclaim the tax paid by the insurance company.  It could be some time before a person may see a return on the investment. Please see the paragraph on page 3 entitled “If you are looking for income from your investment”. Unless you have chosen to take a fixed amount of regular withdrawals for “income”, the income will not be fixed, and could go up or down. Future bonus rates are not guaranteed. Past performance is not a guide to the future. The value of a with profit fund / bond depends on how much profit the insurance company makes, and how the company decides to distribute this profit. With some with profit bonds, the majority of the charges are taken in the early years. This could have the effect that if you cash in your investment during this time you may get back less than you invested. Please read about the Market Value Reduction in the key features. On cashing in your bond, you might not get back the amount invested.

SAVE MONEY WHEN SWITCHING FUNDS WITHIN A FUND MANAGEMENT COMPANY  

Power Robbins may be able to save you money when switching funds within the same fund management company, if your investment is already in our agency.    Most fund managers give generous discounts off the initial charge for fund switches.  If, when you phone your fund manager to enquire, they won’t give you a good discount, ask them if it’s because they will pay Power Robbins commission for the switch.   If YES, send your switching instructions in a short letter via our office.   We will forward this promptly, waiving the switch commission. 
FUND MARKET SWITCHES - Cofunds currently have a standard charge of 0.25% for all fund switches.  We will give you a supply of switch instruction forms,  that you can send direct to Cofunds. 

PLEASE ASK - Any questions?  Please do not hesitate to contact our friendly staff.

If there is a product you are interested in and you do not require advice, then please call us to see if we can help save you money.
E&OE

Power Robbins - Independent Financial Advisers
FREEPOST, Fileturn House, Church Road, Bookham, LEATHERHEAD, KT23 3BR
Tel 0800 032 5433 Fax 01372 450417 e mail info@power-robbins.co.uk
Partners P F Power FLIA MLIA (Dip)
Hours of business - 9am to 5pm, Monday to Friday

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