emmabeth wrote:Sorry for delay in responding, I've been waiting for the IFA's report.
Firstly, thanks for all the replies which gave much food for thought.
The proposed wrapper is an overseas investment bond. The underlying portfolios are a 50/50 split between Alphabeta fund partners - AB4 portfolio and Morningstar - Moderate passive portfolio.
The overall charges, including IFA fees are 1.395%
I can't help feeling that I could invest directly into a similar portfolio in an ISA without an IFA.
Any views and advice would be welcome
Hi emmabeth - following on from my previous comment, I hope the following helps a little with your decision making:
You are currently 67 and the £500k going into this bond would generate fees of 1.395%, or £6,975 per annum. If you do need care when you are older (AgeUK suggests 14.8% do - so plenty don't!) then let's assume this would be at age 85 for arguments sake (could be younger/could be older). This means that you will pay the above fees for the next 18 years which totals £125,550 (not including growth had the funds been left in the investment). AgeUK's latest report here https://www.ageuk.org.uk/globalassets/a ... tsheet.pdf states that the median period from admission to the care home to death is 462 days (15 months) but that 27% of people have lived in care homes for more than three years. If you are one of these 27%, the fees you would have paid above of £125,550 could have covered £41,850 of fees each year over this three year period and your original investment will not have been touched.
As hiriskpaul has mentioned above, putting your existing ISA funds (which actually can generate a tax-free income!) into a cheap Vanguard fund would cost 0.22% a year, or £1,100 (a difference of £105,750 over the 18 years).
You would have to be in a care home for an awfully long time to deplete your current investment portfolio (not withstanding the growth this could achieve over the next few decades), on top of any pension income that you would use towards the care fees. I'm not saying this couldn't happen, but just as a bit of perspective.
Cheers, OLTB.