capital protected portfolios retirement planning

C A P I TA L P R O T E C T E D P O R T F O L I O S
RETIREMENT PLANNING
ABOUT US
Blackfinch is an established UK provider of capital
protected investment solutions. Our philosophy is based
on transparency and simplicity. Our services provide real
solutions to real financial planning challenges faced by
individuals today.
Blackfinch’s origins go back to 1992, meaning that we
have more than 20 years’ experience of trading in the UK
investment markets. During this time, our products and
investment solutions have evolved to suit the challenges
faced by investors as regulations and markets change.
As the economic climate has shifted, we have adapted and
strengthened to ensure that our investment solutions
remain both transparent and compelling. Throughout this
evolution, we have grown in partnership with our clients
and their professional advisors, and now have in excess of
£500 million of assets under administration.
IMPORTANT INFORMATION
This Brochure is issued and approved as a financial promotion
by Blackfinch Investment Solutions Limited, which is authorised
and regulated by the Financial Conduct Authority (“FCA”)
(FCA number: 153860). Registered Address: LSA House,
Chequers Close, Malvern, Worcestershire, WR14 1GP.
This Brochure should not be relied upon in isolation; any
decision to invest should be made on the basis of the information
contained in the purchase terms, illustrations and full
application documents. Prospective Investors must rely on their
own examination of the legal, taxation, financial and other
consequences of investing and the risk involved. Prospective
Investors should not treat the contents of this Brochure as advice
and, if in any doubt about the proposal discussed in this
brochure, should consult their own professional advisors.
Blackfinch Capital Protected Portfolio invests in Traded
Endowment Policies (‘TEPs’). All policies and portfolios of
policies are sold on an execution-only basis to new investors, who
become the TEPs’ beneficial owners. Prospective Investors should
consider all the risk factors in relation to the Blackfinch Capital
Protected Portfolios, a summary of which is provided below.
— Past performance does not imply that future trends will follow.
Forecasts made in this Brochure may not be achieved and there is
a risk that you might not get back the full amount invested.
— The targeted rates of return are subject to a number of assumptions,
a change in any of which could adversely affect returns.
— Any changes to the taxation environment or HM Revenue &
Customs practice may affect investment returns.
— You have the option at any point to surrender some or all of
the policies to the life assurance companies who issued them.
Please be aware that if you surrender a policy, the life
assurance company can apply a discount to the policy value.
This will usually result in a loss, as the surrender value you
receive will not represent the full market value. We therefore
recommend that you hold the policies until maturity. The
process to surrender a policy normally takes two to three
weeks from your request to receipt of funds.
— Blackfinch will purchase TEPs from multiple UK market
makers which, in some instances, will include market makers
from within the same group of companies.
Whilst Blackfinch Investment Solutions Limited has taken all
reasonable care to ensure that all the facts stated in this
Brochure are true and accurate, no representation or warranty,
express or implied, is given as to the accuracy or completeness of
the information or opinions contained in this Brochure and no
liability is accepted by Blackfinch Investment Solutions Limited,
or any of its directors, members, officers, employers, agents or
advisors, for any such information or opinions.
The Blackfinch Capital Protected Portfolios may not be suitable
for all investors and we would recommend that prospective
investors seek independent advice before making a decision.
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RETIREMENT DECISIONS As you approach retirement, preserving your wealth and
security are paramount. Your appetite for risk is likely to
fall and like many investors, you may move away from
equities, to protect your fund’s value and to reduce
investment volatility in the years before you buy an annuity.
During retirement, you may want to draw a sustainable
income that does not erode your capital in real terms.
This can leave you with a difficult decision. Equities are
ideal for keeping pace with inflation and staying ahead
of the Government Actuary’s Department (GAD) rates,
but you may find the additional risk and volatility
uncomfortable. You therefore need an investment solution
that combines strong growth potential with security, and
the flexibility to choose a term to fit your requirements.
At Blackfinch, we recognise your need for a pre and post
retirement investment strategy, which offers:
— Capital protection to provide security and preserve
your pension fund
— Competitive risk-adjusted returns
— Low volatility
— The potential to outperform cash and other
low-risk investments
— Transparency of underlying assets
— Investment terms to allow you to plan for your
retirement or drawdown needs
— Low fees
— Protection under the Financial Services
Compensation Scheme (FSCS)
— A llowable investments that can be held in Self Invested
Personal Pensions (SIPPs) and Small Self Administered
Schemes (SSASs)
We have therefore developed our Capital Protected
Portfolios, to let you benefit from a growth strategy
that maintains an appropriate exposure to equities
and property, while providing security to protect your
pension funds.
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THE BLACKFINCH SOLUTION
Our Capital Protected Portfolios are flexible and innovative, providing
you with a secure investment solution for your retirement needs.
We construct transparent portfolios to suit your
circumstances, purchasing assets which are usually
aquired at a discount to their real value to generate
competitive returns. These assets have attractive built-in
guarantees, giving you security and protection, and are
managed by the UK’s leading life assurance companies,
who have a history of long-term performance and
financial strength.
TERM
TARGET RETURN MINIMUM CAPITAL
PER ANNUM
PROTECTION
4 Year +
5.00%
75%
5 Year +
5.50%
75%
6 Year +
5.75%
75%
Our portfolios are allowable investments, which you can
hold in SIPPs and SSASs to generate tax-free returns. They
provide a balance between risk and return, by holding
assets that gain exposure to equities as well as the other
major assets classes.
7 Year +
6.00%
75%
This makes our portfolios an ideal drawdown solution,
as their capital protection preserves the value of your fund,
while targeting above-inflation returns can deliver income
above GAD rates. These characteristics also mean that our
portfolios are suitable for generating growth while
protecting capital, during the accumulation stage of
retirement planning.
We have a selection of portfolios available for you to
purchase at any time, maturing in either a specific term
or in over range of terms, so you can plan access to your
capital when you need it. We administer the underlying
assets for the duration of your investment term, at the end
of which you collect the proceeds. It is a simple process,
made easy for you by Blackfinch.
Note: The above table highlights the target returns and the
minimum capital protection levels for each given term of
investment into the Blackfinch Capital Protected Portfolios.
These are forecast returns, based on current performance levels,
and you may receive less than this amount.
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PORTFOLIO HIGHLIGHTS
CAPITAL PROTECTION
TRANSPARENCY
— All portfolios are constructed with a minimum
75% capital protection from inception.
— The underlying assets contain ring-fenced guarantees
and the level of protection will usually increase
throughout the term.
— The capital protection is provided at no extra cost
to you.
— We provide you with full visibility of the assets in your
portfolio and the amount of capital protection that each
asset contains.
— You will be given clear details of how we will manage
your portfolio, as well as any fees and charges.
LIQUIDITY
PERFORMANCE
— The portfolios target competitive risk-adjusted returns
of between 5% and 6% per annum, with low volatility.
— The investments gain access to all major asset classes
including equities, fixed interest and property, which
would normally be associated with more volatile and
higher risk strategies.
— The returns are based on the asset performance with
no leverage.
REASSURANCE
— The portfolios hold assets from some of the world’s
largest and most secure financial institutions.
— Direct ownership of the assets places you in control,
removing broker default risks and fund-based risks,
such as a run on the fund.
— Portfolio assets are regulated by the FCA and
benefit from FSCS protection (90% of the claim with
no upper limit).
— If you need access to capital, you can surrender the
assets to the life assurance company that issued them.
We help you with this and can typically make the
monies available to you in two to three weeks.
Surrender values may not represent the full market
value and we recommend that policies are held until
maturity (see Liquidity Risks on page 10).
FEES
— We charge no initial fee for setting up your portfolio.
— There is a 0.5% annual processing fee for administering
your portfolio.
— At your request, we can facilitate any upfront or
ongoing advice fees that you have agreed with your
FCA authorised advisor.
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HOW IT WORKS
We create our portfolios with protection at the forefront,
utilising the exceptionally high and robust protection
mechanisms inherent in the assets.
The assets are carefully selected with-profits Traded
Endowment Policies (TEPs). These give exposure to the
strongest UK life assurance companies and carry high
levels of capital protection.
The inherent policy guarantee is made up of the original
sum assured and the annual bonuses that have built-up
during the policy term. This guarantee is locked in and
often represents a high proportion of the policy value.
We also do not employ any leveraging.
We administer your portfolio by paying the premiums
until the policies mature, ensuring you receive the full
benefit when they do. We account for the future premiums
when we create your portfolio and hold monies securely
on your behalf, in our FCA-regulated client account.
From the moment you invest in a Blackfinch Portfolio,
the administration is in our expert hands. We handle the
process smoothly and efficiently through to maturity.
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INVESTMENT PERFORMANCE
TEPs’ underlying performance is generated by the life assurance
companies’ with-profits funds, in which the policies are invested.
These funds are characterised by increased stability and reduced
volatility, due to the life companies’ smoothing techniques, which
enable the policies to perform more predictably in volatile markets.
The underlying with-profits funds give you exposure to all
major asset classes, while the inherent policy guarantees
are a barrier to downside performance. This is useful in
periods of high inflation and when markets are volatile.
The illustration below shows the asset mix of withprofits funds that our portfolios typically invest in,
as at 31 December 2012.
TOTAL
EQUITIES
PROPERTY
FIXED
OTHER
NORWICH UNION 40.1 19.3 37.03.6
CLERICAL MEDICAL 39.3 19.1 36.05.6
FRIENDS PROVIDENT 36.7 10.2 49.23.9
ROYAL LONDON 46.2 37.9 14.61.3
PRUDENTIAL 34.0 12.0 44.010.0
INTEREST
Source: Money Management April 2013
We purchase policies usually at a discount to their true
asset value, at a point in their investment term when a large
proportion of their value is protected. This gives you an
excellent chance to benefit from a strong risk-adjusted
return, by holding the policy to maturity.
Blackfinch typically buys policies with terms of 20 years or
more and with four to eight years remaining until maturity,
as these represent the best long-term value. We can select
from a huge range of policies, which is a testament to our
established market position. Our expertise enables us to
select the best policies to suit your specific requirements.
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