Introduction



Annual Review ReportForXXXXProduced DD/MM/YYYYBy[Enter paraplanner name here if applicable] – [Job Title here] on behalf of [Enter Adviser Name Here] – [Job Title here] Address:Fairey Associates Limited 36A Church StreetGreat BaddowChelmsfordEssex CM2 7HYTelephone:?0345 319 0005Fax:???? 0207 160 5265 Email:?? [Enter Adviser Email Here]Table of Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc471296496 \h 3Scope of Review PAGEREF _Toc471296497 \h 3(i) Investment Strategy PAGEREF _Toc471296498 \h 3(ii) Performance PAGEREF _Toc471296499 \h 3Section 1 - Your Current Situation PAGEREF _Toc471296500 \h 4Attitude to Risk PAGEREF _Toc471296501 \h 4Capacity for Loss PAGEREF _Toc471296502 \h 4Ethical Views PAGEREF _Toc471296503 \h 6Section 2 - Your Objectives PAGEREF _Toc471296504 \h 6Section 3 – Recommendations PAGEREF _Toc471296505 \h 7Maximising your tax efficient savings (delete any areas not applicable) PAGEREF _Toc471296506 \h 7Investment Review PAGEREF _Toc471296507 \h 8Fund Composition – Fairey Associates 2016/17 Hybrid ‘XXXX’ Portfolio PAGEREF _Toc471296508 \h 10Wrap Provider – existing holdings PAGEREF _Toc471296509 \h 13Regular Reviews – Enhanced Service PAGEREF _Toc471296510 \h 13Next Annual Review Meeting PAGEREF _Toc471296511 \h 13Payment for Services PAGEREF _Toc471296512 \h 14Adviser Charges - Potential Tax Consequences PAGEREF _Toc471296513 \h 14Initial Adviser Charge PAGEREF _Toc471296514 \h 14Ongoing Adviser Charge PAGEREF _Toc471296515 \h 15Compliance Declaration PAGEREF _Toc471296516 \h 15Cancellation Rights PAGEREF _Toc471296517 \h 15Financial Services Compensation Scheme (FSCS) PAGEREF _Toc471296518 \h 16Conclusion PAGEREF _Toc471296519 \h 16Appendix 1 – Investment Terms Explained PAGEREF _Toc471296520 \h 17Appendix 2 – Tax Implications summary on pensions PAGEREF _Toc471296521 \h 18Appendix 3 – Pension Product Risk Warnings PAGEREF _Toc471296522 \h 19Appendix 3 – Investment Risk Warnings PAGEREF _Toc471296523 \h 20New fund portfolios to insert PAGEREF _Toc471296524 \h 21IntroductionAs part of our service agreement with you we are committed to undertaking a review of the below holdings with Standard Life/Aviva on an annual basis (amend if different to annual) I have summarised as follows: Nature of InvestmentTotal Amount of Holdings as at XXXXStocks & Shares ISA?XXXXOffshore Bond?XXXXSelf Invested Personal Pension (SIPP)?XXXXGeneral Investment Account?XXXXWrap Cash?XXXXTotal Value of Platform Assets?XXXXScope of Review (i) Investment Strategy I have previously recommended a suitable range of funds designed to optimise the potential future returns within your tolerance for risk (the degree of risk you are willing to take) and capacity for investment loss (the level of potential loss you could afford to sustain). Different investments / asset classes perform differently to each other depending on the prevailing market conditions. The extent to which different investments and asset classes are correlated to each other is also an important factor to take into account. Investments may be positively correlated (which means that they move in the same or a similar direction) or negatively correlated (which means that they move in different directions). In a suitably diversified portfolio the actual composition will also deviate over time from the long-term asset allocation which was established at outset. It is therefore important to consider whether any adjustments need to be made to your investments to keep your portfolio adequately diversified and consistent with your investment objectives and attitude to risk. (ii) PerformanceWhilst future investment returns cannot be predicted it is important to consider how the underlying investments held within your portfolio have performed against appropriate benchmarks.This should be considered over a reasonable time horizon, although short term fluctuations (volatility) can occur due to a variety of factors - not just underperformance - and it is also important to consider performance consistency and the investment's performance relative to its risk rating.Section 1 - Your Current SituationAn important part of the planning process is that we continue to keep up-to-date with your current circumstances and objectives. We discussed the fact find that I previously completed with you and you have signed to confirm that the information within this document remains accurate and up-to-date. To this end you have confirmed that your personal details, your income and expenditure and your assets and liabilities are the same as before with no significant or material changes to your personal circumstances.[Enter details of any changes in personal & financial circumstances here)Attitude to Risk Your overall risk profile describes your general risk outlook and indicates the level of risk you are normally prepared to take, although you may decide to take more or less risk for any specific investment goals you may have. As part of identifying your risk profile we discussed/previously discussed (if no changes to ATR) your answers to a psychometric questionnaire, the indicative risk score from which is ‘enter risk profile here. We agreed this was the most appropriate attitude to risk for you. OR However, this does not take into account other factors that will impact on the risk approach that is most suited to you. (delete as appropriate)Enter details of other considerations here, if appropriate. Note also that if the agreed risk profile is different we explain why (ensure this is also confirmed on the fact find or in a file note) and then put both descriptions down and confirm which one is agreed risk profile and which one is the risk profile score, for example like this: Cautious to Moderate Attitude to Risk – Risk Profile Score You are prepared to take limited investment risk in order to increase the chances of achieving a positive return but you only want to risk a small part of your capital to achieve this. A typical Cautious to Moderate portfolio will usually have the larger part of the portfolio invested in fixed interest gilts, bonds or cash that are low risk but offer only low returns. The remainder of the portfolio will usually be invested in equities and property which can boost longer term returns but are associated with more risk. Using a broad range of assets gives you a varied portfolio and that diversification helps to reduce the overall levels of risk.Cautious Attitude to Risk – Agreed Risk Profile You are prepared to take only a small amount of investment risk and it is important to you that your capital is protected. This means that your portfolio will concentrate on investments that provide low returns in the long term but present lower risk to your capital. Only a small amount of riskier assets will usually be included in your portfolio in order to increase the chance of obtaining better long term returns. A typical Cautious investor will be invested mostly in fixed interest gilts and bonds as well as in cash, with a small element in equities and property that can boost longer term returns but are associated with more risk. Using a broad range of assets gives you a varied portfolio and that diversification helps to reduce the overall levels of risk.Cautious Attitude to Risk You are prepared to take only a small amount of investment risk and it is important to you that your capital is protected. This means that your portfolio will concentrate on investments that provide low returns in the long term but present lower risk to your capital. Only a small amount of riskier assets will usually be included in your portfolio in order to increase the chance of obtaining better long term returns. A typical Cautious investor will be invested mostly in fixed interest gilts and bonds as well as in cash, with a small element in equities and property that can boost longer term returns but are associated with more risk. Using a broad range of assets gives you a varied portfolio and that diversification helps to reduce the overall levels of risk.Cautious to Moderate Attitude to RiskYou are prepared to take limited investment risk in order to increase the chances of achieving a positive return but you only want to risk a small part of your capital to achieve this. A typical Cautious to Moderate portfolio will usually have the larger part of the portfolio invested in fixed interest gilts, bonds or cash that are low risk but offer only low returns. The remainder of the portfolio will usually be invested in equities and property which can boost longer term returns but are associated with more risk. Using a broad range of assets gives you a varied portfolio and that diversification helps to reduce the overall levels of risk.Moderate Attitude to Risk You are prepared to take a moderate amount of investment risk in order to increase the chance of achieving a positive return. Capital protection is less important to you than achieving a better return on the investment. A typical Moderate Investor will usually invest in a variety of assets to obtain diversification and therefore reduce risk. Equities and property, which can boost longer term returns but are associated with more risk, would often account for a higher proportion of assets than fixed interest gilts and bonds or cash. At shorter investment terms the proportion of higher risk assets is usually reduced. The range of asset types helps reduce the overall risks while increasing the chance of better returns.Moderate to Adventurous Attitude to RiskYou are prepared to take a medium degree of risk with your investment/s in return for the prospect of improving longer term performance. Short term capital protection is not important to you and you are willing to sacrifice some long term protection for the likelihood of greater returns. A typical Moderate to Adventurous investor will be invested in equities buy with other assets included to provide some diversification. There may be a small amount of specialised equities within the portfolio, which focus on a particular sector of the economy or relate to a particular market or industry. Specialised equities can boost longer term returns but are associated with more risk than standard type equities.Adventurous Attitude to RiskYou are prepared to take a substantial degree of risk with your investment/s in return for the prospect of the highest possible longer term performance. You appreciate that over some periods of time there can be significant falls, as well as rises, in the value of your investments and you may get back less than you invest. This strategy holds significant risk in the shorter term. A typical Adventurous investor will usually be invested entirely in higher risk assets such as equities. There may also be a proportion of the investment in specialised equities, which focus on a particular sector of the economy or relate to a particular market or industry. Specialised equities can boost longer term returns but are associated with more risk than standard type equities.Capacity for LossInvestment HorizonA longer investment horizon helps support capacity for loss as this gives more time for markets to recover and more scope to save to make up for past investment losses. However, this is generally less pertinent for retired people as they have less scope to save more.Following completion of our Capacity for Loss Questionnaire, we assessed your capacity to be low/medium/high which can be best described as follows: (Delete as appropriate) Low - We discussed your ‘capacity for loss’ and given your level of income and the value of your other assets we agreed that you have low capacity for investment loss. This means that should your investments go down in value at any point and you choose to crystallise such a loss by gaining access to your investments, it would impact your lifestyle.Medium - We discussed your ‘capacity for loss’ and given your level of income and the value of your other assets we agreed that you have medium capacity for investment loss. This means that should your investments go down in value at any point and you choose to crystallise such a loss by gaining access to your investments it would somewhat disadvantage you. High - We discussed your ‘capacity for loss’ and given your level of income and the value of your other assets we agreed that you have high capacity for investment loss. This means that should your investments go down in value at any point and you choose to crystallise such a loss by gaining access to your investments it would not impact on your lifestyle. You understand that the value of your investments can go down as well as up and you are comfortable with the level of risk that you are taking with your investments. [or enter your own wording here in relation to the discussion you had with the client around capacity for loss] Investment Experience Free text here to confirm investment experience – refer to notes on the fact find – copy from there Ethical ViewsYou have/have not expressed any ethical preferences in relation to your investments. Include details of ethical preferences here, if applicableSection 2 - Your ObjectivesWe have established that your objectives are as follows:Examples as followsYou are in a flexi-access drawdown arrangement and you have confirmed that you do not need to draw on these funds at this time. You have stated that you have no desire to annuitise and that there are no changes to overall situation. Maximise tax efficient savings;Review your existing investment portfolios to ensure this/these remain in line with your attitude to risk and current market conditions; You have confirmed that this is/these are the only objective/s that you are prepared to address at this time and do not wish to discuss any other potential objectives even though you may have other needs that should be addressed. Therefore, by not reviewing these other objectives this could be to your detriment. I have based my advice on what I believe to be complete information in relation to this objective and I therefore believe my recommendation to be suitable advice.Section 3 – Recommendations Examples as follows: Maximising your tax efficient savings (delete any areas not applicable) ISA Allowance I recommend that you utilise your unused ISA allowance by moving funds from your personal portfolio on the wrap of ?XXXX into your existing XXXXXX Stocks & Shares ISA account. This will use up your ISA allowance in full for the current tax year and maximise tax efficiency for your savings. Please note, the ISA allowance for the upcoming 2016-17 tax year will remain at ?15,240.00, however, this will rise from 6th April, 2017.As we are recommending that you add further funds from your XXXXX e.g. cash savings/inheritance received/xxxxx, I confirm we have checked to ensure these additional funds can be made subject to the annual allowance limit of ?15,240 for ISAs. I confirm you have sufficient allowance. Please ensure the file is backed up to confirm this) SIPP contributions (delete if not applicable) I recommend that you make a contribution of XXXXX into your SIPP. If personal contribution: Your contributions will be paid net of basic rate tax relief, and then grossed up by the SIPP provider. The basic rate tax relief is then reclaimed by the SIPP provider from HMRC. If in any tax year you are a higher rate tax payer, the additional tax relief can be claimed through your self assessment return. If employer contribution: In addition to extracting the funds from the business free of tax, you will benefit from tax free growth on its investment income and capital gains.Note here if carry forward has been used and show your calculations I have also considered the annual allowance which places an annual limit on the total amount of tax efficient pension savings that can be made by you, and on your behalf, to registered pension schemes and I can confirm that this will not be exceeded. More information on the annual allowances is available on request. The earliest pension benefits can be accessed is age 55, which you are already past. If you wish to access the funds at any time then you can withdraw 25% tax free cash and the rest is taxed as income. I recommend that in your circumstances, your pension is left untouched because it is held outside of your estate for inheritance tax purposes and it is a tax efficient savings pot. Should you need to make withdrawals, I will recommend the best strategy when the time comes. I therefore summarise the recommendation as to which account they will be added to as follows: Additional Amount/Increase In Contribution Amount Account XXXXXXXX SIPPXXXXXXX Stocks & Shares ISAEmergency funds – as you are adding funds to your portfolio, a key area to consider is having sufficient monies for emergencies. You confirmed to me that you do not have/have sufficient cash funds available for this purpose. I would generally recommend that you retain 3 to 6 months net income in instant access funds as a suitable emergency fund.Increase in regular contributions I recommend that you increase your regular contribution to XXXX (currently paying XXX). Affordability - As you are increasing your regular contributions, a key area in financial planning is to ensure this is affordable for you and that it will not cause you financial difficulty. Based on the information provided by you, on your expenditure and income details in the fact find, the increase appears to be affordable. Should there be any changes to your income and expenditure and it no longer is affordable, please do let me know so we can change the regulars as soon as possible for you. Investment Review No Rebalancing or Fund Switching [Delete section if not appropriate]Based on the analysis of your portfolio, this is sufficiently close to the XXXX (e.g. strategic asset allocation/target volatility/performance targets we set etc - You should enter your own reasons as to why, in your view, no changes were necessary) therefore I am not recommending any changes at this moment. For your information, I have set out a table below of the asset allocation of your portfolio in comparison to the target asset allocation. (NOTE THAT THIS IS THE HYBRID 2015 PORTFOLIO – NEED TO INSERT DIFFERENT TABLE IF NOT 2015 OR HYBRID 2015 WHICH CAN BE FOUND IN THE APPROPRIATE INVESTMENT MANUAL HERE T:\FAL IntranetAsset AllocationFundRiskCauCau-ModModMod-AdvAdvActual Asset Allocation UK Value CompaniesVanguard FTSE UK Equity Income IndexHi17.0%12.0%11.0%14.0%19.0%UK Mid CompaniesHSBC FTSE 250 IndexHi5.0%5.0%5.0%7.0%9.0%UK Smaller CompaniesLiontrust UK Smaller CompaniesHi2.0%4.0%5.0%7.0%7.0%US EquitiesVanguard US Equity IndexHi5.0%7.0%10.0%15.0%20.0%European EquitiesVanguard FTSE Dev Europe ex UK IndexHi1.0%2.0%2.0%3.0%4.0%Asia Pacific EquitiesHSBC Pacific IndexHi2.0%3.0%4.0%6.0%8.0%Emerging Market EquitiesVanguard Emerging Market Stock IndexHi0.0%2.0%5.0%6.0%8.0%Short-Tem GiltsSWIP Defensive GiltLo5.0%5.0%5.0%5.0%2.0%Medium-Term GiltsL&G All Stocks Gilt IndexLo8.0%7.0%5.0%4.0%4.0%Index-Linked GiltsL&G All Stocks I-L Gilt IndexMed20.0%15.0%12.0%7.0%5.0%IG Corporate BondsKames Sterling Corporate BondMed5.0%6.0%6.0%4.0%0.0%HY Corporate BondsBaillie Gifford High Yield BondHi5.0%5.0%5.0%3.0%0.0%Overseas BondsVanguard Global Bond IndexMed8.0%7.0%5.0%3.0%0.0%Money MarketWrap/Product CashLo2.0%2.0%2.0%2.0%2.0%Absolute ReturnStandard Life GARSMed9.0%10.0%14.0%10.0%10.0%PropertyM&G Property PortfolioMed6.0%8.0%4.0%4.0%2.0%Rebalancing / Fund Switching – Existing Funds[Delete section if not appropriate] I recommend that you rebalance your existing , including new funds being added to top up the XXX (delete if not adding funds), to the new Fairey 2016/17 ‘Hybrid’ ‘xxxxx’ Portfolio, which is detailed in the next section. This will ensure that your portfolio is realigned to take account of current market conditions and your attitude to risk. Fund Composition – Fairey Associates 2016/17 Hybrid ‘XXXX’ Portfolio Click here to get fund composition table Fund SelectionWhenever discussing investments your view on the level of risk you are prepared to take is paramount in deciding where to invest and which funds to invest in. The level of risk you are prepared to accept can differ from your overall attitude to risk. Below are some of the reasons for this:Your investment objective.The anticipated length of the investment (short, medium or long term).Other assets you have and how these compare.The importance of the money that you want to invest and how much, if any of it, you can afford to lose.Access requirements (can it be locked away for a minimum period of 5 years or would immediate access be required?)We agreed (as confirmed earlier in this report) that you would be invested in line with a XXXXXXX attitude to risk. It should be noted that the performance of each asset class will vary and grow at differing rates, but by splitting your investment between different asset classes this should help combat the potential for loss in any one particular class as each one should respond differently in the same investment environment. This, in turn, should help spread the level of risk you are taking - and even though some funds may have a higher or lower risk rating than your stated attitude to risk, the combination of funds I have recommended meets the overall risk requirements for your investment.Splitting your monies amongst different classes helps you combat the potential for loss in any one class as each will in theory respond differently in the same investment environment. This helps spread the level of risk you are taking. The combination of funds I have recommended meet the overall risk requirements for your investment, even though some funds are higher and some lower than your stated attitude.Spreading the RiskUtilising more than one asset class (such as an element of gilts to counterbalance a high equity holding) can reduce risk. The alternative, single asset class selection is a proven higher risk investment strategy that you may not feel comfortable with.Fund PerformanceI have included graphs below, which illustrate the performance of your 2015/16 ‘XXXX’ portfolio and our recommended 2016/17 ‘XXXX’. Both/all portfolios are ‘back-tested’ from July 2011. Include FE Performance Graphs here for the current Fairey portfolio and recommended Fairey portfolio [Include appropriate AFI Index as Benchmark]. Source: Financial Express Note: The performance chart of your current portfolio is identical to the recommended portfolio as no changes to the underlying investments have occurred. (Only include this wording if there have been no changes to the investments held in the current portfolio vs recommended portfolio).Obviously this is historical data and past performance is no guide to future performance. Our new portfolios are therefore constructed, as they are every year, with our outlook on the future global economic environment in mind as well as a range of other criteria as detailed in our Investment Manual.Performance Graph (Total Return) [Delete Paragraph As Appropriate]The Total Return basis shows the total return of the instrument with all income reinvested and assuming income is taxed at basic rates of income tax. This is a more suitable pricing structure to illustrate the past performance of our funds when held within an Investment Portfolio where there will be a tax effect on the funds.Performance Graph (Gross Return Basis) [Delete Paragraph As Appropriate]The Gross Return basis is used to illustrate the return of an instrument over a specified period with all income reinvested on a gross basis i.e. without any allowance for taxation. This is more appropriate to illustrate the past performance of our funds when held within a pension or ISA where practically no tax is suffered within the investment vehicle.AFI Index (Benchmark)The Adviser Fund Index (AFI) is made up of the recommended portfolios of a panel of leading UK financial advisers. Based entirely on the funds actually recommended to clients, the AFI Adventurous, Moderate and Cautious portfolios carry real-life credibility, providing insight into the benefits of holding top quality funds. The fund portfolios are collected and aggregated twice a year and FE publishes daily performance of each index as well constituent lists and further analysis.Advisers and investors alike can look for funds recommended by this influential panel for reassurance or new ideas in fund selection.Volatility Volatility is a measure of risk. Assets that experience wide fluctuations in value are defined as high risk, but generally tend to produce the highest long-term performance. Very low risk assets (for example deposits) have the smallest fluctuations in investment return terms. I have also attached a table below that illustrates the volatility of the portfolios. Include FE Volatility table/s here for the current Fairey portfolio and recommended Fairey portfolio[ [Include appropriate AFI Index as Benchmark]. Source: Financial Express The above tables illustrate the ‘Gross Return/Total Return’ annualised ratios table over three years (from XX 2013 to XX 2016). Note: The volatility table of your current portfolio identical to the recommended portfolio as no changes to the underlying investments have occurred. (Only include this wording if there have been no changes to the investments held in the current portfolio vs recommended portfolio).I have included a brief glossary of the terms used in the above table in the appendixKey Investor Information Documents (KIIDs) - ExplanationWhere required I have issued you with a Key Investor Information Document (KIID) in respect of the funds I have recommended. These documents provide a rating for the fund on a scale of 1-7 based on the Synthetic Risk Reward Indicator (SRRI) which is designed to give investors a straightforward indication of the level of risk associated with a particular fund in order to enable investors to make easier comparisons.Please note that these ratings are a standardised measure of a fund's volatility calculated in line with a prescribed methodology. The SRRI will therefore not correlate directly to the Attitude to Risk / Investor Risk Profile categories used in our discussions which also takes into account other factors when assessing your tolerance for risk.Please note that not all funds are required to produce a KIID and therefore there may not be an SRRI rating available for all of the above funds. In addition, even where a KIID is available certain funds (such as those with significant exposure to property as an asset class) are not permitted to publish an SRRI. Tax Position on Fund Switching (Are there any CGT consequences on personal portfolios?) I have also detailed any costs or tax implications in respect of switching funds below:If you were to rebalance your Personal Portfolio, you would make a gain of ?XXXX. Taking into account your annual CGT exempt amount of ?11,100 each (2016/17) you would have no capital gains tax liability as your total gain would be within your annual exempt amount (assuming you have made no other capital gains elsewhere in the current tax year).ORThere are no tax implications in switching between funds as the above funds are held within a XXXX (enter details of tax wrapper)Wrap Provider – existing holdings I have not considered any other wrap providers at this time as you have a considerable amount of holdings on the XXXX platform and for ease of administration I recommend that you remain with your existing provider. Nevertheless, I have ensured that the contract which they offered contained the right features for your requirements. XXXX provides the technology platform which allows us to store your relevant personal and policy details, and as the data will be available online, it is held in accordance with the highest internet security standards, akin to online banking. Whilst there are a number of Wrap providers available, all with differing features and charging structures, I currently feel that remaining with XXXX suits your current needs. We do, however, keep this under review. Regular Reviews – Enhanced ServiceIt is important that the selected investments are reviewed regularly to ensure that they continue to meet your objectives and attitude to risk.This is especially important when a portfolio made up of a number of different funds has been constructed to meet a certain asset allocation because, if left unchecked, it may become unbalanced over time and there is then scope for the original solution to no longer match your risk profile and objectives.We will continue to write to you once a year on the anniversary of your plan with:Performance figures – these will show the losses and/ or returns made over the previous year’s investing.Rebalancing figures – these will calculate how far your portfolio has moved from the recommended fund allocation. An opportunity to meet for an annual review of your investments and your personal circumstances. We can then review your risk profile and consider whether to rebalance to the original fund allocation or change the portfolio in line with a different attitude to investment risk.Next Annual Review MeetingYour next annual review meeting is scheduled for MM/YYYY. Payment for ServicesAdviser Charges - Potential Tax ConsequencesAdviser charges can be paid either direct by you or they can be paid from your investments.[Include only the relevant paragraphs below as appropriate]When paid from your investments, this can come from natural income such as dividends or interest payments (which may have been paid into the product cash account if the investment is held on a platform). If, however, there is insufficient cash or income to cover the adviser charge, a withdrawal direct from the investment by encashing a sufficient number of units to cover the costs may need to be made instead. Making an encashment though can create a potential tax event for you.For an investment bond, any encashments made to pay an adviser charge will form part of the 5% pa (cumulative) tax deferred allowance that you are entitled to, and should this exceed your available allowance, the excess will be added to your income to determine if an income tax liability is due. For a direct investment in shares or collectives, any encashment could crystallise a loss or a gain, and if there is a gain this could create a potential Capital Gains Tax (CGT) liability if this gain when added to any other gains made in the same tax year (less carried forward losses) exceeds your annual CGT exempt amount. For ISA or Pension contracts this should not create a tax issue, although adviser charges can only be deducted from Pension contracts to pay for Pension advice. Otherwise, such payments could be unauthorised pension lump sum payments and create a tax charge.It is important that you understand that where the fees are automatically taken from your investment, the impact it may have on your tax affairs is still your responsibility to declare.Initial Adviser Charge In line with the Client Fee Agreement signed by you on XX/XX/XXXX, the initial cost of my advice is ?XXXX. This equates to X% of the increment/new investment funds of ?XXXX. You have agreed that this adviser charge will be deducted from the amount received by the product provider, with the net amount remaining of ?XXXX being invested within the product.[Amend accordingly if client is paying by invoice]ORAs this is part of your annual review there is no initial charge. Ongoing Adviser Charge We are charging you an ongoing adviser charge of X% of your total investments per annum for our investment management service. On the basis of a fund value of ?XXXX, this equates to an ongoing annual adviser charge of ?XXXX per annum.You should note that the amount you pay will fluctuate with the value of your investment; if the value of your investment rises, the amount you pay us will also increase. Conversely, if the value of your investment falls, the amount you pay us will also decrease.The payment of our ongoing adviser charge will be taken directly from your investment on a monthly/quarterly/annual basis using a formula of 1/12th / 1/4th of X%?of your total investments under our management.Ongoing services can be cancelled at any time by simply informing us in writing. Please note that we reserve the right to charge you for services provided prior to cancellation.Please note that these charges will fluctuate in accordance with the underlying fund pliance Declaration We are authorised and regulated by the Financial Conduct Authority, as detailed in the Client Agreement Letter dated XXXX. We would particularly draw your attention to the information concerning charges, cancellation and risk contained in the documentation provided. As the Client Agreement Letter explains, you may be entitled to take your complaint to the Financial Ombudsman ServicePlease note that in all our dealings with you, we will treat you as a Retail client. If we have categorised you as a professional client, then you will lose certain protections provided for retail clients, details of which we have previously provided to you. When providing our advice, we have relied on the information you have provided to us during the information gathering process. If you feel this information is not a true reflection of your situation, then please let us know as this may affect the appropriateness of any recommendations made.Cancellation Rights (delete if not applicable i.e. if just rebalancing then there is no cancellation rights. There will be cancellation rights if adding new monies) Where I have made any recommendations I have also supplied you with the appropriate an Illustration together with a copy of the Key Features document, which I have explained to you, provides a great deal of information concerning the terms under which the investment contract has been issued. You should read this document carefully and contact me if you have any queries concerning it. I would like to draw your particular attention to the sections on charges and cancellation.Financial Services Compensation Scheme (FSCS)You may also have full rights to the Financial Services Compensation Scheme (FSCS). The FSCS provides compensation should your chosen provider become insolvent and be unable to honour a claim under your policy. The levels of compensation vary depending on the type of contract concerned.ConclusionShould you require further information regarding the contract recommended, please do not hesitate to contact me.Yours Sincerely, [Enter Electronic Signature Here][Enter Adviser Name Here]Independent Financial AdviserAppendix 1 – Investment Terms Explained Downside Risk - Downside risk is a measurement which only considers negative returns. It is calculated as a downside deviation of returns below a specified Risk Free Rate. It represents and estimation of a security's potential to suffer a decline in price in negative market condition. It could be considered as an estimate of the potential loss on any investment.Maximum Drawdown - Represents the worst possible return over a periodE.g. Buying at the maximum price over the period and selling at the worst.Maximum Gain - Represents the best running return over a periodE.g. The longest running consecutive gain without making a lossMaximum Loss - Represents the worst running return over a periodE.g. The longest running consecutive loss without making a gainNegative Periods - Indicates number of negative monthly returns.Positive Periods - Indicates number of positive monthly returns.Volatility - Standard deviation is a statistical measurement which, when applied to an investment fund, expresses its volatility, or risk. It shows how widely a range of returns varied from the fund's average return over a particular period. Low volatility reduces the risk of buying into an investment in the upper range of its deviation cycle, then seeing its value head towards the lower extreme. For example, if a fund had an average return of 5%, and its volatility was 15, this would mean that the range of its returns over the period had swung between +20% and -10%. Another fund with the same average return and 5% volatility would return between 10% and nothing, but there would at least be no loss.While volatility is specific to a fund's particular mix of investments, and comparison to other portfolios is difficult, clearly, for those that offer similar returns, the lower-volatility funds are preferable. There is no point in taking on higher risk than necessary in order to achieve the same reward.Appendix 2 – Tax Implications summary on pensions Contributions paid into pensions benefit from tax relief subject to gross earnings and the annual allowance. The annual allowance is a limit on the amount that can be contributed to a pension each year, while still receiving tax relief. It's based on gross earnings for the year and is capped at ?40,000 per annum. A lower limit of ?10,000 per annum may apply when drawing benefits. If you exceed the annual allowance in a year, you won’t receive tax relief on any contributions paid in excess and you will be faced with an annual allowance tax charge. Carry forward of the annual allowance allows you to make pension contributions in excess of the annual allowance, if you have not used the previous three tax year’s annual allowances limit and you have sufficient earnings to support the contribution. You can’t receive tax relief on contributions in excess of your earnings in a tax year, even if you have annual allowance limit to carry forwards, as you must also have sufficient earnings to support the contribution. If you make employer/company contributions, you are not subject to your earnings limit, only the annual allowance limits apply. This type of contribution benefits from corporation tax relief if valid under business expenses. We suggest large employer/company contributions are run past your accountant to ensure they can be classed as business expenses. The funds within pensions benefit from tax free growth on its investment income and capital gains. When you start drawing retirement benefits, you can generally take up to 25% of your pension pot as a tax free lump sum (know as Pension Commencement Lump Sum – PCLS). You can then use the remainder of your pot to provide an income that may be subject to income tax at your marginal rate. National Insurance contributions are not paid on PCLS or pension income.The Lifetime Allowance is a limit on the amount of pension benefits that can be drawn from pension schemes – whether lump sums or pension income – and can be paid without triggering an extra tax charge, called the Lifetime Allowance tax charge. The Lifetime Allowances current level is ?1 million for 2016/17. Funds over ?1 million when drawn out could potentially be subject to the Lifetime Allowance tax charge, unless you have a form of protection against the Lifetime allowance limit. In the event of death before age 75, death benefits paid to your beneficiaries are tax free. If you die after age 75, there will be tax to pay up to the recipient’s marginal tax rate.Appendix 3 – Pension Product Risk Warnings If you take early retirement (note the earliest that pension benefits can be taken is currently age 55 and rising to age 57 from 2028) from the contract, especially during the early years, you may get back less than you have invested. You should read, carefully, the section entitled 'Risk Factors' on the Key Features Document, which highlights any possible disadvantages.The retirement fund values quoted are projections and are no guarantee of a final maturity value. Should funds under-perform expectation, you may be required to increase your pension contributions or accept a lower retirement fund value which in turn would lead to a lower annual income from your pension. Annuity rates may have fluctuated by the time you take benefits (assuming you choose to buy an annuity at retirement).I strongly recommend that we arrange to review your pension arrangements on an ongoing basis in order to ensure that the selected investments continue to meet your objectives and attitude to risk. This is especially important when a portfolio made up of a number of different funds has been constructed to meet a certain asset allocation because, if left unchecked, it will become unbalanced over time and there is then scope for the original solution to no longer match your risk profile and objectives.It should also be noted that the importance of reviewing your pension plan increases as you near retirement, and in the later years you should consider switching to lower risk funds to reduce volatility and help preserve the value of your plan.Appendix 3 – Investment Risk Warnings You should be aware of the following risks in respect of the investments I have recommended. You should also ensure you read the Key Features Document which I have explained to you as this provides a great deal of information on the terms under which the policy will be issued:-The product is designed as a medium to long term investment. If the investment is surrendered early then its value may be less than that originally invested.Illustrations are intended as a guide to future returns which are not guaranteed. The growth rates used are those prescribed by the Financial Conduct Authority and all investment companies use the same rates.Past performance is no guarantee of future returns.The value of investments and any income from them can fall as well as rise.Changes in currency rates may cause the value of certain funds to fall or rise.Our recommendations, and any references to taxation, are based on our understanding of current tax legislation which may change in the future. Please note: Tax benefits are subject to change and individual circumstances.If regular withdrawals are being taken from the investment, and the level of withdrawals exceeds the growth of the fund (after charges), then the initial capital invested will be eroded. Property funds can carry a liquidity risk as the underlying investment, due to its nature, may not be readily realisable. Some property funds may impose delays of up to 12 months or more before they will pay out any surrender proceeds. In addition, the value of property can be subjective and will depend on both the valuers opinion and the prevailing conditions in the markets.High Yield Bond funds may invest in bonds that carry a higher risk of default by the bond issuer in order to obtain a higher income yield.New fund portfolios to insert Delete this section once copied and pasted the appropriate portfolio I have detailed below the new fund composition of the 2016/17 ‘Hybrid’ Cautious/Cautious to Moderate/Moderate/Moderate to Adventurous/Adventurous portfolio: Asset AllocationFundRiskCauCau-ModModMod-AdvAdvUK Value CompaniesVanguard FTSE UK Equity Income IndexHi17.0%12.0%11.0%14.0%14.0%UK Mid CompaniesHSBC FTSE 250 IndexHi5.0%5.0%5.0%7.0%19.0%UK Smaller CompaniesLiontrust UK Smaller CompaniesHi2.0%4.0%5.0%7.0%7.0%US EquitiesVanguard US Equity IndexHi5.0%7.0%10.0%15.0%20.0%European EquitiesVanguard FTSE Dev Europe ex UK IndexHi1.0%2.0%2.0%3.0%4.0%Asia Pacific EquitiesHSBC Pacific IndexHi2.0%3.0%4.0%6.0%8.0%Emerging Market EquitiesVanguard Emerging Market Stock IndexHi0.0%2.0%5.0%6.0%8.0%Short-Tem GiltsAberdeen Sterling Short Term Government BondLo5.0%5.0%5.0%5.0%2.0%Medium-Term GiltsL&G All Stocks Gilt IndexLo8.0%7.0%5.0%4.0%4.0%Index-Linked GiltsL&G All Stocks I-L Gilt IndexMed20.0%15.0%12.0%7.0%5.0%IG Corporate BondsKames Sterling Corporate BondMed5.0%6.0%6.0%4.0%0.0%HY Corporate BondsBaillie Gifford High Yield BondHi5.0%5.0%5.0%3.0%0.0%Overseas BondsVanguard Global Bond IndexMed8.0%7.0%5.0%3.0%0.0%Money MarketWrap/Product CashLo2.0%2.0%2.0%2.0%2.0%Absolute ReturnStandard Life GARSMed9.0%10.0%14.0%10.0%5.0%PropertyBlackrock Global Property Securities Fund Med6.0%8.0%4.0%4.0%2.0%I have detailed below the new fund composition of the 2016/17 ‘Passive’ Cautious/Cautious to Moderate/Moderate/Moderate to Adventurous/Adventurous portfolio: Asset AllocationFundRiskCauCau-ModModMod-AdvAdvUK Value CompaniesVanguard FTSE UK Equity Income IndexHi15.0%14.0%13.0%12.0%11.0%UK Mid CompaniesHSBC FTSE 250 IndexHi9.0%12.0%13.0%17.0%22.0%US EquitiesVanguard US Equity IndexHi9.0%10.0%12.0%18.0%22.0%European EquitiesVanguard FTSE Dev Europe ex UK IndexHi6.0%6.0%8.0%11.0%16.0%Asia Pacific EquitiesHSBC Pacific IndexHi0.0%2.0%3.0%4.0%5.0%Emerging Market EquitiesVanguard Emerging Market Stock IndexHi0.0%0.0%2.0%3.0%4.0%Medium-Term GiltsL&G All Stocks Gilt IndexLo20.0%16.0%14.0%9.0%8.0%Index-Linked GiltsL&G All Stocks I-L Gilt IndexMed19.0%15.0%13.0%9.0%7.0%IG Corporate BondsBlackRock Corporate Bond TrackerMed12.0%15.0%14.0%10.0%3.0%Overseas BondsVanguard Global Bond IndexMed8.0%8.0%6.0%5.0%0.0%Money MarketWrap/Product CashLo2.0%2.0%2.0%2.0%2.0%I have detailed below the new fund composition of the 2016/17 ‘Light Green’ Cautious/Cautious to Moderate/Moderate/Moderate to Adventurous/Adventurous portfolio: Asset AllocationFundRiskCauCau-ModModMod-AdvAdvUK Value CompaniesJupiter Responsible IncomeHi12.0%11.0%14.0%19.0%21.0%UK Large CompaniesEdenTree Amity UKHi9.0%10.0%14.0%16.0%17.0%International EquitiesF&C Stewardship International Hi7.0%10.0%15.0%20.0%21.0%International EquitiesEdenTree Amity International Hi2.0%2.0%3.0%4.0%5.0%International EquitiesAberdeen Ethical World Hi3.0%4.0%6.0%8.0%10.0%Emerging Market EquitiesVanguard Emerging Market Stock IndexHI2.0%5.0%6.0%8.0%9.0%Short-Tem GiltsAberdeen Sterling Short Term Gov Bond Lo5.0%5.0%5.0%2.0%2.0%Corporate BondsRathbone Ethical BondMed21.0%17.0%11.0%4.0%0.0%Corporate BondsEdenTree Amity Sterling BondNed22.0%17.0%11.0%4.0%0.0%Money MarketWrap/Product CashLo2.0%2.0%2.0%2.0%2.0%Absolute ReturnKames Ethical Cautious ManagedMed9.0%9.0%9.0%10.0%11.0%PropertyBlackrock Global Property Securities Fund Med6.0%8.0%4.0%3.0%2.0%I have detailed below the new fund composition of the 2016/17 ‘Dark Green’ Cautious/Cautious to Moderate/Moderate/Moderate to Adventurous/Adventurous portfolio: Asset AllocationFundRiskCauCau-ModModMod-AdvAdvUK Value CompaniesJupiter Responsible IncomeHi12.0%11.0%14.0%19.0%20.0%UK Large CompaniesEdenTree Amity UKHi9.0%10.0%14.0%16.0%16.0%International EquitiesF&C Stewardship International Hi9.0%14.0%14.0%19.0%20.0%International EquitiesEdenTree Amity International Hi10.0%12.0%14.0%19.0%20.0%International EquitiesAberdeen Ethical World Hi10.0%12.0%15.0%19.0%19.0%Corporate BondsRathbone Ethical BondMed24.0%19.0%17.0%3.0%3.0%Corporate BondsEdenTree Amity Sterling BondMed24.0%20.0%10.0%3.0%0.0%Money MarketWrap/Product CashLo2.00%2.00%2.00%2.00%2.00% ................
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