Anyone have experience with Skandia International?

[R123]

I am considering placing some investment funds with the following offshore company and I would be glad to know if anyone has experiences, positive or not, with them:

https://www.skandiainternational.com/en/other/

thanks for any advice.

Edited February 7, 2014 by R123

[ExpatJ]

How did you hear about them?

Sent from my iPhone using ThaiVisa app

[arby]

Yes, I have experience with them........Stay far, far away from them........

[MMarlow]

Yes, I have experience with them........Stay far, far away from them........

Why do you have such strong negative feelings about Scandia?

[orosee]

I lost a lot of money with them. More than I feel comfortable with. As a final insult, they now want to charge me 5% fees to transfer back the remaining money to my account.

More detail:This was a low risk, low gain lump sum investment of $40k (a so-called protected fund) that never grew in 5 years, then lost 50% in 2008, gained nothing in the following 3 years until it was disbanded. I chose to have the remaining 20k in what they told me was a safe, bank account like structure. A month later, I had only 14k left. I contacted them as well as my financial advisor but both chose not to respond to repeated enquiries.

Early December I requested to have the rest transferred to a local account and was told that I had to pay $750 fees. Worse, they refuse to tell me when I will get the money (it's been 2 months already) and also told me that I should settle for payment in installments of undisclosed amount and frequency.

Otherwise they can't tell me when I'll get my money, which is exactly the situation I'm on anyway.

So I couldn't really recommend Skandia to anyone but my worst enemies.

Tip: If you're using a financial advisor and he ever mentioned "dollar cost averaging", run. I had a total of 3 investments over the past 15 years (2 with Skandia, 1 with Royal London) and none of them made me any money. In fact all of them lost over the past 3 years.

Many of my friends lost almost everything after 2008, so I consider myself lucky.

[malcolminthemiddle]

Are you considering an umbrella bond such as their Executive Investment Bond promoted amongst others by Abbey Financial Services based in Spain?

If you are be aware of the different charging structures available.

Make sure you have received and signed not only the application form (do not let Abbey complete the form on your behalf) which only contains the code of the charging structure provided by Abbey but also the mandatory Charges Confirmation Form which details the full extent of the charges you have agreed.

PM me for any further details.

Edited February 7, 2014 by malcolminthemiddle

[mexxx]

its an insurance co.

enuff said.

[R123]

Are you considering an umbrella bond such as their Executive Investment Bond promoted amongst others by Abbey Financial Services based in Spain?

If you are be aware of the different charging structures available.

Make sure you have received and signed not only the application form (do not let Abbey complete the form on your behalf) which only contains the code of the charging structure provided by Abbey but also the mandatory Charges Confirmation Form which details the full extent of the charges you have agreed.

PM me for any further details.

The answer to the question is yes and the company promoting to me this Executive Investment Bond is indeed Abbey in Spain. I will send you a PM.

Really appreciate your help.

[R123]

ps: I tried to send you a PM. if not arrive let me know and I will resend.

[wordchild]

I would exercise extreme caution in dealing with Abbey, they have a mixed reputation (to say the least) and are a part of the same group as the dreaded Devere. There is plenty about both on this forum and on other expat forums.

Skandia is part of the Old Mutual Group and, as noted above, is an insurance company and also has a platform for fund investment. They are a popular vehicle for the offshore IFA,s , IMO because they operate a charging structure that can be very renumerative for the IFA and very costly for you. The heavily promoted benefits of investing through them eg ease of switching between funds, tax planning, and a poor value insurance product are really worth nothing much for most expats. And, what benefits there are, can be obtained easily and less expensively through other means. The main issue, though, is you are usually locked in for a period (via heavy exit penalties) and it can be costly to get your money out if you need to. As an expat, there should never be any need to go into any kind of investment that locks you in. Much better to access the investments you want via an onshore discount broker or another low cost platform.

Of course, for many people, it is right to take (and pay for) advice, but never ever surrender the ultimate control of your money to someone else or allow yourself to get locked into something that is costly to get out of.

Edited February 8, 2014 by wordchild

[AyG]

High fees.

Expensive way to get life insurance.

Only allows investment in Unit Trusts/OEICS (funds) - not lower cost alternatives such as Investment Trusts and ETFs.

The only people that it makes sense for are financial advisors. (Lots of lovely commission. You can almost imagine them rubbing their hands in glee.)

Far better in my opinion to open an account with an offshore broker such as TD Direct Investing in Luxembourg which allows investment in funds, shares (including ITs) and ETFs. If you don't want to invest in funds, then Saxo Capital Markets in Singapore is a lower cost alternative.

And if you want life insurance, buy cheap term insurance to cover the period you need it for.

[SheungWan]

As Suze Orman has pointed out umpteen times, you keep your insurance policies and your investment policies totally separate.

[dddave]

I'm not the OP but I learned a lot from this topic. Nice to see a topic such as this one wherein people take the time and effort to share helpful information.

[JSixpack]

Scamdia. Be afraid. Very afraid.

Only allows investment in Unit Trusts/OEICS (funds) - not lower cost alternatives such as Investment Trusts and ETFs.

Yes they do. Maybe it depends on the Scamdia product.

Edited February 8, 2014 by JSixpack

[AyG]

Only allows investment in Unit Trusts/OEICS (funds) - not lower cost alternatives such as Investment Trusts and ETFs.

Yes they do. Maybe it depends on the Scamdia product.

Really? I had a Skandia (not International) account a few years ago. It only provided for investments in funds. Now looking at both the Skandia International website and the Skandia UK one, there's no reference that I can see to holding equities at all. Can you provide a bit more detail, or possibly a relevant link?

[Misty]

You'll really want to understand what you are buying before purchasing one of these schemes. For example, you're not investing, you're buying investments inside an insurance wrapper. You'll really want to understand the difference. Examples: due to the insurance wrapper, your money will be locked up needlessly for a long period (typically 5-25 years), and the lock-up can only be undone at great expense. Meanwhile, the insurance wrapper will help to hide multi-layers of hidden fees. The types of funds you'll get to choose to invest in are not great. Better lower cost options are easily available elsewhere without the insurance wrapper. Finally, presumably you're a resident of Thailand, but you'll be getting "advice" from an unregulated "advisor" (salesman) in Spain, on a thinly regulated product based somewhere like the Isle of Man. That's 3 different jurisdictions, and you are the small guy in this transaction - if it goes pear-shaped (and these types of structures often do), who is going to help you? No regulator, that's for sure. I'm not sure why anyone would enter into this type of scheme when there are much better options out there.

[R123]

You'll really want to understand what you are buying before purchasing one of these schemes. For example, you're not investing, you're buying investments inside an insurance wrapper. You'll really want to understand the difference. Examples: due to the insurance wrapper, your money will be locked up needlessly for a long period (typically 5-25 years), and the lock-up can only be undone at great expense. Meanwhile, the insurance wrapper will help to hide multi-layers of hidden fees. The types of funds you'll get to choose to invest in are not great. Better lower cost options are easily available elsewhere without the insurance wrapper. Finally, presumably you're a resident of Thailand, but you'll be getting "advice" from an unregulated "advisor" (salesman) in Spain, on a thinly regulated product based somewhere like the Isle of Man. That's 3 different jurisdictions, and you are the small guy in this transaction - if it goes pear-shaped (and these types of structures often do), who is going to help you? No regulator, that's for sure. I'm not sure why anyone would enter into this type of scheme when there are much better options out there.

Thank you very much for your post Misty and the same thanks applies to the others who so far have contributed. You will notice i started this thread as i need advice about this "investment" with Skandia as i am indeed trying to understand this scheme. The broker, if I can call him that, has not so far at any time mentioned to me that the "wrapper" I am getting was was an insurance wrapper. In none of the emails they have sent me nor the lengthy phone call to me has the word insurance been mentioned. There is in the Skandia brochure an oblique mention per se of insurance, so when the broker calls me again i will raise this issue with him.

Hence and I have made no decision if i will go ahead with this scheme I am seeking advice about it including from this forum.

So far i can find no one who has anything good to say about either Skandia or the agent in Spain.

Misty you also state:

" I'm not sure why anyone would enter into this type of scheme when there are much better options out there"

-I would be very grateful if you or anyone one else with the relevant experience could suggest such better options. I am retired with offshore status living in Thailand. For the purposes of the present investment I will shortly have 100,000 pounds sterling available. Want to generate and receive per annum a decent income from it to go towards my retirement expenses as bank interest rates are dreadful. Can leave the capital alone for several years providing I get a p.a. income around 6-8%.My attitude to risk is these days medium to high. That said I am not a financial expert in any way. That is why i contacted Abbey, and why I am posting this topic here.

Kind regards.

Edited February 8, 2014 by R123

[malcolminthemiddle]

One of the benefits of umbrella bonds is they can be held in joint names and used for succession planning. With a written mandate for discretionary management they can be used to provide a spouse with a regular income in the event of your death.

Also I believe 100% of the contribution is invested in the underlying fund without deduction for "insurance".

[AyG]

-I would be very grateful if you or anyone one else with the relevant experience could suggest such better options. I am retired with offshore status living in Thailand. For the purposes of the present investment I will shortly have 100,000 pounds sterling available. Want to generate and receive per annum a decent income from it to go towards my retirement expenses as bank interest rates are dreadful. Can leave the capital alone for several years providing I get a p.a. income around 6-8%.My attitude to risk is these days medium to high.

You're not going to find any investment which gives 6-8% per annum income without taking on considerable risk (or loss of capital). However, over the medium to long term you can get a total return of that order, so you'll need periodically to sell part of your investments to provide income.

GBP 100,000 isn't (in the greater scheme of things) a lot of money. You'll want to keep costs as low as possible and not overdiversify your investments. As mentioned previously, I suggest you open an offshore brokerage account. You don't mention your nationality which affects the tax situation. For a US citizen you might consider an equally weighted portfolio of (mostly low cost) ETFs as follows:

• 20% iShares MSCI Thailand (exposure to your "home market")
• 20% EGShares Emerging Markets Core (in the belief that emerging markets will outperform developed markets in the medium to long term)
• 20% Vanguard S&P 500
• 20% Vanguard FTSE Europe
• 20% Vanguard Total Bond ETF (provides diversification away from equities)

If you're not a US citizen, you'd need to check with the broker the rate of withholding tax on income. With Saxo Capital Markets (Singapore) it's 30%, whilst with TD International (Luxembourg) it's 15%. Consider how this is offset against charges.

For a non-US citizen, there are similar ETFs listed elsewhere which may have a better tax situation.

[changnaam]

A good point made about succession planning. Also which country are you from, and do you plan to return later in retirement. If you are from the UK and return, then a wrapper such as this could be beneficial from a taxation point of view.

It sounds like you are not in a position to take investment decisions yourself, and as many have said a fund platform would offer lower costs. Why not find a broker here or in your home country who is able to assist with a platform and advice. You can then deal with the person face to face.

Luxembourg is a popular jurisdiction for many platforms.

[changnaam]

Sorry, duplicated.

Edited February 8, 2014 by changnaam

[fletchsmile]

I just cashed in a collective investment bond with Royal Skandia (same group) after about 7 years. I took it out on the basis of dipping my toes in and letting someone else manage a small amount of my money. The idea being that in future if it worked out and I didn't want to spend much time on my investments or if I died, there would be another alternative to the high dependency on me that exists at the moment. My observations:

The financial advisor company that set it up - deVere- was abysmal. Only really interested in commissions. They also set it up in USD instead of GBP which as fees are fixed at the start locked me into a crap rate about 1 GBP being USD 2 (compared to 1:1.60 -is now) so I was paying $2 of fees every year for GBP1... and from there their service went downhill.

The product itself is expensive. The structure is designed to ensure that they maximise and secure their fees and make it easy for Skandia and any IFA to allocate their returns of commission rather than yours.

There is a penalty if you want to cash in earlier than 8 years of 1% pa on the initial amount, amortising 8%, 7% etc. I decided to cut my losses and suffer the final 1%

The whole structure is just loaded with fees on top of what is necessary if you know what you are doing. eg their charges on top of the underlying fund charges, quarterly admin fees, fees to switch, FX transaction fees etc etc. They claim they can get better entry fees for you into funds. That is perhaps true if you go direct to the fund manager direct in the UK. but you can go thru a discount broker and pay no initial charge anyway. In Thailand it is only 1%-ish on average to go direct compared to 5% in UK

With all the set up issues and fees, it worked out for me 2% p.a. in fees above the same funds managed by me in a Hargreaves Lansdown account.

After cash in, I lost about 8.5% over 7 years. Now if you took the annual fees out at least it would have made a small profit.

Performance in the first couple of years was poor. That was down to lack of communication from them/IFA and not knowing what was happening, after I moved countries and the IFA didn't pass on any info or even reply to emails I didn't even know what the plan was worth! Performance picked up when I kicked the IFA off the policy and started doing myself.

Also because fees are based on initial investment not current investment value there are 2 important impliactions:

1) Your IFA and Skandia's commission and what they get is not linked in any way to performance - a bad sign. Your money goes up or down they earn the same! So unless you keep adding money to pay them even more commission, they want to do as little as possible in managing existing money. They are more interested in selling and bringing in new money for more commissions.

2) If your timing is bad - I set up in 2006 a couple of years before the GFC - then the portfolio drops, you are still facing fees the same fees on the invested amount. eg invest GBP 25k (usually the minimum) fees say 500 a year is 2%. that's on top of an underlying 1.5% by the fund manager that is hidden from you. So a 3.5% hurdle rate. Now if your money falls say 20% to 20k, you are still paying 500 pounds a year which is now 2.5% on top of the 1.5%. Drop 40% in a stress scenario to 15k and you are paying 3%+ fees + say 1.5% underlying. that's 4.5%+ return needed just to stand still!

This is part of what happened to me. That I am an experienced investor is why I understand this. An inexperienced investor would just see themselves not doing very well. I compensated a bit by kicking out the IFA and taking more agressive funds, but the damage was done

Once I started managing the policy myself it was much better. I got great service from the lady at Royal (Skandia). She was very pleasant to deal with, professional and helpful

Unfortunately the underlying is that the plan is expensive and the product not very good. No online platform to select select funds instantly was annoying - as faxing and waiting is not my style. Took 3 weeks or so to cash in. Compared to my account with HL I can check all my funds online whenever I want, no extra fees - hell they even give me a loyalty bonus back. I can sell with them and have the money in a couple of days.

They market it on the tax advantages too. For someone in Thailand there is virtually no income and capital gains taxes if you do things right. The only real advantage is on inheritance tax, where if your estate if over about GBP 375k. IHT was a factor for me. Even then though you can put money in your wife's name, kids names etc like I do, to mitigate that as a start before anything complicated is needed.

{The IHT rules recently change also for people with a foreign spouse too. Instead of about 52k (for foreign spouse) + your 325k, you can now utilize 325k x 2 like someone with a UK spouse.}

In summary:

If you don't know what you are doing regards money, and your timing is right, it is possible they may be of use for some people. If you educate yourself you just see that the product is poor value for money.

I sort of knew that up front, having tried similar products a couple of times in the past, but dip my toes in from time to time. I was playing around with a couple of % of my total investment portfolio only, and the results weren't impressive - although not unexpected. Like I said I won't be here for ever and hopefully my wife and kids will outlive me.

BTW otherexamples from my family:

- My aunty recently had a similar experience. I helped her cash in her policy (not Skandia but similar). For 10 years she got back more or less her capital less their fees! As she couldn't take risk with capital I helped her find a decent convenient acc for cash which was for her a better option. She also used to complain about lack of access to her own money!

- For my brother and sister in law they had Skandia ISAs. I helped them cash them in and now managed them for them thru HL. the fees on ISAs thru Skandia weren't as bad as CIB's or EIBs but still unneccessary.

- My mum used to have some other insurance bonds with other companies: Liverpool Victoria, Prudential, etc set up by my dad. I helped her cash them in and now manage the money for her through HL.

Educate yourself is the best option.

Even just buying a few unit trusts thru say Aberdeen Thailand or your bank, will be a better option for most people. Particularly if you are below the UK IHT threshold of GBP 375k and dealing smaller amounts.

Cheers

Fletch

Edited February 8, 2014 by fletchsmile

[wordchild]

You'll really want to understand what you are buying before purchasing one of these schemes. For example, you're not investing, you're buying investments inside an insurance wrapper. You'll really want to understand the difference. Examples: due to the insurance wrapper, your money will be locked up needlessly for a long period (typically 5-25 years), and the lock-up can only be undone at great expense. Meanwhile, the insurance wrapper will help to hide multi-layers of hidden fees. The types of funds you'll get to choose to invest in are not great. Better lower cost options are easily available elsewhere without the insurance wrapper. Finally, presumably you're a resident of Thailand, but you'll be getting "advice" from an unregulated "advisor" (salesman) in Spain, on a thinly regulated product based somewhere like the Isle of Man. That's 3 different jurisdictions, and you are the small guy in this transaction - if it goes pear-shaped (and these types of structures often do), who is going to help you? No regulator, that's for sure. I'm not sure why anyone would enter into this type of scheme when there are much better options out there.

Thank you very much for your post Misty and the same thanks applies to the others who so far have contributed. You will notice i started this thread as i need advice about this "investment" with Skandia as i am indeed trying to understand this scheme. The broker, if I can call him that, has not so far at any time mentioned to me that the "wrapper" I am getting was was an insurance wrapper. In none of the emails they have sent me nor the lengthy phone call to me has the word insurance been mentioned. There is in the Skandia brochure an oblique mention per se of insurance, so when the broker calls me again i will raise this issue with him.

Hence and I have made no decision if i will go ahead with this scheme I am seeking advice about it including from this forum.

So far i can find no one who has anything good to say about either Skandia or the agent in Spain.

Misty you also state:

" I'm not sure why anyone would enter into this type of scheme when there are much better options out there"

-I would be very grateful if you or anyone one else with the relevant experience could suggest such better options. I am retired with offshore status living in Thailand. For the purposes of the present investment I will shortly have 100,000 pounds sterling available. Want to generate and receive per annum a decent income from it to go towards my retirement expenses as bank interest rates are dreadful. Can leave the capital alone for several years providing I get a p.a. income around 6-8%.My attitude to risk is these days medium to high. That said I am not a financial expert in any way. That is why i contacted Abbey, and why I am posting this topic here.

Kind regards.

you could put together a corporate/high yield bond portfolio which would give you an income in that kind of range (i have one myself with that kind of yield) but that would not be without risk and you would also need some amount of knowlege. As others have said worth spending some time getting your knowlege base up, read a couple of books, check out a couple of sites eg Motley Fool, it can be very rewarding and you will have some fun doing it!

Edited February 8, 2014 by wordchild

[fletchsmile]

One of the benefits of umbrella bonds is they can be held in joint names and used for succession planning. With a written mandate for discretionary management they can be used to provide a spouse with a regular income in the event of your death.

Also I believe 100% of the contribution is invested in the underlying fund without deduction for "insurance".

100% may be invested without deduction, which they use as a selling point. Key parts not mentioned:

- If you go thru a discount broker such as Hargreaves Lansdown you can also have 100% invested on most of over 2,000 funds

- They (insurance co.) will charge you an admin fee + annual portfolio fee instead. These can be around 1.5% or so on top. So yes 100% gets invested but extra fees of 1.5% get paid to them on an ongoing basis. In addition to the 1.5% underlying annual fee by the fund itself

- They will also receive trailer fees from the fund manager out of that 1.5%. Some discount brokers will rebate part of that back to you.

- The practice of agents receiving trailer fees from the fund manager is being stopped this year under UK legislation. What will happen in many cases is that 1.5% fund manager fee will drop, and the agent have to more transparently charge you a fee. eg before they charged you 1.5% per annum, the fund manager charges 1.5% and they get say half. They therefore earn 1.5% + 0.75% (hiddent )from you for a total 2.25%. This year onshore they will have to transparently charge you the 0.75% direct. Offshore generally has more hidden fees - not sure if that will change.

The bottom line though is that the "100% invested" great deal is only a small part of the truth on a much bigger story

Yes the succession planning can be useful. As mentioned above, for a married guy with estate under GBP 650k IHT - the is easily managed. Have kids and you can be looking at GBP 1mio+ before you need it.

When dealing with people's estates insurance companies seem to take longer than simple fund management houses or discount brokers. That was my experience from sorting out my father's estate anyway.

Cheers

Fletch

Cheers

Fletch

Edited February 8, 2014 by fletchsmile

[AyG]

As mentioned above, for a married guy with estate under GBP 650k IHT - the is easily managed. Have kids and you can be looking at GBP 1mio+ before you need it.

I have no idea where the 1 million figure comes from. Forming an (expensive) trust? Or giving the money away and living 7 years?

Of course, if you're both considered non-domiciled, the situation is easier, but Hector is very reluctant to consider expats as non-domiciled.

[Naam]

As mentioned above, for a married guy with estate under GBP 650k IHT - the is easily managed. Have kids and you can be looking at GBP 1mio+ before you need it.

I have no idea where the 1 million figure comes from. Forming an (expensive) trust? Or giving the money away and living 7 years?

Of course, if you're both considered non-domiciled, the situation is easier, but Hector is very reluctant to consider expats as non-domiciled.

please elaborate why.

[JMS]

I opened a Skandia 10 years savings plan some 12 years ago and paid in a total of £84000. When it finished I received back just over £103000 so I was happy with this. As the money was paid monthly you get an average of high and lows in the markets which suited me. If you put a chunk in when the markets are high or take it out when they are low you never really gain that is why I preferred the method of monthly payments. Over the 10 years I never had one problem with them

[Naam]

you could put together a corporate/high yield bond portfolio which would give you an income in that kind of range (i have one myself with that kind of yield) but that would not be without risk and you would also need some amount of knowlege. As others have said worth spending some time getting your knowlege base up, read a couple of books, check out a couple of sites eg Motley Fool, it can be very rewarding and you will have some fun doing it!

i'd say quite some amount!

[AyG]

Hector is very reluctant to consider expats as non-domiciled.

please elaborate why.

Hector doesn't provide any guidelines on what it takes to become non-domiciled. He refuses to tell you if he considers you non-domiciled whilst living as an expat (personal experience). And he wants to grab as much tax from you as possible when you die - even if you've lived abroad for decades. Simply moving abroad to spend the rest of your life outside the UK is not sufficient, as many foreign families have found after their provider dies.

To quote from a KPMG document on the subject:

There is no precise definition [of domicile] but, broadly speaking, under English law, you are

domiciled in the country that is your permanent home. Everyone is born with a domicile of origin (usually taken

from their father) and this domicile is “sticky” and very difficult to lose. Someone born in the UK to a UK

domiciled father could remain UK domiciled even after living abroad for many years.

[fletchsmile]

As mentioned above, for a married guy with estate under GBP 650k IHT - the is easily managed. Have kids and you can be looking at GBP 1mio+ before you need it.

I have no idea where the 1 million figure comes from. Forming an (expensive) trust? Or giving the money away and living 7 years?

Of course, if you're both considered non-domiciled, the situation is easier, but Hector is very reluctant to consider expats as non-domiciled.

I'm UK domiciled. My wife is Thai.

Previously my IHT threshold was 325k and 50k (approx) for foreign spouse. Total 375k -ish. Changes in legislation made this 325k each same as UK domiciled + UK spouse. Total 650k -ish.

I have children. I invest money in "child name by father name" and "child name by mother name" here in Thailand. They are minors so can't access the funds. I have full discretion over them.

Strictly speaking the 7 year rule would be relevant, as would potentially exempt transfers (PETs), as would being able to demonstrate the money came from income and not from capital, i.e gift from income without affecting status. So it's not a great stretch to see how 1mio could be legitimately built up that way, and adding 350k+ in a reasonable time frame. Hence the figure of 1mio+ ball park. With 2 kids in international school shelling out about THB 18 mio (GBP 350k) baht in school fees until age 18 is a reality, so no harm in putting money in their name well in advance either.

BTW Worth also noting that of the 350k balance mentioned given to kids, one could easily argue that if it came from a joint bank account or even the account of your wife that half of the money was gifted from the wife anyway. Hence 1mio isn't that far away.

There is also how someone could do in practice as well. Have a UK will, a Thai will etc. The wife could sort out all the assets in Thailand, including joint names, the kids, etc before actually needing to go thru UK probate for the UK assets. i.e she could clean out all money in Thailand before even dealing with UK assets and the UK will separately. As a large chunk of the money was earned outside UK and is kept in say Thailand in names such as the wife's and kids, even if someone didn't have the legitimate routes above, that's difficult for the UK taxman to pin down.

Cheers

Fletch