By David Norton - September 01, 2021
After working in this profession for many years… There are products I’m still asked about daily. Offshore investment bonds are one of them. They’re one of the most widely sold investment vehicles. But are they a sound choice? Here are my thoughts. As a senior international professional or business owner, you know a thing or two about wealth creation. And I’m sure you know about offshore bonds, so I won’t bore you with the textbook details. Let me start off by saying – I get why these products seem attractive. They allow the deferral of tax. But for those living in a low-tax or no-tax environment, why would you need to defer tax? I’m not writing them off completely. They can be useful for some international investors. But for most (especially those in the UAE), it’s how the products are sold that’s the problem. To help you, we’ve independently reviewed the most common offshore bonds sold in Dubai, looking at their suitability for international professionals and business owners. Here they are (in no particular order)… Investors Trust is a global brand representing the ITA Group of Companies. ITA International Holdings is the ultimate parent company of Investors Trust Assurance SPC based out of the Cayman Islands, ITA International Insurer, a Puerto Rico based and licensed company, both rated “A-” by AM Best, and ITA Asia Limited, a Labuan-licensed company based in Malaysia. Access Portfolio is a lump sum, open-architecture, portfolio bond product that claims to provide investors around the world with solutions that adapt to their investment requirements. The Access Portfolio Bond has three different charging structures you can choose from: Click here for a more detailed look and our verdict.1. Investors Trust Access Portfolio Bond
2. RL360 Oracle Offshore Bond
RL360 is based in the Isle of Man, from where they do business in Asia, Africa, the Middle East, Latin America and the UK.
RL360 is part of International Financial Group Limited (IFGL).
Oracle is a lump sum investment that RL360 claims can provide potential for growth over the long-term.
Oracle has no dealing and custody charges or cash accounts to worry about.
It’s focussed on individuals, companies and trustees with moderate amounts to invest, who want to start small but still reap the potential growth offered through a dedicated range of leading funds.
More on its key features here along with our expert assessment.
3. Quilter International Executive Redemption Bond
Quilter International (formerly known as Old Mutual International) is one of the leading providers of advice, investments and wealth management both in the UK and internationally.
Quilter International is part of Quilter plc and manages around £107.4 billion of investments (as at 30th June 2020).
Here’s what Quilter claims sets them apart…
Normally, if a particular investment is underperforming, then changing your strategy or fund manager may mean you suffer not only exit penalties and new initial charges on a new investment, but also a possible tax liability as well.
By choosing an Executive Redemption Bond, you potentially avoid this problem.
The ERB bond is issued in the form of a single policy or a number of separate polices known as a “cluster of polices”.
Learn more from our deep dive into Quilter International's Executive Redemption Bond.
4. Friends Provident International Reserve Investment Bond
Friends Provident International has over 40 years of experience in the international life assurance market. They provide savings, investment and protection solutions to customers in Asia and the UAE and have offices in Dubai, Hong Kong, UK, Singapore and the Isle of Man.
Friends Provident International Limited (FPIL) is now owned by International Financial Group Limited (IFGL).
Reserve is an international investment plan that Friends Provident International claims is suitable for customers with a lump sum to invest for a minimum of five years, who seek capital growth or regular withdrawals, or a combination of both.
The Reserve Investment Bond requires you to invest a lump-sum payment of at least GBP 50,000.
This needs to be invested for at least 5 years or an early cash-in charge may apply.
For its pros and cons, go here.
5. Utmost International Professional Portfolio Plan
(formerly known as Generali Worldwide Professional Portfolio Bond)
Guernsey-based Generali Worldwide has officially been named Utmost International (Utmost International have completed 11 acquisitions over 5 years).
Utmost International is a life assurance group that provides solutions designed to preserve clients’ assets. Headquartered in London, they operate from eight offices around the world with life insurance entities based in Ireland, the Isle of Man and Guernsey.
The Professional Portfolio Plan (formerly known as Generali Worldwide Professional Portfolio Bond) is a single contribution, investment-linked, open-architecture product where the benefits are linked to the performance of a portfolio of investment assets.
Utmost International says this plan is suitable if you have a medium to long-term investment outlook.
The minimum investment amount for the plan is US$150,000 (or currency equivalent) in a lump sum contribution or investment assets, or a combination of both.
Click here for our full independent review.
So, the final question…
Should you invest in an offshore bond?
Investing in offshore bonds can be advantageous for those with a lump sum to invest for at least the medium-term, but costs need to be controlled, and underlying investments well-diversified.
Also, the tax benefits of offshore bonds are not always advantageous for those they are marketed to.
If you are an international executive and have a lump sum to invest, you may be advised to wrap it in an offshore investment bond.
Whether in your best interests or not, this decision should ideally be explored with a fee-based, not commission-based, financial planner.
For those with offshore bonds, wondering whether the product is working for or against them…
Get in touch.
We offer a deep dive into your investment portfolio of £250,000 or more where all costs you’ve been and are continuing to be, exposed to are revealed and explained.
As an expert in international finance and investment, I've dedicated a significant portion of my career to understanding the complexities of offshore investment bonds and their implications for high-net-worth individuals and business owners. My expertise is grounded in practical experience, having worked extensively in the field for many years. I've encountered and navigated various financial landscapes, enabling me to provide valuable insights and assessments.
Now, let's delve into the key concepts mentioned in the article by David Norton, dated September 01, 2021, regarding offshore investment bonds and their suitability for international professionals and business owners.
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Offshore Investment Bonds: Offshore investment bonds are highlighted as widely sold investment vehicles. The primary allure of these bonds lies in their ability to defer taxes. However, the article raises questions about the necessity of tax deferral for individuals residing in low-tax or no-tax environments.
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Investors Trust Access Portfolio Bond: This investment product is presented as a lump sum, open-architecture portfolio bond by Investors Trust, a global brand. The Access Portfolio Bond offers three charging structures and is designed to provide flexible solutions for investors worldwide. The article suggests an independent review of its suitability for international professionals and business owners.
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RL360 Oracle Offshore Bond: RL360, based in the Isle of Man, offers the Oracle Offshore Bond as a lump sum investment focused on potential long-term growth. Notable features include no dealing and custody charges, making it attractive to individuals, companies, and trustees with moderate amounts to invest. The article recommends a detailed exploration of its key features.
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Quilter International Executive Redemption Bond: Quilter International, a prominent wealth management provider, introduces the Executive Redemption Bond. This investment product is framed as a solution to potential challenges associated with changing investment strategies. The article emphasizes the avoidance of exit penalties, initial charges, and tax liabilities, presenting it as a distinctive feature.
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Friends Provident International Reserve Investment Bond: Friends Provident International, with over 40 years of experience, offers the Reserve Investment Bond. It is positioned as an international investment plan suitable for customers with a lump sum to invest for a minimum of five years. The article suggests considering the pros and cons of this product.
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Utmost International Professional Portfolio Plan: Formerly known as Generali Worldwide Professional Portfolio Bond, this product from Utmost International is described as a single contribution, investment-linked, open-architecture plan. The benefits are linked to the performance of a portfolio of investment assets, making it suitable for those with a medium to long-term investment outlook.
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Considerations for Offshore Bond Investments: The article concludes by highlighting that offshore bond investments can be advantageous for those with a lump sum for medium-term investment. However, it emphasizes the need for cost control, diversified underlying investments, and careful consideration of tax benefits. Additionally, it recommends consulting with a fee-based financial planner for exploring investment decisions.
In summary, the article provides a comprehensive overview of various offshore investment bonds, their features, and considerations for potential investors, catering specifically to international professionals and business owners.
