OMI Executive Bond
Old Mutual International OMI Executive Bond :-
Old Mutual International (OMI) is a huge South African and London listed insurance company that has specialised in offering a wide variety of investments within its products. Prior to 22 December 2014 the company was known as Royal Skandia before changing it’s name to OMI. OMI operates globally and for many years was a trend setter offering the option of building portfolios and utilising funds from multiple fund managers and providers.
Old Mutual International (OMI) is made up of three companies:
- Old Mutual International Isle of Man (previously Royal Skandia)
- Old Mutual International Ireland (previously Skandia Ireland)
- Old Mutual International (South Africa)
OMI offers different products in different regions and some of the products available in the UK are very good. However, this review is based on the Dublin / IOM based Offshore Old Mutual International (OMI) Executive Bond products exclusively. OMI provide investment solutions for expatriate and local customers around the world, including Africa, Asia, mainland Europe, Latin America, the Middle East and the United Kingdom. Old Mutual International (South Africa) provides an investment product to South African residents through Old Mutual Isle of Man, a branch of Old Mutual Life Assurance South Africa (OMLACSA).
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Old Mutual International – OMI Executive Bond Review
The Old Mutual International (OMI) Executive Bond offers a range of commission set-ups and it is vital to understand this, as one adviser may charge far less than another adviser for what appears an identical product, but is not.
However, like many bond based platforms Old Mutual International (OMI) Executive Bond lacks flexibility and access when compared to a pure platform custodian. If you are considering a Old Mutual International (OMI) Executive Bond then ensure you fully understand the local taxation position and weigh any benefits against its lack of flexibility, access and charges which are often not explained. The type of funds available are also down to the adviser as to whether they are “cheap” or “expensive” versions which relates to what the adviser is seeking to earn.
- Widely available and sold, with good company rating
- Offers some tax protection in certain jurisdictions
- With commission rebated it could be considered for a minimum of 5 years investment where no withdrawals required
- It offers time apportionment for those returning to UK
- No flexibility of full withdrawal or full access in the early years without penalty
- Many countries do not recognise any tax concessions
- With commission this is an extremely expensive option, and even part withdrawals can increase real costs
- WARNING: Costs are largely dictated by the charging structure chosen by an adviser. Some advisers recommend a 1% regime and then, after the client has signed, change the charging structure to a more expensive regime to earn more commission
|Policy Currency: The Old Mutual International (OMI) Executive Bond may be denominated in US dollar, GB pound, Hong Kong dollar, Japanese yen or Euro. Benefits will be paid in the plan currency.|
|Why choose the Old Mutual International (OMI) Executive Bond: Both “approved” funds and open architecture are available – unlimited choice of funds. However, funds must be approved by OMI, including in-house and external funds and some funds are “mirror funds” which means you are buying a replica of a management fund, not the actual fund, which leads to price discrepancies which can be large over time. Do NOT assume that funds approved by OMI mean they are recommended or safer options. Some funds are unregulated and very high risk.|
|Old Mutual International (OMI) Executive Bond promotion: What does Old Mutual International (OMI) write about their own Old Mutual International (OMI) Executive Bond? Old Mutual International (OMI) Executive Bond is a quality product for those who wish to save for their future regularly but flexibly – perhaps to supplement savings outside of a pension or other tax-advantaged vehicles. It provides the potential to build up cash for substantial future expenditures, such as paying school or university fees, or supplementing income in retirement.|
|Eligibility: The Old Mutual International (OMI) Executive Bond is a regular premium, whole of life, life assurance contract issued by Old Mutual International (OMI) . You can set up a policy in 1 of 7 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD) Swiss franc (CHF), Australian dollar (AUD), Hong Kong dollar (HKD) and Japanese yen (JPY)|
|Minimums: Lump sum minimum of £50,000. You can make additional lump-sum payments into your policy at any time with a minimum of £2,500. However your will pay any initial fund charges on all contributions.|
|Charges: This will depend on the type of plan you take out from Old Mutual International as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser.|
Annual Policy Charges:
There is an annual policy charge taken which is a fixed fee and this can be updated at any time. There may also be a percentage of the value of your fund to cover management costs in the early years which typically is between 1%-1.5% per annum and will last for 7 years sometimes through lifetime.
Alternatively, if you are not used collective funds then there may be stockbrokers fees when you buy and sell certain assets, but you will not see them listed on the valuation as stockbroker’s fees are included in the total value shown for each sale or purchase and will be reflected in the trade contract note.
Additionally there may be an adviser charge to manage the portfolio, this is also typically can be between 0.5 – 1.5% per annum depending on the chosen advisers service provided.
Pensions (QROPS and SIPP) – If the OMI Executive Bond is used within a QROPS or SIPP then there will be additional set up and ongoing fees for the life of the policy. EME does not recommend this product for QROPS or SIPP investing.
|Are charges explicit: By explicit, it means that it is clear to see not only the charges for taking out the plan but also the cost of funds annually, any upfront fund costs, penalties on access, etc. Yes, in the main the OMI Executive Bond charges are clearly shown and any professional should be able to interpret them. We have had feedback from clients though that they find it extremely difficult to interpret charges such as how any early access penalties would be calculated.|
Old Mutual International Bond Brochure
Expat Money Expert Verdict on Charges – commission taken:
Expat Money Expert Verdict on Charges – no commission taken:
|Surrender of the OMI Executive Bond: A partial surrender on your OMI Executive Bond may be treated as a one-off withdrawal. Further details on how it is treated is available in the relevant brochure. A full encashment results in penalties being applied in the early years through surrender charges linked to the term of the policy. In effect this means that on polices the first 5, or more typically 8 – 10, years may have quite high surrender charges imposed. For example, a typical plan applies 8% in the first year of each investment ( top ups incl ), reducing by 1.6% each year to 1.6% in year five and 0% thereafter. It is important to be aware that the OMI Executive Bond is a long term plan, if you decided to cancel the plan early you could lose a considerable proportion of the money you have invested; we have heard that as much as 8% of the value of the plan value can be lost by surrendering the OMI Executive Bond early.|
Expat Money Expert Verdict on Accessibility – commission taken:
Expat Money Expert Verdict on Accessibility – no commission taken:
Expat Money Expert Assessment of the OMI Executive Bond
A great company but, unfortunately, the type of product and charges you pay is selected by independent salespeople who can penalise you by taking high undeclared commissions
Old Mutual International (OMI) has a great reputation but, unfortunately, in the pursuit of offering flexibility of charging structure to all types of advisers they have created a product that has the same name but completely different costs. Those costs are dictated by the adviser and we have been provided a lot of third party information to suggest that some advisers and adviser companies take the maximum commissions (with highest lifetime costs applied to the OMI Executive Bond ) whilst promoting a 1% charging structure.
Therefore, the OMI Executive Bond lacks the transparency of the latest plans available from territories such as the UK, the USA and parts of Europe; ultimately, the OMI Executive Bond can be an expensive option when compared with a pure platform plan.
The type of funds available are also down to the adviser as to whether they are “cheap” or “expensive” versions which relates to what the adviser is seeking to earn. The standard OMI Executive Bond funds have high ongoing fees when directly compared to platform or direct offerings from fund houses via the UK or the USA. The OMI Executive Bond can have high charges on early access where commission has been taken. The OMI Executive Bond offers no standard guarantees that the portfolio will give you the returns you are expecting, but any attempt to take proceeds early in the plans life, or make it paid up, can result in access penalties or higher charges on the remaining invested funds, or both.
Overall the OMI Executive Bond lacks flexibility and access when compared to a pure platform custodian, is not sufficiently transparent, and supposed tax benefits can be outweighed by charges. We do not recommend it within any form of pension planning.
NOTE: The Old Mutual International (OMI) Executive Bond has a successful network of distributing agents throughout the world excluding the main regulated territories. Not all distributing agents have regulation or financial qualifications and may not be aware of the other saving plan options available.
The majority of offshore advisers are recommending products from the Ireland (Dublin) or Isle of Man companies. Unitised investments from other countries held within bonds are NOT protected by the Isle of Man or Ireland protection schemes which they are often advertised as being 99% protected – they are not.
Pensions (QROPS and SIPP) – If the OMI Executive Bond is used within a QROPS or SIPP then there will be additional set up and ongoing fees for the life of the policy. EME does not recommend this product for QROPS or SIPP investing.
There is also an option for the adviser not to charge the client commission, but instead charge a fee. If this option were chosen, it may be of considerable benefit to the performance of the overall investment, as the charges often have a lower impact on the growth of the portfolio. Ask your adviser for further details, as it is not always offered.
WARNING: Costs and information is correct as of July 2016. Please refer to a brochure from the company for current up to date information and any changes on costs or information. You should not buy based purely on information contained within this article and EME do not accept liability for purchases. If you have any doubts then please speak with your financial adviser or a representative of the company for further advice.
If the provider improves or amends its terms then EME would like to hear from them to amend the review page accordingly, and providers are encouraged to comment on errors or omissions to ensure that readers have the latest and correct information.
@ EME Invigilator
many thanks for the information, i have already 11 years with them (started as Skandia) and already started trying to quit three years ago. then just got nice words but no progress.
since February i send all the forms and still pending for clousure. Last mail i got is that the provided address information had been expired. Is it not funny isn’t it?
Already tried to complain officially which is not easier neither as, citing literaly, ‘if you find do find yourself in a position where you need to complain’ ‘if you do have a cause to complain’ and more bla but not help or support.
as mentioned in my previous comment, cannot recommend to anyone.
@J Gilabert – The Quilter bonds usually have a 5, 8 or 10 year charging structure if the adviser commissions have not been removed. Depending on how many years away from the end of the policy term you are, an adviser can assess for you whether the exit fees can be compensated for by switching to an alternative platform. Otherwise, selecting the best possible underyling assets will help reduce your liability.
i understand we don’t know eachother but I can never recommend Quilter (former Old Mutual) It is a pity that no one advised me before i signed my Bond. now i cannot get out, even paying penalty they are just extending and extending it and charging and charging and keep charging in the meantime.
it is difficult to get a withdrawal and almost imposible to cancel or get a full withdrawal. they will extend it as much as they can with the only purpose of keep charging.
i can only tell you think it twice before get caught but this immoral people. and forget about their compliance department or even write complaints just doesn’t work
I charge my clients only 0.55% p.a. This charging structure makes sure they are dealt with fairly.
First year redemption, 2% second year 1%, nil thereafter, ongoing annual charge of 0.55%
Sadly cant avoid the quarterly admin fee charged by Quilter, which is unjustified in my opinion, it changes often, I think around GBP 110 per quarter these days.
OMI (now Quilter), are probably the most professional option for an offshore client.
Its not all about commission, the performance of the dealing desk is vitally important.
There are other companies offshore who claim to be good, but the reality is sadly lacking.
Check the charges with your adviser before you buy.
Stay away! They are modern day pirates. As stated by others the fees are high for no value. Watch out for the delaying tactics with extremely detailed questions to verify who you are on the phone. If you want to withdraw money and transfer to a different bank, they will require extensive proof of what the origin of the money was, making it challenging to even get the money out.
Unfortunately, as you have correctly identified, it is the charges that can wipe out investment gains and when the value of the original investment falls then some of the offshore bond charging structures become disproportionately expensive.
The problem often does not lie in the product, offshore bonds do have a number of interesting tax planning opportunities for the right investor, it is the commission (usually not disclosed) that pushes up the charges to the detriment of the investor.
Always ask about the fees and how much is being paid to the adviser that recommends these products.
We are sorry to hear about your situation. The choice is to encash and take the immediate penalties or maintain the investment but pay the fees over a longer period when the investment may be better placed elsewhere.
My financial adviser, who I had known for years and who had done some good work locked 140k into one of these bonds. I trusted him and let him do this with no questions asked. I let the bond run for about 4 years before having a good look at what was happening. There were charges for this and that all over the place. A couple of investments went a little awry and we lost about 5k bot the bond value had gone down by 10k. Over the next 18 months it won’t down a further 10k. I ckecked the figures since individual funds were generally positive. I summed up the charges and the entire loss could be put down to the charges. I built an excel model to simulate the bond – turns out the even with decent profits they get 70% of the profit. An investment loss in one year is amplified since you still get the charges so you then have to double the profit to regain your original position and then be subject to further charges. In essence this thing is leveraged downwards and can be a race to the bottom. Then I got a statement indicating a surrender value significantly lower than the underlying investments – my adviser shrugged this off as a normal thing. I was livid at the whole situation and cashed the lot rather than having to sit watching this rubbish keep falling in value over the next few years. I lost 25k in total but do not regret surrendering it. I have consigned the adviser to the rubbish bin as a friend and as a professional.
My Experience is negative. My total pension from years in the NHS was invested.in 2014. I believed the overseeing company had a duty to take care of my funds and look out for my best interests. Assurances that the money would perform as well if not better than leaving it in the NHS were given. This should have been the case but high risk investments were made by a now non- existant company and signed off with no recourse to myself. I had expressly written i did not want anything to do with high risk. OMI and Momentum allowed this to happen. My pension is hugely depleted. Clawing back anything is impossible given the continued annual fees. While legally I know they are entitled to charge, I feel morally they might wish to help by waiving fees or allowing me to have the remaining funds without penalty. They are clearly well able to afford this. Written responses to my mails asking for information and clarification were slow and very impersonal given the damage to my financial future. At the rate the fees are being withdrawn, and little improvement in performance of remaining funds to date, the pension will continue to deplete and I feel helpless.
My husband invested over 137,000 pounds into one of these OMI Executive Bonds just over 4 years ago, it is now worth only 27K. Despite being a pension fund, an unlicensed, unregulated IFA operating from Spain used photocopied fraudulent dealing instructions without our knowledge and purchased extremely high risk investments totally unsuitable for a long term pension investment despite the risk chosen being low/medium as a pension fund should be, OMI just allowed this to happen. We are currently in the process of a formal complaint procedure against OMI, who I might add are not taking any responsibility whatsoever and are just passing the buck, back to our Trustee Momentum Pensions Malta Ltd (who we are also complaining to). The fact that both OMI and Momentum Pensions Malta Ltd allowed an unlicensed unqualified IFA to purchase these investments without our knowledge and just sat back and watched our funds disappear is quite incredible. We have paid 19K out in charges alone via OMI, they are still taking a yearly fee based on the original investment value, they will not waver their exit fee to allow us to move to a different company. I am part of a group of 266 disadvantaged investors who between us have lost almost 16 million. We wish we had never heard of QROPS. OMI have made a lot of money out of us, and my friends in our group, we have lost a fortune …. OMI have made a mint! They are disgraceful. Avoid at all costs!
Hi guys if you are having trouble get in touch as we take care of clients where the advisers have disappeared. The salespeople made their money upfront and usually run off and leave the client. That does not mean that these investments are not profitable. They can be if they are managed properly and reviewed every quarter.
I have an ERB with OMI bought through in offshore financial advisor.
My experience is a positive one due to the advisor being professional and transparent.
This bond can be complicated to understand so you MUST ask questions. The advisor is a salesman and of course wants to sell the product but he has to act as an advisor on YOUR behalf. You should be clear on your requirements and determine with him or her that the bond meets those requirements. Be clear on the charges. OMI publish their charges but the advisor can modify them. They are negotiable and the advisor may reduce his commission to make the sale, especially on larger amounts. The advisor is not your friend so you don’t have to worry about making him feel uncomfortable. He is working for you, not the reverse. Ask questions and make demands.
You should not allow the advisor to pressurise you into a purchase. You should take the time to fully understand the product. DO NOT sign up during your first meeting. Ask if you can speak to a tax specialist to understand the implications on returning to your home country.
If you decide to buy it should be only when you feel comfortable and confident that you know what you are getting into. If the decision making process is keeping you awake at night, ask more questions or walk away. The time to ask is before you sign, not after. Follow your meeting up with an email to the advisor stating how you understand the bond and charges and ask him if your understanding is correct. He should reply and then you have a written record that can be used in the event of a dispute later. There is a responsibility for you to carry out due diligence. If you do, there should be no surprises.
Irrespective of the product, choose your advisor wisely, don’t trust advice at face value, ask questions and make sure you understand fully the product and the advisors role.
On the advice of an ‘Expat’ IFA I put my pensions and savings into 2 of these bonds, one in a QROPS, 5 years ago. The assets included Axiom Legal fund which has been embezzled and other Call Note type investments. Both Bonds are now 60% of what they were, the IFA has earned more than the ‘divis’ were, and the Admin & Management charges are horrendous. I cannot surrender them as they now contain suspended assets unless I kiss them goodbye, the QROPS company want £2000 charges. all in all a very bad experience.
Mixed review from me. Actually think the investment I have taken out is ok, but I was recommended to put part into some structured product. It was meant to be guaranteed, but is now failing and losing loads of money.
My question is, what responsibility does OMI ( it was known as Royal Skandia when I took the product) have for the investments. Surely they should do some due diligence on what is being invested in. Also, the original adviser banged on about 90% bond protection, better than i could get in the UK. Turns out the bond protection is worthless.
So, OMI, simply refer me back to an adviser who no longer exists and say, effectively, it was my own fault. Maybe their product is fine, but their servicing and assistance is lousy. Overall, I would give it 2 stars or less.
I took out one of these after a recommendation from a large worldwide organisation. I am afraid I do not have such a positive story as the adviser knew I wanted the money back in 3 years but appears to have locked me into an 8 year charging structure.
Funds also did not perform, part the advisers fault and part market conditions in fairness, but I had less in there than I started with. I was then less than happy to find out that I was going to get a wopping 5% surrender charge for wanting my money back. I also found out the charges on the product were massive.
When I went back to the adviser he was no longer in the industry and the IFA referred me to Royal Skandia (which has now become OMI). Royal Skandia referred me back to the IFA.
No-ones responsibility and no-ones fault it would appear, other than my own for beleiveing the salesman who, it turns out was not even qualified and had not taken a single investment exam.
This product turned into a disaster for me, and I would warn others to make sure you are dealing with a reputable adviser and company (do not believe all the marketing stuff about being biggest or best).
PS – I do not normally comment on these sections, but I thought this review was great. Spot on. Had I gone to a decent adviser maybe I would have ended up with the same product or a better product on a different charging structure. Well done EME for making me write something!!
OMI are good and I would recommend them. I’ve had no problems in dealing with them
Wow, wot a review. By that I mean good!!!
I was about to buy this (or should say recommended to buy it) but having read this, I am contacting you guys.
I think you have just saved me a fortune, so keep up the good work (and I am telling my friends).