RA Charges (pre May 2025) Flashcards
What two elements make up the charges for SJP products?
How are these further divided?
- Inital charge (Intial advice & Intial product)
- Ongoing charge (ongoing advice & ongoing product)
What does the initial advice fee cover?
Covers the cost of…
- Providing the advice
- The work undertaken to guarantee suitability
- The administrative costs incurred when setting up the investment.
How much is the intial advice fee?
4.5%
What is the intial product fee?
1.5%
Total inital charge
6%
What does the ongoing charge cover?
Covers the cost of…
- Maintaining the investments
- The administration of the funds
- Providing ongoing advice.
How much is the ongoing advice fee?
0.5%
How much is the ongoing product fee for a Retirement Account?
1%
If no early withdrawal charges apply, what charges will the client pay?
The annual management charge of 1.5%
* Which is the 0.5% for advice, and the 1% for product
Combine with the fund charge incured by the fund managers each year
1.5% + x%
How is the initial charge paid?
It is not taken from the investment value.
Instead, The inital charge of 6% is paid by the annual managment charge, at a rate of 1% per policy year.
Meaning that, after 6 years, no Early withdrawal charges apply.
What is the early withdrawal allowance? And what is a key feature?
- 7.5%
- It is culmulative, meaning any unsued amount can rolled up to be used in later years.
For how long do intial advice fees apply to regular contributions?
- 5 years
- Meaning that each subsequent contributions will have it’s own EWC period.
When do Early Withdrawal Charges apply? How do they reduce?
EWCs apply if the client choses to transfer away or withdraw an amount greater than 7.5% of the intial investment each year, for the first 6 years of the policy being in place.
The charge reduces on a sliding scale, starting at 6% and reducing by 1% each policy year. (This is being paid by the annual management charge of 1%.
Key information when discussing the charges table
The advice and product charges shown in the first table combined are the equivalent to the charges shown below (Expected fund manager charges & page 9), and not in addition to them.
Last page - “How much will the advice cost?”
What needs to be covered off
- Verbally confirm the costs.
- Give the example of OAF costs and describe that these are levied on a percentage of th total investment meaning, if the value of investment increases, so will the amount of OAF in £.
