Tilney BestInvest Review for Expats — Qatar, Thailand, Vietnam, Cambodia Hong Kong and beyond
This story originally appeared on adamfayed.com.
(Quick note; If you are an expat and have been proposed BestInvest in the Middle East, Malaysia, Thailand, China, Cambodia, Vietnam or beyond and want a more in-depth review of these plans, alongside customer reviews and questions at the bottom of the page, please visit– https://adamfayed.com/zurich-vista-review-rl360-quantum-friends-provident-hansard/).
Who are Tilney Best Invest?
Tilney BestInvest Ltd, or Tilney Group, is a financial planning and investment company. Their assets under management exceed 20 billion. They became famous for their `spot the dog` commentary.
Where is Tilney Best Invest sold?
They have offices in London, Glasgow and Edinburgh. They are sold worldwide in Hong Kong, Malaysia (Kuala Lumpur), Qatar, Cambodia (Phnom Penh), Thailand (Bangkok, Pattaya and Phuket especially) and Mainland China (Shanghai mainly) due to the relationship between Tilney Best Invest, W1 Group and Infinity Financial Solutions.
What Tilney Best Invest funds are most widely sold?
- IFSL Tilney Bestinvest Aggressive Growth Portfolio
- ifsl tilney bestinvest growth portfolio
- ifsl tilney bestinvest income portfolio
- ifsl tilney defensive
- IFSL Bestinvest Income Portfolio R GBP
Who usually buys the funds outside of the UK?
It varies but typically British expats, alongside Japanese, South Africa, Korean, Norwegian, Swedish and other expat groups. Many of these expats are looking for something specific, like expat advice for British expats in Cambodia or expat advice for Japanese people in Malaysia or Thailand. Some are looking for something more vague, like financial advice in Hong Kong or another location.
What’s the positives about BestInvest?
- They are a large and established group.
- Moreover for UK-only clients investing through SIPPs, the fees are more reasonable than for overseas clients. They typically charge 0.2%-0.4% service fees, depending on the account size. There are additional fund fees, however, which are quite high — as much as 1.60% per year.
What are the negatives about BestInvest?
1. The fees are high. Not the service fees but the fees within the funds. The Tilney BestInvest Defensive Portfolio and Tilney BestInvest Aggressive Portfolio both charge up to 1.60% per year + up to 5% initial charge. You can invest in index trackers from 0.03% per year. There is an incredible amount of academic data that shows that fees matter in investing over the long-term.
2. The fees are especially higher if you buy BestInvest outside the UK as an expat. The reason is simple; there are multiple fees:
- 1.5% annual management charge (AMC)
- Over 2% per annum ongoing charge
- Up to 5% upfront
- Up to 1%-2% yearly depending on which bond and QROPS/provider is used.
To put it simple, you are getting numerous fees. The life insurance fee, BestInvest fee, broker fees and sometimes QROPS and SIPPS fees.
So writing a review of Infinity Financial Solutions and Best Invest, is quite different to writing a review of BestInvest’s UK solution.
Which offshore products are BestInvest sold through?
It varies but typically numerous regular savings plans and offshore bonds including:
•Friends Provident International Reserve Investment Bond
•Friends Provident International Zenith
•Generali Worldwide Choice Account
•Generali Worldwide Professional Portfolio Bond
•Hansard International Capital Investment Bond
•Old Mutual (used to be called Skandia) Collective Investment Bond
•Old Mutual (used to be called Skandia) Collective Redemption Bond
•Old Mutual (used to be called Skandia) Executive Redemption Bond
•Investors Trust Access Portfolio
•Investors Trust Fixed Income Portfolio
•Prudential International Portfolio Bond
•AXA Evolution Bond
•Friends Provident Premier Advance Savings Plan
•Hansard Vantage Savings Plan
•RL360 Insurance Company Limited (RL360) Quantum
These providers are usually in Isle of Man, Guernsey, Bermuda, British Virgin Islands, Cayman Islands and Jersey.
It makes sense, in many ways, for expats to invest overseas and offshore, when they live outside their home country.
So the issue isn’t where the money is invested geographically, but the fees and charges within the plans. This results in many complaints and bad reviews, especially when early surrender and redemption charges aren’t mentioned.
Moreover, whilst Tilney are regulated by the Financial Conduct Authority, the firms selling them overseas are not. That isn’t a problem in of itself, but don’t think you are getting enhanced protection.
The Labuan license, moreover, is more of an insurance license, than a financial license. Life insurance -related products can be connected to investments though; they are just more expensive than pure investment platforms.
What are the fees like within these products
It varies, but typically 1%-4% per year depending on many factors, including whether you contribute in these plans until the end of the term. On the savings plans, you often can’t get bonuses if you fail to contribute every month, meaning you only get the fees and not bonuses.
BestInvest performance relative to the market
The US S&P has increased by 11.48% so far this year — as of March 6, 2019. 2018 was -4.38%. 2017, 2016 and 2015 was 21.83%, 11.96% ands 1.38% respectively. The accumulative performance has been over 42%.
If you would have invested $100,000 in the US S&P in 2015, therefore, you would have more than $142,000 today. Even if you added 10% government bonds, and 90% S&P as per Warren Buffett’s suggestion,you would now have well over $130,000.
If you had invested in the BestInvest aggressive portfolio, in comparison, from 2015 until now, you would have about $129,000 before the aforementioned fees.
The BestInvest Defensive Portfolio has only produced about 2% per year before fees, meaning several offshore investors are seeing negative returns, despite markets being up.
It is a numbers game — compounded fees harm compounded gains. 2% per year easily gets wiped out by the aforementioned high fees. Even 7%-8% per year gets reduced to 3%-4% if the compounded, indirect, fees are high.
Are there charges for getting out of BestInvest products?
The funds are liquid, so often UK investors can get out without penalty. However, if you have bought BestInvest through an offshore life insurance company, there are charges for getting out.
On lump sum products, the charges last for 5–14 years, depending on the terms and conditions of the product.
On regular savings plans, charges last for 5–30 years, depending on the terms of the contract.
If there are charges for getting out of the product, what can you do?
It depends. In some cases fund changes within the existing product makes sense. In other cases, you can do a maximum penalty free surrender. For example, if you have $100,000 in your account, you can withdraw $50,000 or $70,000 without penalty, and invest in a cheaper alternative.
How high this maximum penalty free surrender is usually depends on how long you have been invested in the account.
On day 1, you often have $0 penalty free surrenders available, especially on the savings plans. Most savings plans have a 1–2 year initial period. If you fail to pay in for this period, you lose all your money.
After that initial period, your surrender value gradually increases. So on a 25 year plan, for example, after 5 years, your surrender value may be 20%-30% of the account value. After 22 years, your surrender value may be 95% or more, but the specifics depend on the offshore life insurance provider.
However, over time, the amount you can withdraw penalty free increases.
Mistakes to avoid
In investing one of the biggest mistakes investors makes is called loss aversion in cognitive psychology. This means that if investors are down, or not doing well, they wait until the accounts are breaking even before selling.
A simple example would be if you have $100,000 in your account. The value is $95,000. After more reading, you know that deep down the fees are eating into returns. However, as the account briefly hit $101,000 before, you wait until the account recovers to $100,000+ before selling as you don’t want a loss.
I have even seen investors wait 2–10 years to avoid this loss.The rational thing to do is accept the $5000 loss in this situation, as that money can be made up quickly in a cheaper structure.
In addition to that, many investors think size is always good. Having 24/7 account access and log in, flash IT systems and an office in Mayfair doesn’t help client returns; lower fees and better funds would help that.
What can you do if you have a BestInvest policy offshore?