Lump sum investment plans – a flexible and tax-efficient approach to your clients’ investment needs
Investors often find themselves at a crossroads when deciding how best to start their investment journey. Whether their goal is to provide financial stability for loved ones or to fund future life events, having a financial plan in place is essential. This is particularly true when they find that they have a large lump sum to invest – perhaps from an inheritance, a business or property sale or a lottery win.
First, it’s important to understand what a client wants or needs to do with this wealth. A lump sum investment plan helps investors remove the uncertainty of meeting their future financial goals, or to protect against unanticipated life events.
They’ll want an investment solution that is flexible, efficient, and cost-effective and allows them to access their money at the drop of a hat.
Some lump sum investment plans, such as RL360’s PIMS portfolio bond, allow investors to build wealth quicker due to their tax-efficient nature. They are also designed for expatriates and/or internationally mobile people, and are portable across a variety of jurisdictions, unlike most domestic products where their benefits are restricted to their country of issue.
These products provide a personalised approach to investing, enabling investors to customise their portfolios to align with their specific needs and risk tolerance. This flexibility allows investors to focus on building wealth, safe in the knowledge that they have a single plan that meets their various needs.
Lump sum investment plans also come in a variety of structures to suit your clients’ circumstances. For example, they can be set up either as Insurance Wrappers that pay a benefit when the named life or lives assured die, or as an Investment Wrapper or Capital Redemption plan that exists for a period of 99 years. This latter option aids long-term financial planning and removes the risk of an early death claim and all the administration that goes with it.
Both versions are extremely flexible and can be used for a variety of purposes, such as:
1. Paying for children’s education
Using a lump sum investment plan to fund the costs of your children’s education is a very common and sensible option. By selecting a variety of different asset types, you will give your lump sum every opportunity to grow tax-efficiently and keep pace with rising university costs. You can take future annual withdrawals when it is time to pay for school fees without incurring additional costs, as withdrawals are free. You can also allow for these withdrawals to be inflation-linked to mitigate the ever-rising costs for annual university or college fees.
2. Help supplement retirement income
In addition to receiving your personal and maybe state pension(s), using a lump sum investment plan allows you to supplement your retirement income. If you want to retire before the mandated retirement age, a lump sum investment plan allows you to take withdrawals at any time. They are not bound by the same rules as other pension solutions, providing a flexible and accessible retirement option.
3. Significant purchase or major financial event
Because you can access your investment at any time, your lump sum plan can help with life’s major purchases, both expected and unexpected. Whether it’s buying a house, or funding the purchase of a business, your financial adviser will be able to instruct you on the most tax efficient way to withdraw the money you need from your plan.
4. Passing on wealth to loved ones
Using a lump sum investment plan in conjunction with a trust can really benefit investors when it comes to succession planning. Most lump sum investment plans allow you to name multiple beneficiaries. They are also designed to avoid the need for probate in the event of death of the named life assured, meaning the monies are distributed quickly in line with your wishes. The death benefit paid can also help reduce or settle estate taxes. All of these mean a lump sum investment plan with a trust solution might be the perfect solution for you.
RL360 offers a variety of lump sum investment options such as PIMS, our personalised investment management solution, which can provide a flexible and efficient way to manage your clients’ investment needs in one convenient plan. Whether they’re looking to invest a moderate lump sum or a considerable amount, these plans offer a multitude of life-enhancing features that can help grow wealth, provide flexibility, remove uncertainty, and provide peace of mind.
Investments in PIMS start from GBP45,000, or the equivalent in 6 other major currencies. Talk to your clients today to about how RL360’s PIMS can meet their financial needs.