I have read the replies above with interest and this being a Forum, I wanted to impart a little of my wisdom to share with both the financial professionals on this page and also others that visit in order to gain further knowledge.
There are many Offshore Bonds offered by Offshore Life Insurance Companies and in all honesty, they are all much-of-a-muchness, similar products underneath with different wrappings.
Life Companies cannot offer ‘charge-free’ bonds because of costs to buy into most Funds – even though it is correct, Life Companies get heavily discounted Fund entry fees, these fees are charged externally to the actual Bond charges.
There is not an Offshore Bond on the market today that allows for no bid/offer spread, no annual management charge and no exit charges together – because once again, where would the Life Companies make their money and still be able to pay IFA’s Commission who recommend their products, they couldn’t!
You will almost always now in Bonds have no bid/offer spread, annual management charges are similar and exit charges will only apply in the main, to a proportion of your investment if you have to encash it within a given period – usually 5, 8 or 10 years: these figures will differ from product to product.
Bonds should not be viewed as a short-term vehicle which can be used as a trading platform but rather as a longer-term wrapper to encompass different aspects of an overall portfolio (in the main funds) but can also include stocks/shares, unit trusts and other assets.
Zurich and their products have been around years and you will get people who like them, and people who do not. There will be an equal number I am guessing who have made money and an equal number who have not. This usually has nothing whatsoever to do with an annual management charge of 0.8%, 1.2%, 2.5% or 3% – nor does it have much to do with External Fund charges. It has, in the main, everything to do with the Financial Advisor who recommended the product to you in the first place and how “hands-on” that person is in managing your portfolio.
Some Advisors will tell you at the outset that they are not Fund Guru’s and will not be managing that portfolio for you. Some Advisors will recommend as form of Discretionary Fund Management (as mentioned) and some Advisors will tell you they are Warren Buffet in disguise and pretend that they will manage your portfolio on a daily basis. Whichever category your Advisor falls into is more than likely to have a very high impact on whether your portfolio makes money or not – as opposed to a percentage-point difference in Annual Management Charges or external Fund charges.
I will close by saying that there are huge benefits to expatriates in using the offshore Life Companies’ vehicles, not least being that Life Insurance linked products do not come under the new European Union Directives for disclosure and taxation. Zurich’s bonds are fine, as are almost all other Life Insurance Bonds being touted in and around Singapore – and the rest of the world.
If you want to make a sound investment decision from the outset, forget studying the bonds, the funds and the products first, leave that to second. First, we always suggest that people conduct due diligence on the Independent Financial Advisor that is offering their advice and the products. Ask them how long they have been in Singapore as an Advisor, and how long the company has been here itself. Ask to see the licence of that company and when translated, check that they are licensed to conduct Financial Services Business here in Singapore.
Ask for 3 references from satisfied clients here in Singapore, of your own nationality – and check those references out because any legitimate Financial Advisor here would not object to that and would fully understand your reasons for asking.
And finally, before you sign on any dotted line with any Financial Company – not just here in Singapore but throughout your time as an expatriate and even when you return home – remember that if anything sounds “too good to be true”, that is usually because it is either a scam or you are not being explained the product and charges correctly.
There are many good companies in the IFA world and there are an equal number of great products with companies like, and including, Zurich International. These will never let you down on their own. It is the initial advice, explanation of the charging structure and the ongoing servicing of that advice that is of paramount importance and this will be the determining factor that makes/breaks your investment. If you understand what you have, are happy with the goals for your bond and above all understand how that bond will achieve your target goals and have a structure mapped out by your Advisor to do this, then this is the key.
It is such a shame that so many people get ‘sold’ an investment and then never see or hear from their Advisors again.
