Regular Savings Plan | Overseas Case Study

A British client based in Dubai wanted to save $2,700 per month as part of his future financial planning; he had heard he could obtain good returns from a savings scheme based in the Isle of Man.

He was recommended a 25-year savings plan and was told he could expect returns of 9% per annum.

He was told the plan was flexible and he would always have access to his savings, as long as he kept it running for 2 years.

Two years into the plan after he had invested $66,591.00 plus his valuation was showing a “bonus” with current growth, which gave a total valuation of $84,133.00.

HIDDEN COMMISSIONS & EXIT CHARGES

His circumstances changed and he wanted his money back 2 years after commencement, the actual amount he received was Zero. It transpired his offshore savings plan included an “initial period”. The adviser had received a commission from the insurance company of $34,020.00, which he would have had to repay if the client had not completed the initial period. It was only after the deduction of all contributions in the first 2 years that the client had any entitlement; hence he received zero from the insurance company.

In this case Tailormade would have recommended a savings plan that would have returned $67,392.00 after 2 years and would have been accessible with no penalties or early surrender charges. If the fund were left to grow at 7% per annum gross the fund would be worth $78,015.00 after 5 years.