Old Mutual International Managed Capital Account OMI MCA Review
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Fund Access 2.0 / 5
Charges 2.0 / 5
Accessibility 1.0 / 5
- Widely available and sold, with good company rating
- Limited up-front charges
- Offers some tax protection in certain jurisdictions
- Very costly if you wish to access it in the first few months / years
- Does not provide full access to lowest cost funds and passive trackers
- Not as good as OMI’s other offerings
- Many countries do not recognise any tax concessions
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Old Mutual International (OMI) is a huge South African and London listed insurance company that has specialised in offering a wide variety of investments within its products. Prior to 22 December 2014 the company was known as Royal Skandia before changing it’s name to OMI. OMI operates globally and for many years was a trend setter offering the option of building portfolios and utilising funds from multiple fund managers and providers. This review focus is on the OMI MCA Managed Capital Account plan.
Old Mutual International (OMI) is made up of three companies:
Old Mutual International Isle of Man (previously Royal Skandia)
Old Mutual International Ireland (previously Skandia Ireland)
Old Mutual International (South Africa)
OMI offers different products in different regions and some of the products available in the UK are very good. However, this review is based on the Dublin / IOM based Offshore Old Mutual International (OMI) Executive Bond products exclusively. OMI provide investment solutions for expatriate and local customers around the world, including Africa, Asia, mainland Europe, Latin America, the Middle East and the United Kingdom. Old Mutual International (South Africa) provides an investment product to South African residents through Old Mutual Isle of Man, a branch of Old Mutual Life Assurance South Africa (OMLACSA).
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|Policy Currency: The OMI MCA may be denominated in US dollar, GB pound, Hong Kong dollar, Japanese yen or Euro. Benefits will be paid in the plan currency.|
|Why choose the OMI MCA Managed Capital Account: Over 50 Leading Fund Houses offer a wide choice of 370 investment funds. You choose from a wide range of risk-rated funds covering all the major world markets and investment classes. The funds section contains performance statistics which are updated monthly, fund prices which are updated daily and Fund Fact Sheets on each fund.|
|OMI MCA Managed Capital Account promotion: What does Old Mutual write about their own OMI MCA? OMI MCA is a quality product for those who wish to save for their future regularly but flexibly – perhaps to supplement savings outside of a pension or other tax-advantaged vehicles. It provides the potential to build up cash for substantial future expenditures, such as paying school or university fees, or supplementing income in retirement.|
|Eligibility: The OMI MCA Managed Capital Account is a regular premium, whole of life, life assurance contract issued by Old Mutual International. You can set up a policy in 1 of 7 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD) Swiss franc (CHF), Australian dollar (AUD), Hong Kong dollar (HKD) and Japanese yen (JPY)|
|Minimums: You can start saving with the Managed Capital Account as little as £300 per month per month ( or equivalent in other currencies ), and this can always be increased later. 100% of each premium paid will be allocated to the purchase of units in your policy. For larger premiums, the allocation rate can increase up to 102%. You can pay premiums via a number of different methods including credit card. There is no additional cost if you do choose to pay by card. You will be able to select from more than 150 funds from some of the world’s leading fund managers, and you won’t pay any initial fund charges.|
|Charges: This will depend on the type of plan you take out from Old Mutual International as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser.
Establishment: Establishment 1.6% per annum for 5 years
Are charges explicit: By explicit, it means that it is clear to see not only the charges for taking out the plan but also the cost of funds annually, any upfront fund costs, penalties on access, etc. Yes, in the main the OMI MCA charges are clearly shown and any professional should be able to interpret them. We have had feedback from clients though that they find it extremely difficult to interpret charges such as how any early access penalties would be calculated.
|Surrender of the OMI MCA: A partial surrender on your OMI MCA may be treated as a one-off withdrawal. Further details on how it is treated is available in the relevant brochure. A full encashment results in penalties being applied through surrender charges linked to the term of the policy. In effect this means that on polices with an original term of more than 15 years most, if not all, of the first 18 months-2 years premiums are lost upon surrender.It is important to be aware that the OMI MCA is a long term savings plan, if you decided to cancel the plan early you could lose a large proportion of the money you have saved, we have heard that as much as 50% of the value of the plan value can be lost by surrendering the OMI MCA early.
Quick Summary from TailorMade
Unlike the Executive Wealth Account we think the OMI Managed Capital Account is similar to many in the offshore market place. Similar to the RL360 Quantum plan this type of plan may have been a common option in the UK back in the 1990’s but in 2015 it lacks the transparency of the latest plans available from territories such as the UK, the USA and parts of Europe; ultimately, the OMI MCA is an expensive option when compared with a pure platform plan.
Where it differs from OMI’s other offering is that the OMI MCA pays big commissions, which means that between the first 6 months and 2 years of premiums will be completely lost (penalty) if you attempt to access investments early. We think the non-commission variant Executive Wealth Account from OMI is better as it charges upfront and then does not apply exit penalties; it gets an extra star from this variant although it is expensive.
The standard OMI MCA funds have high ongoing fees when directly compared to platform or direct offerings from fund houses via the UK or the USA. You may not get back all of your savings with an OMI MCA and there are no guarantees that the portfolio will give you the returns you are expecting, but any attempt to take proceeds early in the plans life, or make it paid up, will result in access penalties or higher charges on the remaining invested funds, or both.
However, some people require help when making disciplined decisions and will welcome the fact that a plan is written to a set target date and cannot be accessed early without a surrender penalty; some people wish to deliberately lock-up their funds. Therefore, potential investors have to weigh up the benefits of locking up their investments and not having the flexibility to access their investment earlier without surrender charges applied.
NOTE: The OMI MCA is often also known as the OMI Managed Capital Account and it must not be confused with the OMI Executive Wealth Account plan; same company but 2 completely different structures.
The OMI MCA provides the option of lump sum commission to its distributors (in the industry this is called indemnified or up-front commission) and it has a successful network of distributing agents throughout the world excluding the main regulated territories. The amount the distributor earns is linked to the length of the policy; the longer the policy term the longer the surrender penalty incurred on early access, the more money the distributor or adviser earns. Not all distributing agents have regulation or financial qualifications and may not be aware of the other saving plan options available.
WARNING: Costs and information is correct as of July 2016. Please refer to a brochure from the company for current up to date information and any changes on costs or information. You should not buy based purely on information contained within this article and EME do not accept liability for purchases. If you have any doubts then please speak with your financial adviser or a representative of the company for further advice.
If the provider improves or amends its terms then EME would like to hear from them to amend the review page accordingly, and providers are encouraged to comment on errors or omissions to ensure that readers have the latest and correct information.
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1 / 5
|Charges||Overall charges greater than 8% per annum.|
|Funds||Limited selected range of collectives or mirror funds with upfront additional charges (Bid/Offer spread) or initial “capital” units.|
|Accessibility||To avoid access penalties, only accessible after establishment period of 8 years or longer, or total loss of fund or severe penalties in establishment period of 12-24 months or longer.|
|Overall Assessment||A commission-based adviser’s product. Not recommended under any circumstances.|
2 / 5
|Charges||Overall charges greater than 5% per annum.|
|Funds||In-house range of collectives or mirror funds with upfront additional charges (Bid/Offer spread).|
|Accessibility||Penalties resulting in loss of fund value may exist for 5 years – 8 years, or total loss of fund or severe penalties in establishment period of 12-24 months or longer.|
|Overall Assessment||A predominantly commission-based adviser’s product with limited use or appeal.|
3 / 5
|Charges||Overall charges between 2.5% and 5% per annum.|
|Funds||In-house or limited range of collectives or mirror funds with no Bid/Offer spread.|
|Accessibility||To avoid access penalties, only typically accessible after establishment period of 12-24 months or longer, but with no penalties thereafter.|
|Overall Assessment||For those seeking lock-in target dates (perhaps with guarantees) over 5 years.|
4 / 5
|Charges||Overall charges less than 2.5% per annum.|
|Funds||Full range of collectives with no Bid/Offer spread and rebates on charges reducing annual costs.|
|Accessibility||Immediate within 60 days without any penalties on any item.|
|Overall Assessment||Recommended for some situations and some people.|
5 / 5
|Charges||Overall charges less than 1.6% per annum.|
|Funds||Includes ETPs (passive) and Individualised accessible collectives with no Bid/Offer spread and clean share classes for lowest annual costs.|
|Accessibility||Immediate within 30 days without any penalties on any item.|
|Overall Assessment||Recommended for most situations and most people.|