View more on these topics

A Royal Life of Riley

Royal London


Type: Capital protected bond

Aim: Growth linked to the performance of the Schroders FTSE 350 Managed Fund and/or RLAM FTSE 350 Tracker Fund

Minimum investment: Lump sum £10,000

Term: Five-10 years

Return: 100% of the performance of the Schroders FTSE 350 Managed Fund and/or RLAM FTSE 350 Tracker Fund

Guarantee: Up to 110% of capital returned regardless of the performance of the underlying funds depending on length of term and protection level

Charges: Initial up to 6.75% taken monthly over first five years, annual 1.3% for Schroders fund, annual 1% for RLAM fund

Commission: Initial up to 5.75% for paper application, up to 6% for online applications, a proportion of initial commission can be converted to renewal commission

Tel: 08708 506070

Riley – as in The Life of Riley – is a capital-protected bond that provides flexibility not only in the level of capital protection available, but also the term of the product.

Independent Personal Financial Management Luke Gibbon describes Riley as a single premium bond with the choice of a FTSE 350 tracker fund or an FTSE 350 managed fund. He points out that the product makes it possible to insure against losses or even insure for a gain of up to 10 per cent at a selected maturity date in five to 10 years’ time.

Gibbon observes that if the bond grows in the meantime, the gain can be locked in – at a cost. “The cost of the insurance depends on market conditions on the day capital is invested. However, in the brochure it gives an example of a cost of 15 per cent to guarantee a return of capital in 10 years’ time. There is a penalty on encashment before five years,” says Gibbon.

On the commission side, Royal London is offering initial commission up to 6% for internet applications. “This can be exchanged for fund-based commission, with the maximum being 3 per cent initial with 0.5 per cent fund based renewal. Commission can also be reinvested to reduce charges,” explains Gibbon.

Gibbon is not entirely happy with the charges as he feels the initial cost is slightly high, although the annual fees are fairly typical.
In Gibbon’s view, the bond sends mixed messages in that it offers the potential for guarantees but the fund it invests in would be deemed to be a medium risk UK investment.

“The costs of the guarantees would seem high, which is why a greater risk may need to be taken on the investment fund. As the investment is via a bond it could offer a tax free efficient income for higher rate tax payers, but the underlying fund will be subject to capital gains tax, which could potentially be avoided via a unit or investment trust.” says Gibbon

Gibbon feels that overall, clients who understand and accept the risks of the investment side of the bond would have a diversified portfolio and probably would not be interested in the guarantees. “These clients would probably also invest via unit or investment trusts. Clients who are more nervous of stockmarket investment would probably not accept the risk of the funds available and even if they did, would be put off by the costs of the guarantees,” he says.

In summary, Gibbon thinks Riley is expensive – taking into account of the guarantee element – not tax efficient and not very flexible. “I also disliked the marketing material as I felt that it was patronising and feel the name is gimmicky. On the other hand my secretary liked both, which might explain why I am the advisor.”


Suitability to market: Poor
Investment strategy: Poor
Charges: Poor
Advisor remuneration: Average

Overall 3/10


Treasury says active advice will avoid VAT on proc fees

The Treasury says brokers may be liable for VAT on retention proc fees if they fail to help their client through the entire sales process. It says if a broker recommends that a client remains with their lender but does not have some involvement in the deal, such as helping arrange and assist with the […]

Parental leave and pensions

Fiona Hanrahan  – Senior Product Insight and Technical Support Analyst We are often asked how parental leave impacts workplace pension schemes in terms of funding in general, auto enrolment and salary exchange. This article will explain each of these. How does parental leave impact the funding of workplace pension schemes? A member of a defined […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm