View more on these topics

Top up cash or face automatic disinvestment

Threesixty has warned advisers who are paid fees through platform cash accounts to ensure they keep their clients’ accounts topped up or they will risk triggering automatic disinvestment of the clients’ assets and potential capital gains tax charges.

Threesixty partner Phil Young says it is important to ensure that clients hold at least 2 per cent of their investment in the cash account to cover adviser fees if these are 0.75 per cent or more and also to cover the platform’s charges.

He says: “If the cash funds run low, then in order to meet charges payable due to you or the platform, an auto-disinvestment process will usually kick in. This is unlikely to suit your clients’ needs and can result in punitive transaction charges and CGT liabilities. You can set up income payments to go into the cash accounts to mitigate this over time but the early investment years may not address this adequately.”

Young says the 2 per cent should not be treated as a cash asset class for the purposes of asset allocation because it is performing an admin function rather than investment function.

Threesixty is working with a number of platforms to add the model portfolios it has developed with Old Broad Street Research and Margetts, which are likely to include a 2 per cent cash account default option.

But Thomas and Thomas managing director Darren Lloyd Thomas says: “There is too much of a trend of IFAs shoving money into cash with an investment that is supposed to be for the long term. It makes far more sense to charge the client separately and let the client deal with the cash and you deal with the investment.”


Contributing factors

I hear that I might lose the tax relief on my pension contributions soon. Should I be putting more money away now while I can?

Protecting long-term savings from short-term policy

By Jamie Clark, Business Development Manager The pensions revolution is almost upon us. As with any revolution, there will be winners and losers. The winners in this case could presumably be the politicians that orchestrated pensions freedom and choice just before the general election. As for the losers, there may be many thousands of people […]


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