Working in partnership with financial advisers
Freephone 0800 731 2422
www.healthyinvestment.co.uk
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Welcome We have designed this guide to give you the product and investment information you need to enable you to confidently recommend Healthy Investment to your clients. I believe that the best customer outcomes will be achieved by receiving quality financial advice and with over 185 years of experience, relevant products, a strong capital base and a passion for providing advisers and investors with a truly personal service, I am confident that Healthy Investment has a part to play in anyone’s investment portfolio.
Peter Green Chief Executive
“Mutuals present a refreshing alternative to companies putting profit above everything else.� *Source: Association of financial mutuals
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Our history The industrial revolution of the late 1700s saw this country at the forefront of innovation but it also brought poverty, poor housing and ill health to many of the country’s mill and factory workers. These appalling conditions brought people together, forming friendly societies to support each other in times of sickness or death. Through small regular contributions help could be offered to members in need. Most friendly societies were associated with particular employment or social groups e.g. dentists, police, woodmen etc: indeed some still are. Healthy Investment under its original name “The Independent Order of Rechabites� was formed in 1835 in Salford and was originally associated with groups of people who abstained from alcohol. From these humble beginnings the Society grew, provided low cost funeral benefits, affordable sickness insurance and savings and investment plans to hundreds of thousands of individuals throughout the country.
Successive financial services regulations over the years removed many of the distinctive characteristics of friendly societies and most now operate as mutual insurers. The Society has traded as Healthy Investment since 2002 and is a modern, growing, financial services mutual specialising in savings and investment products throughout the whole of the UK. As a mutual financial services provider we are a member of the Association of Financial Mutuals (AFM). This trade body represents mutual insurers in the UK. We are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Freephone 0800 731 2422
www.healthyinvestment.co.uk
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Mutuality & ethics As consumers are demanding greater transparency and seek out socially responsible and financially viable organisations, the mutual core values of trust, mutual benefit and ownership ring true. Mutuals present a refreshing alternative to companies that put profit above everything else. Mutual societies have no shareholders to pay, so any profits that we make are shared by our members. Our mutuality means that we’re run for the benefit of our savings and investment members and that profits stay within the Society for the benefit of all, rather than being paid out in dividends to shareholders. Our members are encouraged to attend and vote at the Annual General Meeting to help shape the future direction of the Society. We are proud to be an ethical provider of ethical savings and investment plans which aim to provide consistent growth through a cautious actively managed With-profits Fund.
As a commitment to being an ethical provider of savings and investment products we never invest in companies that do harm; avoiding investments in alcohol, arms and tobacco industries and gambling and pornography providers. We monitor the governance standards of companies and as a responsible holder of their shares vote against poor governance standards and business practices. We rigorously promote the use of fair trade products within our office and actively support local charities that are chosen by the team on our Ethics Committee.
“Independent surveys reveal that customers report higher levels of satisfaction with mutuals� *Source: The Mutuals Yearbook 2013
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Financial strength Healthy Investment provides savings and investment products to over 110,000 members. At the end of the last financial year we looked after over ÂŁ150 million for savers and investors. Our Solvency capital coverage at 224% was over double the minimum requirement. As Insurance Based Investment Products, all of the investment products we provide are covered by the Financial Services Compensation Scheme without any upper limit, unlike bank and building society cash deposits and some other investment products.
Ethical With-profits Fund Healthy Investment’s Ethical With-profits Fund aims to provide members with steady growth through a low risk, actively managed fund over the medium to long term, whilst smoothing out the fluctuations in investment markets. Our Ethical With-profits Fund invests in a mix of different assets including UK and global shares, government and corporate bonds, commercial property and cash deposits but avoids investments in alcohol, tobacco and arms industries and gambling and pornography providers.
Asset allocation as at 30 June 2019 0.86% Cash deposits 8.33% Overseas equities 9.54% Commercial property
44.55% Fixed interest government bonds
We appoint specialist managers to provide a bespoke service, currently Investec Wealth & Investment to actively manage the investment strategy, asset allocation and individual stock and fund selections. A quarterly investment bulletin provides investors and advisers with the latest asset allocations and stock and bond selections.
Freephone 0800 731 2422
16.87% UK equities
www.healthyinvestment.co.uk
19.85% Fixed interest - corporate bonds
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With-profits that works With-profits continue to make up a considerable proportion of investments in the UK. Analysis undertaken by the FCA shows that, at the end of 2017, over £274 billion was invested in With-profits Funds, with over £16 billion invested in that year alone. With-profits will not be appropriate for everyone but they have a place in the portfolios of clients looking for a cautious investment that is likely to outperform cash deposits and provide capital protection over the medium to long term. With-profits works for clients looking to diversify their risk or who are looking for a less volatile alternative to many managed funds. The FCA continues to ensure that all With-profits policyholders are treated fairly and their April 2019 thematic review confirmed that most of the firms they assessed were taking reasonable care to manage this risk. Many of the historic issues affecting With-profits are thankfully a thing of the past, and as a mutual insurer something we have never had to contend with. In a With-profits Fund investors share in all of the profits of the Society after deduction of running costs and receive their share in the form of an annual bonus, added to their investment, that reflects the performance of the investments in the fund. One of the main aims of the Healthy Investment Ethical With-profits Fund is to reduce the impact of short term market volatility and to help provide investors with a consistent return. This is achieved by “smoothing” the amount of annual return where some of the returns are retained in periods of good investment returns and applied during periods when investment returns are not as good.
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To ensure that all investors receive their fair share of the returns that the With-profits Fund has generated, a final bonus may be paid when investments are withdrawn. Market value reductions have a part to play in With-profits. FCA regulations ensure that these can only be applied to ensure that investors’ returns reflect the investment performance of the With-profits Fund. They can no longer be used simply to deter investors from withdrawing their investment. Healthy Investment has a formal policy on how it applies any potential MVR to ensure that we only apply them when absolutely necessary and for limited periods of time, when the fall in the value of investments in the With-profits Fund is extreme and they have fallen below the level where smoothing the return would result in members leaving their investment in the Fund being disadvantaged. All of Healthy Investment’s products include MVR free anniversaries where capital and growth are protected.
ISA The Healthy Investment ISA is a stocks and shares ISA that enables clients to benefit from the tax advantages of an ISA investment. It allows clients to invest in a cautious fund that aims to outperform cash deposits without the volatility risks of an equity or managed Unit-linked Fund. There is no maximum age and with a minimum initial investment of £500 or a monthly contribution of £25 it provides the opportunity for a wide range of clients to open an ISA. Transfers from cash ISAs and stocks and shares ISAs are welcomed with no minimum transfer value and a maximum of £500,000. Additional Permitted Subscriptions are accepted from any provider. We simplify the process by taking care of all the details by contacting the existing providers and arranging the transfer. The ISA includes a capital and growth guarantee on the 10th and every subsequent 5th anniversary of the opening of the ISA, ensuring that the client’s capital and growth to date is fully protected on these key anniversaries. The same capital guarantee is included on the death of an investor, something we find older clients value. The ISA is suitable for medium to long term investors, has no early withdrawal charges and grows through the addition of annual bonuses. These bonuses are declared net of the 1.4% annual management charge; the bonus declared is the bonus received.
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A comparison of previous annual bonuses shows that our investment aims of consistent growth have been achieved. No one can, of course, predict the future but it remains our objective to maintain steady growth over the medium to long term. Recent years’ annual bonuses were:
2018 - 2.25% 2017 - 3.00% 2016 - 2.75% 2015 - 2.75% 2014 - 3.25% Any final bonus on withdrawal of investments will ensure that the client receives their fair share of the Fund’s returns. An example of a £15,000 investment into a Healthy Investment ISA on 1 July 2009 would have grown to £22,428 if withdrawn on 30 June 2019, an effective annual return in excess of 4% as it includes a final bonus in addition to annual bonuses.
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Investment Bond This traditional With-profits Investment Bond gives clients an opportunity to invest in a range of asset classes and a wide range of actively managed stocks within the Healthy Investment Ethical With-profits Fund. Designed to provide investors with stable returns over the medium to long term from a cautiously managed fund the bond includes an element of life insurance that is often used by advisers when managing clients’ inheritance tax liabilities or discussing concerns over care costs. The Investment Bond can be placed in a variety of trusts to enable clients to protect their assets, or gift monies to family members whilst still retaining some control over access to the assets. One off or regular withdrawals of up to 5% of the investment per annum are available without any immediate tax consequences. There is no minimum age and more importantly no maximum age, especially as capital is guaranteed on the death of an investor. A 10th and every subsequent 5th anniversary capital and growth guarantee ensures investors are guaranteed to get back their initial investment plus all the bonuses that have been added if they withdraw on one of these anniversaries.
Bonuses are added annually and declared net of the 0.9% annual management charge. The bonus declared is the bonus received. Recent years’ annual bonuses were:
2018 - 2.25% 2017 - 3.10% 2016 - 2.85% 2015 - 2.85% 2014 - 3.35% Any final bonus on withdrawal of the investment will ensure that the client receives their fair share of the Fund’s returns. An example of a £25,000 investment into a Healthy Investment Investment Bond on 1 July 2009 would have grown to £34,866 if withdrawn on 30 June 2019, an effective annual return of 3.3% as it includes a final bonus in addition to annual bonuses.
“ In the current climate, we need to know the company in which we invest our money is seeking to ensure our money is safe and well looked after, that you work for us and not your shareholders.” *Source: The Mutuals Yearbook 2013
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Investing for children Nearly all clients want to do something for their children or grandchildren. This can range from an Investment Bond in trust to a modest contribution in a Junior ISA. Arranging a modest investment for a client’s child or grandchild may not initially be profitable but gives an opportunity to build future client relationships. At Healthy Investment we have several options available, some of which are unique to friendly societies.
Junior ISA
Junior ISAs have a maximum annual contribution, currently £4,368. Over the 18 years that they can be held, they will build into sizeable funds. We also welcome transfers of Child Trust Funds, cash Junior ISAs or stocks and shares Junior ISAs from other providers into the Healthy Investment Junior ISA and take care of all the details by contacting the existing provider and arranging the transfer. A minimum investment of £10 opens a Healthy Investment Junior ISA and once opened by the child’s parent or guardian, flexible single or regular investments can be made by anyone.
Child Trust Funds
Child Trust Funds will start to mature over the next 12 months as holders reach their 18th birthday. All children born in the UK between 1 September 2002 and 3 January 2011 were issued with a voucher, many of which were allocated to a provider to invest on the child’s behalf. We were one of those providers and have the knowledge to help parents trace the whereabouts of their child’s money as many will not know where it was invested. We provide both Stakeholder and Ethical Child Trust Funds. Transfers to Junior ISAs from our and other providers’ Child Trust Funds are permitted at any time and from the child’s 16th birthday they can transfer between providers without their parent’s consent.
Freephone 0800 731 2422
www.healthyinvestment.co.uk
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Tax Exempt Savings Plans
Unique to friendly societies Tax Exempt Savings Plans commit plan holders to save on a monthly basis from between 10 and 25 years. Historically this is probably the one product most associated with friendly societies but as the investment limits have remained limited to £25 per month it has lost some of its popularity. However even modest savings over a long number of years can build into an attractive amount. It is a useful addition when Junior ISA limits have been exhausted or for clients who want to retain control of their child’s money beyond the age of 18. Standard endowment savings plans are available for clients wanting to commit to saving more than the tax exempt limit.
Standard Savings Plans
As qualifying life policies the pay-out when these policies mature are free of income and capital gains tax. Suitable for clients who want the commitment of regular saving, Standard Savings Plans offer the opportunity to build a cash sum that will be really useful. Multiple plans can be taken to mature on key birthdays or for example to support a child each year at university. The term of the plan can be fixed for a number of years, or the savings plan can mature on a special birthday. Whilst most popular for children both our Tax Exempt and Standard Savings Plans are, subject to maximum age restrictions, also available to adults.
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Working in Partnership We have worked in partnership with financial advisers for many years and everything we do is aimed at enhancing this relationship and supporting your business. All of our With-profits policies facilitate the collection of advisers’ fees. Our approach is flexible and responsive. Fees can be collected before or after an investment is made and for ongoing fees, monthly or annually. They can be expressed as a fixed amount or as a percentage of the fund value. When you work with us you get your own dedicated Business Development Executive who provides you with an individual and personal service that is tailored to your needs and those of your clients. We have an enviable reputation for excellent customer service with new business, withdrawals and client administration processed within 48 hours. Plan valuations can, when necessary, be processed within the hour. Advisers have access to an online portal containing useful tools, information and literature. As Insurance Based Investment Products all our products fall outside MiFID II regulations.
However we are able to provide personalised illustrations for advised sales to show the impact of adviser charges. We support the production of client reports with example paragraphs for suitability letters, past performance details and fund fact sheets. Featuring on the Defaqto analysis tool, we can also help with the production of reports. Our Business Development Executives are available for individual or group training and our Chief Executive is available for conferences and other events. Where Healthy Investment products are not included on a network panel we can provide the analysis and compliance support necessary for off-panel submissions. On occasion it may be appropriate for you to undertake a sale on an execution only basis and not provide advice to your client on the product’s suitability for their personal circumstances and attitude to risk. In these cases where sales have been undertaken on a non-advised basis, we are able to pay you commission.
We hope that this short guide will answer some of the questions that you may have and give you the confidence to recommend a Healthy Investment product as a suitable investment for your clients. Please remember that if you’re not happy with our service or products for any reason at all, we need to know so that we can do something about it. We want you and your clients to be thrilled and satisfied. Do tell us and we’ll do whatever it takes to achieve that. You can contact us by: Telephone (free): 0800 731 2422
Email: enquiries@healthyinvestment.co.uk
Web: www.healthyinvestment.co.uk
Post: 2 The Old Court House, Tenterden Street, Bury BL9 0AL
Freephone 0800 731 2422
www.healthyinvestment.co.uk
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2 The Old Court House, Tenterden Street, Bury BL9 0AL Tel: 0161 762 5790 Fax: 0161 764 3557 Email: enquiries@healthyinvestment.co.uk www.healthyinvestment.co.uk In accordance with the Insurance Distribution Directive this leaflet has been classified as marketing material. Not for use with clients. Healthy Investment is the trading name of The Rechabite Friendly Society Limited, an incorporated friendly society under the Friendly Societies Act 1992. Register No. 218F. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register No. 109994. 1
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