Rochford Policies has launched a new geared investment scheme giving IFAs the chance to earn commiss...
Rochford Policies has launched a new geared investment scheme giving IFAs the chance to earn commission on a portfolio of traded endowment policies bought with a mixture of existing capital and a secured bank loan.
The new Traded-endowment Investment Portfolio Plan (TIPP) offers IFAs' clients the ability to gain potentially high returns by gearing up policies that would otherwise receive a lower price discount rate if bought individually.
The product can be incorporated into a tax-efficient pension plan like a Sipp or an SSAS and carries a minimum one-off IFA commission of 3%. The product is designed with a life span of 10 or more years.
The product allows investors to select a portfolio of policies with their IFA and apply for a secured bank loan, which can be up to 90% of the total surrender value of the policies.
If approved, a loan account is set up from which all fees and premiums will be paid. The bank retains the policies as security. As the policies start to mature they are used to pay off the loan and the balance is paid to the investor as profit. Rochford Policies warns that IFAs need to make clients aware that the risk profile of the product changes depending on the level of gearing taken, but it said it offered investors the chance to make potentially higher returns.
Sidney Cohen, managing director of Rochford Policies, said: "The fundamental thing to remember is that this is a relatively low risk instrument with the potential to reap the rewards of greater returns."
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