Welcome to the Intelligent Investor

"For the great enemy of truth is very often not the lie - deliberate, contrived and dishonest - but the myth - persistent, persuasive, and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought"

John F Kennedy 1962

JFK was referring to the US economy, but his words are equally applicable to the complex world of modern investing. At Collins Ward we help our clients to understand the nature and realities of modern institutionally dominated investment markets, by dispelling the ‘persistent, pervasive, and unrealistic’ myths that inhibit successful investment performance.

2008 will be remembered as a year when many long-held beliefs were exposed by the severity of market forces. The Intelligent Investor column aims to provide incisive commentary on wealth management issues and move investors, in JFK’s words, ‘to a new, difficult, but essential confrontation with reality.’

June 16, 2009

Discounted gift trusts and loan trusts: What your financial adviser doesn’t tell you: Key information for potential investors

The enclosed eBook is a must read guide for any investor contemplating an investment into a discounted gift trust or loan trust. Find out what your financial adviser probably doesn’t even know!

The title of this post and attached eBook is somewhat controversial. I think the days of financial advisers deliberately misleading clients in order to sell endowments and other high commission paying products has passed. The increased take-up of advanced professional exams and a move to a fee-for-service remuneration structure has changed the nature of financial advice. However, this eBook guide highlights an area where one of JF Kennedy’s “myths” persists (see quotation at the top of the homepage).

Discounted gift trusts and loan trusts are often recommended to clients as a means to save inheritance tax, yet retain some form of access to capital or an ongoing income. There is no doubt that some advisers treat these solutions as a panacea for all client situations and recommend one where the other is not suitable. But is this just a case of having two options and advising the client to use the option which is least unsuitable? I am concerned that this is the reality for many advisers who, in JFK’s words, “enjoy the comfort of opinion without the discomfort of thought”. This guide dispels some of the many myths surrounding discounted gift trusts and loan trusts. It covers when these solutions should be utilised and highlights alternative solutions that are often unknown to many financial advisers, accountants and solicitors.

Finally, an apology to those advisers who have invested the time and resources and evaluated the various schemes in the marketplace before forming a considered opinion of which schemes are worthy of recommendation to clients. I salute these advisers and hope that one day this will be the norm in the financial advisory world.

You can download the eBook here.

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