An ISA transfer means moving your ISA savings from one Cash ISA to another, or from a Cash ISA account to a Stocks and Shares ISA, or Stocks and Shares ISA to a new Stocks and Shares ISA or a combination of all.
What you need to know
- Your Cash ISA may not be giving you the best deal.
- Our proposition. Stocks and Shares ISA. Major UK Insurance Company as the new ISA provider, Free Transfer of all of your ISA holdings, £300 initial fee on application per transfer applied by us, No tie in, Current Return 3.88% net of all policy fees, servicing fees and costs. (Please Note. We do not transfer Cash ISA holdings to Cash ISA holdings)
- Best Cash ISA rate 20.07.2020 1.65% 7 Year Term Annual Interest Shawbrook Bank (source: www.moneyfacts.co.uk/isa/best-cash-isas)
- UK Inflation Rate 1.8% 2019/2020 Office of National Statistics (source: www.ons.gov.uk/economy/inflationandpriceindices)
- You may have seen large market swings.
- You can transfer both Cash & Stocks and Shares ISA holdings into the same new ISA.
- You can transfer back to a Cash ISA from a Stocks & Shares ISA so you are not tied in.
- Stocks & Shares ISA's are higher risk than Cash ISA's.
Speak to someone today
If you would like to speak to someone directly today,
please give Howard a call.
Available Monday - Friday 9am to 6pm
Obtain your signed Permission
Our process is a postal process, meaning that we do not visit you at your home because we are not charging any upfront fees to you and with social distancing a key factor now days this makes even more sense health wise. We are available via telephone or via video link if required at any point.
Your enquiry will mean that we send you out a pre prepared pack of information plus forms that you will need to complete and return to us which includes a checklist so you do not miss anything in the pre paid envelope supplied.
If there is anything else that you want us to look at there is a form in the pack to let us know and we will deal with that as a separate matter.
Agreement / Paperwork
Once we receive the reply envelope from you with the completed paperwork we require, this will enable us to make any enquiries needed by us. We will then prepare our report and the necessary paperwork to send out to you to sign and return to us. Upon receipt we will then action the transfers for you and keep you up to date with progress.
We are only dealing with the ISA holdings in this process.
Following completion of the process you will be able to log into the providers website and see your values at any point plus we will keep an eye on things as per our servicing agreement.
Be advised that we do not cold call, we do not mail shot, we do not pester people, we do not force people to make decisions they do not want to. Everyone who we see is as a result on an enquiry led by them, meaning that the potential client has made the decision to look at what they want and in most cases already made up their minds what they require. This is the purpose of this website to enable you to find us so we can assist and advise you accordingly
Here at First Place Financial Ltd we have researched the marketplace for a viable ISA solution for Cash ISA holders who are receiving little or virtually no Cash ISA Fund Growth currently. Likewise holders of Stocks and Shares ISA's can also be invested in funds that are far too risky for their attitude to risk and are looking for a lower risk insured fund alternative.
As we are independent and we are not a product provider ourselves we cannot simply say this is our ISA offering take it or leave it like some direct ISA providers do as they are not advising on other suppliers, therefore we have an advice process.
What we can say is that one size doesn't fit all, however we have identified a major Insurance Company that offers Insured low risk fund options, that is a well matched product for low risk ISA investors who wish to obtain a higher rate than current Building Society and Bank Cash ISA's will provide and wish to look at alternate ISA solutions to provide a better return.
Some reasons you should use us to transfer your ISA(s).
- £300 initial fee on application to transfer each of your ISA(s), 1% annual management fee applied.
- No tie ins.
- Access to our initial advice and ongoing advice review process.
- Only the best product providers used.
- Flexibility of product and fund selection.
- Extensive Industry Experience of over 32 years
- We are fully Independent and Directly Authorised by the Financial Conduct Authority.
- You have just realised that you have too much with one cash ISA provider and wish to protect your money in the event of the provider failing, but wish to stick with some Cash ISA's and some Stocks & Shares ISA's.
- You have realised that you have too much in Cash ISA's and wish to diversify into some Stocks and Shares ISA's for additional growth.
- Safety of your money.
- You are unhappy where you are currently and want to change.
- You wish to invest into the current years ISA allowance and are not sure which provider, which product Cash ISA or Stocks and Shares ISA to choose from.
- You can see your money eroding as you are not really making any growth. Low interest rates are not good for savers.
- You have over £85,000 with the same supplier or group and now you have realised this you want to transfer to protect your money by supplier diversification.
- You have non insured Stocks and Shares ISA's over £50,000 in value with the same supplier and wish to protect these.
- You have a Unit Trust and want an ISA product.
- Cash ISA's are not really cutting the mustard growth wise and you are seeking an alternate route maybe via a Stocks and Shares ISA with some or most of your cash ISA holding or holdings. (you can transfer back to cash ISA holdings in the future if rates improve).
- Better savings rate for growth and to offset inflation.
- You are willing to transfer out of some or most of your Cash ISA's to obtain a better rate of return than you currently receive in the building society or bank based Cash ISA's and you are looking for a fund that will give you growth with a fair degree of safety.
- Combine various ISA holdings so it is easier to manage.
- Re assess all of your holdings cash and stocks and shares ISA's. Check your Attitude to Risk and re align all of your holdings into a sensible balance between Cash ISA and Stocks and Shares ISA's as your current arrangements have got out of hand. You wish to use a new product that allows capital protection in the event of company failure with no upper limits, safety of investment via a smoothed fund with the option to diversify fund holdings at any time.
- £608 Billion was the value of Adult ISA holdings at the end of 2017-2018
- £69 Billion was subscribed to an adult ISA in 2017-2018
Cash ISA Holdings around £267.5 Billion. Stocks and Shares ISA around £334.4 Billion
(source. All facts, figures taken from HM Revenue & Customs Individual Savings Accounts (ISA) statistics, August 2018)
Many IFA's will transfer your ISA from A to B and typical charging is 3% of what is transferred over and a 0.5% trail fee to look after the money and advise accordingly. Therefore the first thing you have to do is recover the 3% initial cost before you make any growth, so for a savings contract we think that would lack motivation for investors to switch over, although many still do, on that basis.
Our online offer to you
Our stance on ISA Transfers from Cash ISA's to Stocks and Shares, or Stocks and Shares ISA Transfer to Stocks and Shares ISA is £300 initial fee on application per ISA transferred. So that is £300 upfront and a 1% of the fund value trail fee per year which is paid at 1/12th of 1% per month with an initial tie in period similar to a current cash ISA (as there is no upfront costs to you). As we are transacting the transfer for no charge is more beneficial to clients wishing to use our services.
When looking at Cash ISA transfers into a Stocks and Shares ISA as cash ISA's are deemed as low risk, we have a particular provider and fund in mind that is suited to such transfers and this transfer deal is only available by us, via our website enquiry process. This is a postal limited advice transaction and specific to the ISA Transfer and nothing else. On more complex cases we may require an appointment to see you.
The sole aim in this is to increase your returns from your ISA money. Cash ISA's give a poor return and by transferring for free there is plenty of incentive to look at our proposal. Likewise if you have multiple stocks and shares ISA's or even a single one you can lower the risk by switching and invest out from on the providers investment platform should you desire.
Now Cash ISA's can be switched back from Stocks and Shares you are not stuck with a decision to try a Stocks and Shares ISA.
All of our ISA transfers or switches are ISA to ISA and therefore they are never cashed in so they retain the ISA status and no ISA advantages are lost.
With Stocks and Shares ISA's you can log into the ISA providers website and see the value of your ISA on a daily basis if you wish. This is far better than many building society cash ISA's savings books where you have to go in and have the book made up with adding the interest.
The provider that we would use for a stocks and shares ISA as a transfer or new investment at this time has a range of insured smoothed funds. The insurance company we use as an ISA provider for these transactions will not accept direct client applications and all applications have to be via an adviser firm on an advised basis. Another benefit of transferring a Cash ISA is, investor protection, a proven track record, no large day to day market fluctuations and after fees are taken into account you would receive (20.07.20) 3.7% growth net of all charges. (When taking into account the best available cash ISA rate of 1.65% Gross currently and the reduction in real growth from inflation. The current inflation rate (2019/2020) is now 1.80%, so you will be getting fund growth but no increase in spending power so a transfer into a Stocks and Shares ISA doesn't seem like a bad plan)
ISA is a tax efficient savings method. There is no tax to pay on the growth, no capital gains on the growth, no time limit. There has always been two versions, Cash and Stocks and Shares.
Cash ISA plans are building society and bank based in the main and offer you low rates of return and at the same time low risk. Low rates and cost of living deduction have a tendency to erode real cash ISA growth. Some Cash ISA's will give you a better deal but want to lock your money in, others are reluctant to take transfers and there is still a bit of brand new customers get better deals than existing ones going on. Sometimes when deals end you revert to a lower default rate which is advantageous for the supplier of your ISA.
Stocks and Shares ISA
Stocks and Shares ISA plans operate under exactly the same rules as cash ISA's except they are invested in the wider market giving the investor a far wider fund and investment sector choice. Needless to say these are more risky than a pure Cash ISA, however depending upon the fund choice one can have a low risk ISA or a blend up to a far higher risk.
Cash ISA & Stocks and Shares ISA
There is nothing stopping you having both Cash and Stocks and Shares ISA's.
Is Your Money Safe with your ISA providers if they went bust?
If your bank, building society or credit union went bust you would be entitled to compensation through the Financial Services Compensation Scheme for a maximum of £85,000. The maximum you would get is still £85,000, even if the total of all your different accounts with the same bank added up to more than this. Some bank brands are actually owned by a larger bank company. For example, First Direct is owned by HSBC. So, if you had £80,000 with First Direct and £10,000 with HSBC, you would have a total of £90,000 with HSBC Bank Plc. That means £5,000 would not be covered by the FSCS. If you have a joint account, the Financial Services Compensation Scheme deposit protection limit is £170,000. If you have more than £85,000 invested with the same bank or building society then it may be worth looking at transferring out the excess to another non linked supplier. As an ISA is an individual account you will not have a joint ISA so in the main the £85,000 limit applies but this will also tie in with other funds you have with the same bank or building society or group so it is worth checking.
Never say never, because Northern Rock was a close run thing when the financial crash happened. If people thought their money was safe why was there daily queues to withdraw all of their savings? There have also been some investment firms that have failed previously. (See FSCS Website for details).
By diversification and using an insurance company via a stocks and shares ISA your protection is 100% of your holding with no upper limit in the event of a company failure as long as you are using what is called an "Insured Fund" which falls under the banner of "Long Term Insurance".
A Stocks and Shares ISA invested in a non insured fund and also an OIEC, a Collective or a Unit Trust have a £50,000 compensation limit on them.
This alone is worth a consideration for safety of fund if nothing else.
Your investments are in your sole name and you have £300,000 in ISA's of which £150,000 is in Cash ISA's with the same supplier and £150,000 is in non insured funds Stocks & Shares ISA's with two suppliers. You wish to have safety of your fund, flexibility, steady growth in excess of inflation. Your attitude to risk is medium 4-5 on a scale of 1-10 with 1 being low and 10 being high.
Possible solution to solve the Compensation issue to keep the same current strategy.
Firstly you could leave up to £85,000 in your current Cash ISA and have the protection. You could diversify the remainder of your £150,000 cash ISA balance to another non linked cash ISA supplier and obtain the necessary protection. The non insured element you would need to reduce to £50,000 per supplier so you will need another non linked supplier for the extra £50,000 to obtain full protection mirroring your current set up.
Looking at Cash ISA returns as of 16.04.2020 the best you will get is 1.65% Gross with a tie in. With Inflation at 1.80% currently you are not making any real growth. This solution will solve your concerns over investor protection but it won't solve your problems of real growth over inflation. A cash ISA holding has a low attitude to risk and your current attitude to risk is medium.
Cash ISA & Stocks and Shares ISA as a possible solution
Possible Combined Solution. Cash ISA Holdings.
Firstly you could leave up to £85,000 in your current Cash ISA and have the protection. You could diversify the remainder of your £150,000 cash ISA balance to another non linked cash ISA supplier and obtain the necessary protection. This would allow easy access and a fair degree of safety for the cash side.
Or the balance up to or in excess of this you could ISA transfer into an insurance company as a provider using a stocks and shares ISA insured fund as this would give you 100% of the fund protection against the insurance company going bust with no upper limit.
The non insured element you could look to stage transfer into an ISA wrapper to obtain the necessary insured fund protection.
Cash ISA vs Smoothed Fund Returns
£100,000 Cash ISA. Best rate currently 1.65% Gross. This equals £4.52 growth per day. (Basis of calculation £100,000 X 1.65% divided by 365) or with the deduction of inflation at 1.7%. £100,000 X (1.65% - 1.80% = 0.15%) divided by 365. This equals £0.00 real growth per day.
£100,000 Stocks and Shares Smoothed Fund 3.7% net of running costs. This equals £10.13 growth per day. (Basis of calculation £100,000 X 3.7% divided by 365) or with the deduction of inflation at 1.7%. £100,000 X (3.70% - 1.80% = 1.9%) divided by 365. This equals £5.20 real growth per day.
The above demonstrates potential returns and the real spending power after the deduction of inflation as a guide.
The big question is; What do you do for the best?
There is clearly lots of money in existing ISA's both Cash and Stocks and Shares and plenty of new money invested into ISA's each year. Last year was the first year Stocks and Shares ISA investments has been more than Cash ISA holdings in the UK.
So do you continue to invest in Cash ISA's for safety, 1.65% growth if you are lucky gross with tie ins, but with inflation currently at 1.80% you will not really make any real growth over inflation in real terms.
The February 2020 inflation rate is 1.80%.
As an alternative do you take advantage of what is really available out there in the market plus what you can do with some or all of your current Cash ISA holdings.
Apart from Cash ISA to Cash ISA transfers to obtain the highest rate available, currently in the 1.65% area (source 16.04.2020 Money Facts Website.) with a 5 year tie in.
Cash ISA's can be a great way to grow your savings tax-free, no matter what tax band you're in. Just because an account is an ISA, it doesn't necessarily mean that you're getting a good interest rate or the best interest rate by your current provider. This is true, particularly on older accounts, you may well find that the rate you're getting could have dwindled – in some instances considerably. If you have not reviewed your Cash ISA holdings for a while or never now is a good time to start.
The Investor Safety in the event of the product provider failing is a very important fact. Whilst not common place we all need a supplier of an ISA product to enable us to have an ISA in the first place. If we invest our money then we need to know what level we are protected in the event of the product provider failing. As we have pointed out they are not all the same. This is a consideration in today's planning.
Have you considered Cash ISA to Stocks and Share ISA transfers. Risky? Yes there is an element of risk attached, but it all depends upon what provider you use and what fund or funds you use of course.
As Independent Financial Advisers we are looking to provide a service of offering you the best deal we think is available from an investor protection point of view and a certain degree of safety fund wise. Whilst we could all invest in the "Hong Kong all singing and dancing fund" (we made that up by the way as it sounds like a risky fund), for great results at a great risk, most people don't want excessive risk just stability and growth.
We have sourced a supplier of an ISA product which is a very well known and established household company name in the UK, with a smoothed fund which means there is not the day to day fluctuation of a direct investment, rather an allocated rate which is reviewed quarterly, but with many underpins which gives a predicted rate of return without tie in with growth rates higher than that of the Cash ISA otherwise there would be little point in mentioning it. This product using their in-house Insured ISA funds is therefore assured of 100% of the fund value with no upper limit in the event of that company failing.
It should be remembered that there are many funds available via this provider but we have highlighted a fund which we think is a comparable viable option for consideration of a Cash ISA transfer.
How do you transfer a cash ISA into a Stocks and Shares ISA like we have mentioned above?
We will take care of the process for you.
Do not withdraw the money yourself from your existing ISA as it will leave the ISA wrapper and you will not be able to put it back in.
There is a process for us to go through to provide you with advice and assess your situation, attitude to risk, check to see if there are any exit penalties to your current ISA or ISA's and if so formulate a plan of staggered transfers if that is the best course of action for you. Once clear we will help you apply to the new ISA provider as part of the normal advice procedure so no onerous paperwork for you to complete. Then any ISA transfer will be your current ISA to new ISA direct which means it stays in the ISA wrapper. Likewise once you have a Stocks and Shares ISA it can be transferred back to a Cash ISA at some point in the future should you so desire so you are not locked in by doing this by a similar process. Some Cash ISA providers don't allow transfers from Stocks and Shares ISA's but there are plenty that do.
Importantly nowadays one can log into the providers website and access your ISA and see its value on a daily basis should you desire.
Now there is cost to transfer and on-going costs factored in to use us as we are fully regulated by the FCA and there is an advice process to go through as we previously mentioned. All of these costs are disclosed and there are no hidden charges.
- Not all cash ISAs will allow you to transfer in. ISA providers are required to let you transfer out, it is not a pre requirement to allow transfers in.
- You're now able to transfer between cash and stocks & shares ISAs however you see fit.
- Make sure to check that your new ISA provider will allow transfers from stocks & shares savings.
- ISA transfers in will probably need to be 'new money' to the bank or building society to be accepted. Some banks and building societies will not let you transfer to another ISA in their range – it will only allow transfers in from money you have saved with another provider.
- You can only have one active cash ISA per tax year (6 April to the following 5 April), but you'll be able to transfer ISAs as often as you wish – as long as you follow the correct process.
What are the risks?
- The value of funds can increase as well as decrease.
- Smoothed funds are allocated a specific growth rate which is reviewed on a monthly and quarterly basis by the provider.
- If the market moves up or down by 10% over a 5 day consecutive period the core fund may be adjusted in value up or down in value which would either increase or decrease the value of your holding overnight. You would still receive your specified daily growth rate and this can be altered at the fund reviews by the provider.
- Unlike a Cash ISA in a building society where you can be assured the core fund value will not decrease a Stocks and Shares ISA cannot offer you a no decrease option.
- Pure Cash Fund is available by a Stocks and Shares ISA but it offers no growth.
- There is a 28 day notice period to switch out or into a smoothed fund for fund stability when fund switching.
- There is no such notice period if you are taking income from your ISA.
Disclaimer: This information is intended soley to provide guideance and is not financial advice. First Place Financial Ltd will not be liable for any loss arising from your use or reliance on this information. First Place Financial Ltd offers individual advice to individual clients.