London, UK – Ingenious today announces that Ingenious Real Estate Finance has completed a £26m loan financing deal to support the development of a mixed-use scheme consisting of 88 apartments, commercial space and a gym at the former Boleyn Cinema site in East Ham, London.

This deal was introduced by broker Daniel Sovitch at Life Financial Solutions.

The development will consist of 88 1, 2 and 3-bed residential units along with commercial units and a gym.

The site is located next to West Ham’s former football stadium, Upton Park.

The new build element of the scheme will be a 5-8 storey building comprising four blocks around a communal courtyard with additional roof gardens. Each flat will have a balcony or terrace.

This is one of a number of recent new transactions Ingenious Real Estate has closed. Including two loans for  £26m in support of the development of 55 new-build family homes in Somerset and Devon; a Bridging loan against an asset in Battersea, South West London and our first Industrial development facility to fund the construction of 48 industrial units near Poole.

These new transactions demonstrate Ingenious’ support for residential and commercial real estate development and projects across the UK.

We are delighted to have supported the development of such an important site, working with Daniel, Adil and Imran was a pleasure and we look forward to supporting them through the build. We continue to see record growth year-on-year in the developments we support, a direct result of the fantastic team we have here at Ingenious which is continuing to expand in both size and expertise. We remain confident regarding the longer-term outlook for the real estate sector despite recent headwinds, particularly the continued demand for quality residential space for owner occupation and rental. We are committed to supporting real estate developers with flexible financing solutions to meet demand.

Howard Sefton

Senior Director at Ingenious

I would like to thank Howard, Rupert and Anabelle at Ingenious for their flexible approach and proactivity in getting this facility over the line. It’s always exciting to follow the progress and build of a project like this right to the end to project completion and I’m delighted to have played a pivotal role in helping it get there.

Daniel Sovitch

Director of Life Financial Solutions

My family has owned this site for over 20 years, bringing forward our vision of regenerating the Old Cinema site. We are very pleased to have worked with both Daniel and Howard to secure financing for the site and I am excited to start construction.”

Adil Naeem

Boleyn Height

Ingenious today announces that Ingenious Real Estate Finance has completed a bridging loan deal with Cole Waterhouse to support its development of a key site in Digbeth, Birmingham, paving the way for the creation of Upper Trinity Street (UTS), a £260 million mixed-use scheme which will deliver 943 homes and a new public park for the city.

Ingenious Real Estate entered into an agreement with Cole Waterhouse to agree a bridging loan over 24 months to acquire the land from multiple private owners, with Auxillium Real Estate acting as the debt broker.

The purchase comes after Birmingham City Council granted planning permission in July 2021 for the transformation of the industrial land into a cultural, commercial and residential scheme. It will include the creation of Pump House Park which will sit alongside the canal and the historic lock keeper’s cottage which will be retained.

We are delighted to have supported the development of such an important site, working with Daniel, Adil and Imran was a pleasure and we look forward to supporting them through the build. We continue to see record growth year-on-year in the developments we support, a direct result of the fantastic team we have here at Ingenious which is continuing to expand in both size and expertise. We remain confident regarding the longer-term outlook for the real estate sector despite recent headwinds, particularly the continued demand for quality residential space for owner occupation and rental. We are committed to supporting real estate developers with flexible financing solutions to meet demand.

Howard Sefton

Senior Director at Ingenious

Last year, Cole Waterhouse signed the first tenants at UTS including the world’s first Museum of Youth Culture, Birmingham Music Archive and Digbeth’s Pat Benson Boxing Academy which together will occupy over 15,000 sq. ft. of space. Designed by Corstorphine & Wright, UTS will deliver a blend of rentable and open market sale homes, some with live-work space and roof gardens, a 133-bedroom hotel, 60,000 sq. ft. of flexible commercial space, car parking and large new areas of public realm across a network of landscaped yards, squares and hidden spaces.

The development of UTS is expected to create 600 jobs during the construction phase, deliver £229.5 million Gross value add (GVA) to the local economy and will create up to 313 additional jobs once built. Phase one will see the development of a portion of the residential element of the scheme comprising build-to-rent housing.

I would like to thank Howard, Rupert and Anabelle at Ingenious for their flexible approach and proactivity in getting this facility over the line. It’s always exciting to follow the progress and build of a project like this right to the end to project completion and I’m delighted to have played a pivotal role in helping it get there.

Daniel Sovitch

Director of Life Financial Solutions

My family has owned this site for over 20 years, bringing forward our vision of regenerating the Old Cinema site. We are very pleased to have worked with both Daniel and Howard to secure financing for the site and I am excited to start construction.”

Adil Naeem

Boleyn Height

Ingenious Real Estate continues to secure deals with, amongst others, loans totalling £26 million to support the development of 55 new-build family homes in Somerset and Devon; an industrial loan in Battersea, South West London for planning for a modern 8-unit warehouse & logistics scheme spanning over 30,000 square feet; a development facility to fund 48 industrial units at Magna Park near Poole; and a bridging finance deal in Felixstowe for 19 two, three and four bed houses.

We continue to see record growth year-on-year, a direct result of the fantastic team we have here at Ingenious which is continuing to expand in both size and expertise. We remain cautiously optimistic about the prospects for the real estate sector, particularly the continued demand for residential space. There has been ongoing government support to meet the acute housing shortage in the UK and we are committed to supporting real estate developers with flexible financing solutions to meet demand.

Howard Sefton

continued

Ingenious believes that the successful loan agreements represent the continued demand for residential real estate development across the UK, despite initial concerns around delays to construction as a result of COVID-19.

Formed in 2013, Ingenious Real Estate focuses on providing senior development and bridging finance to well-designed schemes in locations across the UK that have a proven demand. Typical loan terms are 18-30 months, and the team has since completed more than £600 million worth of transactions. The current portfolio balance is weighted towards residential, with the majority of Ingenious developments qualifying for Help to Buy.  

It’s been another hugely competitive field of entries for this year’s Growth Investor Awards, hosted by Intelligent Partnership. With the standard so high, it’s exciting that The Ingenious Group has secured a spot as one of the finalists for both ‘Industry Game Changer’ sponsored by MICAP and ‘Best New Product or Service’ sponsored by Mainspring.

Now in its eighth year, the Growth Investor Awards is a key event in the investment industry calendar. The awards celebrate the companies and individuals who go above and beyond to support the UK’s growing businesses, and in doing so create jobs, boost economic growth, and support innovation.

About the awards

The ‘Best New Product or Service’ award sponsored by Mainspring celebrates growth investment providers that have introduced innovative new products or services to the market since 6th April 2020. The judges will assess the overall impact of the innovation based on its effect on funding volumes, value for investee companies, challenges overcome, customer feedback, and business impact. To get to the final itself is an achievement, and the Ingenious Group will compete for the top award alongside two other impressive finalists:

The ‘Industry Game Changer’ award  sponsored by MICAP celebrates any outstanding individual, company, product or platform provider that has demonstrably changed practice, perception or engagement in the tax-efficient investment industry.

The Ingenious Group will compete for the award alongside four other finalists:

We are delighted to have supported the development of such an important site, working with Daniel, Adil and Imran was a pleasure and we look forward to supporting them through the build. We continue to see record growth year-on-year in the developments we support, a direct result of the fantastic team we have here at Ingenious which is continuing to expand in both size and expertise. We remain confident regarding the longer-term outlook for the real estate sector despite recent headwinds, particularly the continued demand for quality residential space for owner occupation and rental. We are committed to supporting real estate developers with flexible financing solutions to meet demand.

Howard Sefton

Senior Director at Ingenious

The Growth Investor Awards 2022

Reflecting how far the industry has come in recent years, the Growth Investor Awards are bigger than ever this year. With 28 categories and more than 80 opportunities to win an accolade. The awards will be celebrated with a gala dinner at the prestigious London Hilton Park Lane on the evening of November 24th.

I would like to thank Howard, Rupert and Anabelle at Ingenious for their flexible approach and proactivity in getting this facility over the line. It’s always exciting to follow the progress and build of a project like this right to the end to project completion and I’m delighted to have played a pivotal role in helping it get there.

Daniel Sovitch

Director of Life Financial Solutions

My family has owned this site for over 20 years, bringing forward our vision of regenerating the Old Cinema site. We are very pleased to have worked with both Daniel and Howard to secure financing for the site and I am excited to start construction.”

Adil Naeem

Boleyn Height

Award submissions will now move to a second round of judging from an independent panel of judges. All scores are collated to determine the winner and runners-up, with all finalists receiving a tailored feedback and benchmarking report offering expert insight about areas for improvement.

For further information, please visit growthinvestorawards.com

Ingenious Media is proud to announce that five films produced by investee companies managed by Ingenious have been selected for the Venice and Toronto Film Festivals.

The Son

The Son:  produced by Neddy Dean Productions. Adapted by Florian Zeller and Christopher Hampton (The Father, Dangerous Liaisons), from Zeller’s acclaimed stage play, Hugh Jackman (The Greatest Showman, X-Men) stars as Peter whose busy life with his new partner is thrown into disarray when his ex-wife Kate, played by Laura Dern (Marriage Story, Jurassic World), arrives with their troubled and distant teenage son, setting the family on a dangerous collision course.  The film will hold its world premiere in competition at the Venice Film Festival and will then receive a Gala Presentation in Toronto.

Butcher’s Crossing:  produced by Conqueror Productions.  Based on the seminal novel by John Edward Williams, Butcher’s Crossing is a frontier epic that follows a young Harvard drop-out into the Colorado wilderness as he joins a team of buffalo hunters in search of a mythic herd of buffalo. Little does he know, the journey will put his life and sanity at risk. Detailing a gripping and largely untold chapter in American history, Butcher’s Crossing is a riveting commentary on human nature, masculinity, and man’s relationship to his natural environment.  Starring Nicolas Cage (The Rock, Leaving Las Vegas) the film is directed by Gabe Polsky and will receive its world premiere as a Gala Presentation at the Toronto Film Festival.

Allelujah:  produced by Great Bison Productions.  Richard Eyre (Notes on a Scandal, Iris) directs an adaptation of the stage play written by Alan Bennett (The Lady in the Van, The Madness of King George).  Set in a Yorkshire geriatric hospital Judi Dench (Belfast, Shakespeare in Love)  and Jennifer Saunders (Absolutely Fabulous, Death on the Nile) star in this spirited homage to the idiosyncrasies of old age and the fortitude of health care workers.  The film will receive its world premiere as a Special Presentation at the Toronto Film Festival.

The Lost King:  produced by Magaritz Productions stars Sally Hawkins (The Phantom of the Open, The Shape of Water) and Steve Coogan (Stan and Ollie, Philomena).  In 2012, having been lost for over 500 years, the remains of King Richard III were discovered beneath a carpark in Leicester. The search had been orchestrated by amateur historian Philippa Langley, whose unrelenting research had been met with incomprehension by her friends and family and with scepticism by experts and academics. Directed by Stephen Frears (The Queen, Dangerous Liaisons) this is the life-affirming true story of a woman who refused to be ignored and who took on the country’s most eminent historians, forcing them to think again about one of the most controversial kings in England’s history. The film will receive its world premiere as a Special Presentation at the Toronto Film Festival.

Emily:  produced by Popara Films.  First time feature film director Frances O’Connor brings the life of Emily Bronte to the big screen with Emma Mackey (Death of the Nile, Sex Education) playing the eponymous writer of Wuthering Heights.  O’Connor has assembled a stellar ensemble cast including Oliver Jackson-Cohen (Mr. Malcolm’s List, The Invisible Man), Fionn Whitehead (The Duke, Dunkirk) and Adrian Dunbar (Line of Duty, The Crying Game).  The film will hold its world premiere in the competitive Platform section at the Toronto Film Festival.

Emily

Last year, Ingenious ran an educational webinar when we revealed the ‘Six Golden Rules‘ which, in our view, one could apply when selecting the most appropriate unlisted Business Relief (BR) services for clients looking to conduct some proactive estate planning.

Since then, we have fielded many questions as to the priority in which one should apply those rules. Now we deliberately didn’t seek to prioritise them, as when applied properly they all could reveal a factor or issue about any service that might mean they are assessed as more, or less, suitable for a client.

However, one should remember that if the goal of estate planning is to pass on the maximum of a client’s wealth to their chosen beneficiaries when they die, anything one can do to ensure that a client is able to protect their estate, grow their wealth and mitigate the potential effects of IHT are what counts towards this goal.

However, in the same vein it is also possible to identify ‘Six Potential Oversights‘ anyone could make which might pose a risk to their advice, their clients’ outcomes, the beneficiaries’ wishes and ultimately retaining their business.

Not giving adequate consideration to “estate planning” efficiency

At a recent webinar, we were told by the audience that the primary motive to undertake estate planning is to eliminate, or reduce, the potential IHT burden clients’ estates will be subject to on their death*. However, this could be missed if one focuses on solely the investment risk present in any potential solution, as the IHT efficacy may actually play a much larger role in the success or failure of the proposed financial planning strategy. For example, should a client be invested in a lower risk investment within a solution which is only IHT effective after seven years and then the client dies after two, the advice has palpably failed the client. Bearing in mind the impact of IHT can mean a loss of 40% of the estate value, the result of not doing everything possible to eliminate IHT risk could be far greater that the assumed extra investment risk in doing so.

Being reliant on opinions, rather than facts

We all have a duty to understand the investments we recommend to our clients. As a result, many choose to utilise independent due-diligence to give them an easy snap-shot across the whole market to assist them in comparing rival managers’ services. However, this broad picture cannot be relied on in isolation and to provide the most robust process advisers should overlay their own judgement, having accessed all the relevant facts on these services. See our Six Golden Rules.

Unfamiliarity with all the costs, fees and charges of a service

It is noticeable that the fee models for a lot of unlisted investment services can be confusing and hard to assess and compare. However, it is vital to fully understand not just the magnitude of any investment costs, but how this may impact the performance of the service and what it may imply about the level of risk the manager is taking.

Many managers make a big issue of the fact they may only charge a modest annual management charge (AMC) if a set “hurdle” target is achieved over the life of the investment. What appears even better, is that they also suggest they will defer the taking of this annual charge until that exit point. In these cases it is highly likely the manager is also charging another annual fixed “service” fee which typically is greater than the other quoted AMC, and it is not contingent on any performance target and will be taken annually rather than deferred.

Lastly, understanding the full cost burden of any service can be a good indicator as to the level of risk being taken by the manager. Basically, to make a net positive return a manager must take greater risk for every percentage of fees they take to earn those fees back.

Misreading the way the investment service is valued

Not all unlisted BR services are valued the same way. Many services are valued and audited in order to calculate their Net Asset Value (NAV) but some then declare a separate, and floating, share price which may not match the audited NAV. If this is the case, and the share price is higher than the NAV, any incoming clients are buying shares at more than their “break-up” value which exposes them to the risk that should the trading company cease trading or needs to be broken up, they may only get back less than they invested and indeed thought that they owned.

Sacrificing investment performance for liquidity

Many investors value the concept of instant or fast liquidity in an unlisted investment. Many believe a service that offer redemptions in 10 days is superior to one that offers redemptions in 30 or even 60 days. Some managers also tell them this. But what if maintaining that liquidity impacted the level of funds actually deployed on trading activity? What if that faster liquidity actually meant holding significant capital back to meet those requests, which inevitably has a negative impact on investment returns? Why would the beneficiaries care if it took 20 days more when probate is typically taking more than twelve months anyway? Surely, they would want to have selected the service with the best estate planning effect so they get the best value and absolute maximum of growth?

Confusing size for quality

There can be a natural assumption that the biggest must be the best. But one should consider the impact AUM actually plays in the goal of effective estate planning. Does a larger office or more staff actually benefit investors? It’s our view that the previous metrics above are probably a far more accurate predictor of which managers and services offer the chance of achieving a better outcome to clients. So, deciding which metrics are the most relevant to the outcome clients are seeking is key to selection criteria.

As mentioned above these have been the key areas that seem to cause the most uncertainty and we believe we offer some answers but if have any more issues where you would like some clarity please contact us at investments@theingeniousgroup.co.uk

*Ingenious/PFS Webinar – Six Golden Rules – Oct 2021

Over the last few decades a lot has changed in financial services, but one thing has remained the same: the difficulty experienced by many advisers in getting their clients to commit to estate planning.

There have been many articles detailing the continued rise in inheritance tax receipts, and as the continued freeze of nil rate bands drags more and more people into the IHT net, public awareness of IHT has never been greater. It is supposedly the one tax that nobody likes paying, so why do clients often shy away from doing something about estate planning?

Whilst every individual is different, and they all have their own reasons,  these challenges often fall into three areas.

  1. Starting the discussion – the challenge of discussing money and death with families
  2. Engagement and actions – connecting with hearts and minds
  3. Finding the right solution – balancing control, certainty and performance

Starting the discussion – the challenge of discussing money and death with families

Whilst the pandemic has made people more aware of their mortality, acknowledging this and then being able to discuss it with their nearest and dearest is often difficult for many people. And that’s before the discussion turns to how their wealth may be distributed amongst beneficiaries.  As a result discussions are often postponed for another day, but sometimes that can be too late.

As an independent expert in estate planning matters, a financial adviser is perfectly positioned to help families navigate these difficult discussions together in an objective, supportive and practical way.  Whilst helping families find a way through intergenerational matters can be challenging, clients will frequently say that a weight has been lifted from their shoulders once they begin this process with a trusted adviser.  It is extremely rewarding to see the impact that these discussions can have on clients and their families.  Playing such a role can also help advisers develop broader relationships within the family which may ultimately assist them with the question of intergenerational transfers and retaining an advisory relationship with the next generation.

Engagement and actions – connecting with hearts and minds

Whilst obtaining client agreement to start the discussion is the beginning, being able to engage with different family members in a positive and supportive way requires a certain deftness of touch, without which good client intentions remain just that. 

This is where the full range of an adviser’s skillset comes into its own.  Advisers will generally feel very comfortable playing that independent and objective role in these discussions and advancing the logical outcomes of alternative outcomes.  In addition, emotions surrounding the discussion will inevitably need to be managed so that family members all feel listened to and common ground can be established for without this last part, the family may not ultimately take any action or decisions may be delayed as consensus has not been reached.  These can be difficult discussions for us all to have, especially if we put ourselves in the position of the people being advised but advisers can nevertheless play this role very successfully.

Finding the right solution – balancing control, certainty and performance

Fundamental to the successful outcome above is the answer to the question advisers will inevitably be asked:  what do you suggest we do?  Sometimes, clients simply don’t buy the recommended solution as it isn’t compelling enough and decisions are put off for another day.  But without the right products and solutions, the financial plan may not fully deliver the outcome the client really needs, particularly if it involves an unacceptable compromise.

The objective of estate planning for most people is to provide the best possible legacy for their beneficiaries whilst allowing for their own life needs. At a high level this is simple. Plans must:

As we know, it is not easy to achieve that combination as some aspects conflict.  Many people find gifting and trust planning unpalatable due to the lack of access to capital. More flexible trusts have been popular in the past, but many are put off by the length of time they take to be fully IHT effective. They have also become expensive as the chargeable lifetime transfer, periodic and exit charges may erode the intended benefit.

As a result, many advisers have turned increasingly towards the use of Business Relief-qualifying investments to meet their objectives as the risk of planning failure due to mortality is reduced to two years. This only reduces the risk of failure – it doesn’t remove it. Insurance solutions can be added to actually remove mortality risk and ensure the effects of IHT are mitigated whenever a client dies, as long as the premiums are paid. The challenge with that approach is that premiums can be significant, and may erode the value of the inheritance over time. Costs remain too high for many to contemplate going down this route.

Advisers therefore also need help from product providers in the form of innovation, to furnish them with more compelling solutions which encourage clients to take action.

It’s not hard to see why estate planning falls down the priority list when talking to clients.  It’s not fun to talk about.  For anyone.  However, having the conversations about the emotional impacts for both them and their loved ones can really help ease clients’ fears, and move them toward a solid plan.  And with new services on the market every day, advisers can start building plans that are more likely to achieve their clients’ goals.

Last July I wrote an article considering the potential impact of rising inflation on clients in later life (Later-life and estate planning in an inflationary environment – FTAdviser.com). At the time RPI was increasing at a rate of 1.7% per annum (1), with the OBR predicting a medium-term average of 3% pa. Well, as at 18 May it is now 11.1% per annum (1), and the highest it has been since January 1982 (12%) (1).

In my original article I referred to the 1970s and the last period of sustained high inflation, and how those that were starting out in adult life now find themselves in later life. I looked at the parallels and considered how those clients and their advisers might work together to address the effects of inflation on their later life and estate planning.

However, this new period of high inflation in which we now find ourselves is markedly different from the last, it is worse in many ways and in particular for those in later life. A perfect storm of rising costs and poor returns is hitting middle England, a group that is already being squeezed due to changes in age and gender related demographics and lifestyle. Before considering how advisers may be able to help them, let’s firstly consider the pressures they are under.

The Real Return Crisis

Whilst inflation has yet to hit the peaks of the 1970s and early ‘80s, as I have mentioned it is at its highest point in more than 30 years. That’s where the similarities end though. In May 1982 bank base rate was 13.13% (2), so savers were still seeing a real rate of return of 1.13% per annum. Contrast that with May 2022 where we have a bank base rate of 1.0% (2) and a real terms loss of 10.1% per annum. A swing in annual real rate of return of c.11.23% is huge

Savings and income are being eroded at an unprecedented rate at a time when most tax allowances and thresholds have been frozen, adding to the squeeze. But prices of goods and services increase at differing rates, the rise in the costs of essentials is disproportionately great and therefore is hitting those hardest who can least afford it.

1. RPI All Items: Percentage change over 12 months: Jan 1987=100 – Office for National Statistics (ons.gov.uk)

2. Bank Rate history and data | Bank of England Database

The Care Crisis

The cost of care provision is already eye-wateringly high, and will remain so despite the forthcoming care cap. However, it’s almost impossible to see how this won’t get worse still when you consider that the core costs of care provision are human resource, food and energy (heat) all of which will likely be at the higher end of the inflation basket.

Rising costs, paired with eroding savings mean that care provision could become even less affordable for many, and this will inevitably mean that many middle-aged workers will be forced to provide care for their elderly relatives whilst still working, and likely still providing a home for their children who are unable to get on the housing ladder.

This is already becoming a significant problem as 22.3% (3) of workers aged 50-59 are also providing care to others. This rises to 23.9% (3) for workers aged 60-69. If, as seems likely, this is happening because the costs of care are skyrocketing, then these numbers will only increase as costs continue to rise and inflation takes further hold.

Medical advancements mean that people are living longer (5), which we all hoped would be a good thing. Unfortunately, this is just adding fuel to the fire. Longer lives are not necessarily healthier ones. Recent statistics from the ONS show that, on average, males will spend 16.2yrs (6) of their lives in poor health, and females even longer at 19.4 years (6). Increased life expectancy simply increases the need for care provision, putting even more pressure on the care system, those working as well as caring and it becomes a vicious circle, people will increasingly need support whether that be financial or guidance.

3. Care homes and estimating the self-funding population, England – Office for National Statistics (ons.gov.uk)

4. Life expectancy in care homes, England and Wales – Office for National Statistics (ons.gov.uk)

5. Living longer – Office for National Statistics (ons.gov.uk)

6. Health state life expectancies, UK – Office for National Statistics (ons.gov.uk)

Perfect storm for the squeezed middle

The wealthy can frequently escape these crises relatively unscathed as they have sufficient resources and access to professional support and guidance. Those with little in savings or assets are also not likely to feel the full effects of these challenges as they are often supported by the state.

It is those in the middle who are most likely to feel the pain, and who will have to adapt the most by making changes and re-plan their finances. Those that had planned to leave their savings to their children may now find that they need to repurpose those funds to meet their own needs – not to mention possibly funding care for their own parents.  This may lead to dipping into savings to meet costs which previously would have been covered by income.

Given all the challenges they face, there has never been a time when middle England has had a greater need for advice, and yet only the minority actually seek it, as evidenced by the UK Advice Gap Report by Open Money (7). Without advice, this group could be making mistakes that put them even further behind in meeting their financial goals.

7. UK Advice Gap Report 2021 | OpenMoney (open-money.co.uk)

What can the financial services industry do to help?

All stakeholders need to help increase the visibility of and access to advice. It is also incumbent upon all parties to be proactive and not to freeze in the face of this financial pandemic.  There are some very specific things the financial industry can do to help clients achieve the best possible outcomes for themselves and their loved ones.

Advisers

Product providers / investment managers

At Ingenious we are committed to helping advisers through education and support but also by developing innovative solutions which aim to deliver greater certainty and peace of mind for advisers and their clients

Never has there been a time when clients have needed their advisers more.  Advisers have a vital role to play by making sure they understand the pressures their clients are facing, how those might change and what solutions are available to help them by staying on top of developments and working proactively with product providers to fully understand how they can support them now and into the future.

Footnote:

Ingenious is a specialist investment manager focused on the media, real estate, infrastructure and education sectors. To find out more about Ingenious and their flagship estate planning service IEP Apex visit www.theingeniousgroup.co.uk/iep-apex/

Ingenious backed Crimes of the Future from the legendary director David Cronenberg will hold its world premiere at the upcoming Cannes Film Festival.  Starring Viggo Mortensen, Léa Seydoux and Kristen Stewart, the story is set in the not too distant future in a time when humankind has learned to alter their biological makeup – some naturally and some surgically.

In an interview with Deadline, asked about going back to Cannes following the controversy surrounding his 1996 film Crash, the director said “Well, I’m not nervous. I’m looking forward to it because you make a film to have people react to it. And, as usual — and I’ve said this many times — I’m not making a movie to shock people or assault them. I’m saying, “These are things I’ve noticed. These are ideas I’ve had. These are dreams that have troubled me. I’m showing them to you. You can interpret them as you wish. I just think you maybe would be interested in experiencing these things as I have experienced them.” That’s my approach, and you get a huge variety of responses. “

Cronenberg has been an inspiration to filmmakers and audiences worldwide with films such as The Fly, A History of Violence and Eastern Promises.  Crimes of the Future will be released in France following its Cannes premiere and in June in the United States.

Please note that the availability of Business Relief from Inheritance Tax and Investors’ relief for capital gains tax will be subject to the changes announced in the Autumn 2024 budget. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. Take 2 mins to learn more.

According to a survey conducted by Ingenious last year* the single most important factor that motivates financial planners and wealth managers to recommend a Business Relief (BR) qualifying service to clients is the speed of IHT efficacy. BR investments should be fully IHT-exempt after just 2 years, rather than the 7 years of a Potentially Exempt Transfer (PET).

This feature makes BR-based investments attractive to clients looking for proactive estate planning solutions that allow them to retain both access and control of those assets, and even more so for those clients who may be concerned about their longevity. As clients frequently make estate planning decisions in later life, it is also likely that more clients will live for two years following an investment decision than for seven.

These drivers have led BR-based investment services to such popularity that now well over £1.5Bn per annum is invested into these solutions**.  As a result, a wide variety of fund managers’ services have proliferated to support demand.

However, independent research into these solutions has so far understandably tended to focus on just one of the two major elements of a BR-based service: the underlying investment service and how that may impact a client’s outcome. Due to the common assumption that all BR-based services will produce full IHT efficacy after the same 2-year holding period, the other element, the actual estate planning impact of these services, has been largely ignored.

However, even if a “2-year plan” does have a better chance of success than a “7-year plan”, the 2-year wait may itself still be taking a significant risk with your clients’ outcomes. And should the clients’ die inside that two-year window, their desired outcomes simply aren’t being achieved when their beneficiaries are being hit with a significant IHT bill after their death.  And much as we don’t want to face it, we all run the risk of dying within the next two years, regardless of our age or current health status.

So, what can be done to mitigate this clear risk and ensure we deliver on the client’s outcomes as intended?

For the last five years or more there have been some BR-based services that set up a 2-year life insurance policy alongside the investment service to cover the specific risk of the client dying within those first 2 years. If an investor dies, the life policy will typically pay out 40% of the amount invested into the service, neatly covering the IHT liability and making the investment IHT-effective from day one. However, with these services the client must pay extra fees to cover the costs of the insurance. So, whilst this helps negate the financial impact of mortality within the first 2 years, it will compromise the investment return and therefore the final value that will be passed on to the chosen beneficiaries.

This poses a dilemma to advisers and their clients. If they decide to protect themselves from the impact of IHT if they die within 2 years, they will likely compromise the return they can pass to the beneficiaries; but if they don’t pay for the life cover, they run the risk of IHT fundamentally impacting their loved ones. As a result, many decide to take the gamble and not purchase the cover.

By contrast, a BR-based service that includes life insurance as standard at no extra cost to the investor could deliver this immediate IHT efficacy without compromising on cost or investment performance – an obvious choice for investors and advisers alike.

This kind of service has never before been available on the market – until now. IEP Apex, launched in March, combines Ingenious’ proven investment strategies with life insurance at no extra cost to eligible investors. IEP Apex will ensure that in those cases where investors die within the first 2 years and therefore fail to make Business Relief status, their investment will have grown in line with the performance of the Ingenious IEP services and it will settle the IHT liability via the insurance cover, thus preserving the ultimate value of the investment. Equally, those investors who see out the initial 2-year period will be no worse off as they won’t have paid for insurance thereby protecting their investment returns.

For investors and advisers alike, IEP Apex offers a unique and reassuring way of meeting their estate planning goals immediately in one simple service via accelerated day one IHT cover (post share allotment) without having to incur expensive insurance that hits investment returns.

*Based on a webinar with 340 attendees

** TER – June 2021

Please note that the availability of Business Relief from Inheritance Tax and Investors’ relief for capital gains tax will be subject to the changes announced in the Autumn 2024 budget. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. Take 2 mins to learn more.

Business Relief (BR) qualifying investments are very popular with advisers and investors as the investments are free of Inheritance Tax (IHT) liability after two years, much quicker than other estate planning solutions.  Whilst this is appealing, an investor still has a two year wait for the investment to become BR-qualifying.

To address this problem, insurance cover has been available in the market for several years as an optional extra to protect against IHT liability during the two year qualifying period.  A relatively small proportion of investors take up the option of paying for this protection, but many do not as the cost of the insurance significantly erodes investment returns. These investors prefer to wait the two years out and avoid the cost of insurance cover.

This is an understandable and typical reaction to a discretionary insurance purchase which we often make in our day to day lives if we feel the cost outweighs the risk.  However, when the consequences of the event being insured can be significant, and life changing, we tend to think differently and happily put cover in place, such as home insurance.  A BR investment is no different.  Whilst an investor may not believe they are likely to die in the two year qualifying period, it might happen. Nothing is certain after all, other than death and taxes, the two things under the spotlight here!  And, if the investor were to die in this two year qualifying period, the consequences for their beneficiaries would indeed be significant with 40% of their estate reduced via IHT, something which most people would want to avoid happening to their beneficiaries.

That’s why we developed IEP Apex,  the only BR-qualifying investment with complimentary insurance cover as standard. IEP Apex gives investors and their beneficiaries peace of mind immediately following share allotment that any IHT arising in the first two years will be settled by the insurance policy, for no extra cost to the investor.  No hard decisions, no trade-offs, just peace of mind from day one following share allotment.

Given the potential consequences, why would your clients wait two years for their investment to become BR-qualifying when they don’t have to? 

How does it work?

The insurance policy is designed to settle the IHT liability arising in the two years post share allotment if the investor dies within this time.  In year three, the investment should qualify for Business Relief as normal so it becomes IHT-exempt.  It’s really that simple.

Why should you recommend it to your clients?

IEP Apex is a new type of BR-qualifying service.  It is unique in that, to the best of our knowledge, no other BR-qualifying service provides complimentary insurance cover as standard to pay for the IHT liability arising if the investor dies in the first two years post investment.  The insurance cover is integrated as part of the investment service.  It’s simple and straightforward – there are no examinations or complicated forms, no need to assess by how much the cost of adding insurance will erode performance.  Just a simple health declaration as part of the easy application process, and investors’ IHT liabilities are covered in case the worst happens in the first two years post investment.

But that’s not all IEP Apex provides. Beyond peace of mind, IEP Apex offers investors:

The IEP Apex peace of mind

At any stage of life, IEP Apex protects investors and their beneficiaries from the consequences of their estates being reduced by 40% in the two year BR-qualifying period.  Why should investors wait two years for their investments to qualify for BR when they can be covered immediately following share allotment? 

IEP Apex has your clients covered, just in case.