I will re-review the ITA Evolution savings plan and go over, why you may or may want to have it as a savings or education vehicle if you are an expat. Going over some of the main features, funds, and costs, and then give my personal view and ratings adding on what better alternative you have if you have been proposed this option.
I do think personally, for the vast majority of investors you have better options for most personal that get proposed this option as it is mainly done on commission I.E the advisor or salesperson would get something like 6-12 months premium in commission (depending on the term or around 4%-5% of the total amount invested) so if, for example, you are $1000 a month over 15 years the advisor is likely to get $7,200 (this figure doubles if its $2000 a month and increases if it’s for a longer period of time) in the first 12-24 months paid to them. As you can see the advisor can be heavily incentives to use these plans rather than looking holistically at your financial planning objectives and “sell” an expensive product like this.
I get emailed at least 3 times a week with personnel that has these sorts of saving plans and want to get out of them often to find out that they have heavy surrender periods that may have even been omitted by the advisor. So am writing this to hopefully aid others in not falling into the same trap.
On the plus side with the internet so much in use these days are becoming less frequently “sold” than 10 years ago but, still amazes me that people are still being proposed these types of plans so want to aim to give investors, a better option at looking at the whole market place and what you have open to you.
Just before, it is not just ITA that has heavily charged saving plans as others such as RL360, and FPI all have the same kind of structure and are all laced with a large commission.
At the end of the article, I will give options, for other platforms that may work out more cost-effective for you.
Who are Investors Trust?
Investors Trust describes itself as a group of global brands representing the ITA group which is a group of insurance companies in multiple jurisdictions that aims to give access to investors to global markets.
Where are they based?
They have various locations, Portico, Malaysia, and Cayman, but it is based in Cayman for most uses.
Is it safe to Invest in ITA?
Although, the Cayman is not as highly rated as other offshore jurisdictions. It still offers stability and is rated AA- by Moodys and is not currently at any political, or economic risk.
The Cayman Islands maintains a sophisticated financial regulatory regime under the control of the Cayman Islands Monetary Authority (CIMA). The Cayman Islands financial services industry has a strong compliance culture.
Investor Trust, although, not a major systemic bank does have around $1-2 Billion AUM (as of 2021) and has been around for a number of years. Personally, I believe it to be stable for the medium-term outlook.
It also has a Custodian bank, that was HSBC U.S. for the protection of investor’s assets.
What is the Evolution plan?
The Evolution plan is a saving plan for expats and locals. It is mainly used as a medium-term saving plan or an education plan.
What currencies are allowed?
- USD
- EUR
- GBP
How Long do I have to save for?
You do have 5-year plans but due to the charging structure, only 10-25 years plans are available.
What amounts do I have?
1200 USD/GBP/EUR is the minimum amount and there is no maximum.
What are the Charges?
It does depend on the amount and time, I have put a picture of ITA charging structure below.
In short, the charges
- 1.9% for 1-10 years. 0.35% after
- Monthly fee 7 USD
- Fee 0.125% a month
Figure 1: Is from ITA website shows the charges
Do you get any benefits?
Yes, you do. But, only on certain amounts and time periods. You get set extra units depending on the amounts (see below).
Also, you get a loyalty bonus of the 7.5% of the premiums from years 1-10 and 5% after.
This is only paid if you have not missed any monthly payments nor have you decreased the premiums.
Figure 2: Shows the extra allocation units you get for the number of yearly contributions and duration of the plan
Can I take money out?
Yes, but only after the initial period (usually 18 months depending on the duration of the plan), and then it is calculated on the annual amount due left of the plan. Therefore the longer the time pay into the plan the more you can take out. Also after 15 years, this is not applicable to this product.
In short, it will not be feasible as you will lose the bonus if you take money out, and should consider this before you buy the plan.
Can you decrease the plan?
Yes, you can decrease the amount to the minimum value. Although, this will affect the bonus.
Can I skip a month if I don’t have enough money?
Yes, you can, however, you will be required to top it up in future payments. Also, this will sacrifice your plan’s bonus.
Can I increase it?
Yes, you can increase the plan value.
Can I put more in one month if I have a bonus?
Yes, you can. This can also be counted towards your monthly contributions or use as an additional payment.
Can I have a beneficiary?
Yes, you can and in the event of death, it will pay 101% of the account value.
What is the tax status of the plan?
It varies for individual circumstances dependent on location. Please see a qualified tax or financial advisor for specific information. However, Cayman Island has no tax on Income or Capital gains so can work out to be tax-efficient if set up correctly with your personal circumstances.
Who can have this plan?
Any between the ages of 18-65 and is not a U.S. citizen or U.S. resident.
What is the fund range on the plan?
The plan has an adequate funds range in GBP/EUR/USD
https://www.investors-trust.com/products/fund-platform/
Few fund names include Black Rock, Franklin Templeton, Ishares, Morgan Stanley, and Pimco.
https://www.investors-trust.com/products/product-family/evolution/
What are my thoughts?
The charging structure is not the cheapest, working out at 2%+ for a 10-year plan and 1.5+% for a 15-year plan (if you don’t get the bonus). However, this can be redeemable in the way of a bonus of 7.5% and extra allocations of 1%-5% (depending on the amount), that way if you use it over a 10-15 year term it can bring the charges down to a reasonable amount.
The fees aren’t too bad when you look at the funds, if you are going into a fund such as Morgan Stanley Global Opportunity could cost 5% entry that ITA doesn’t incur.
The fund range is good enough for you to make a good portfolio and includes Index funds with Ishares which is what I like.
I personally use this but only as a pension plan for a small amount of money that I don’t see go out of my account. I would highly suggest if you are to consider this you do the same.
I have stated in a number of blogs and videos these can use but they are highly ineffective if not used right due to the illiquidity and charging on the platforms and may want to consider other options if you might need the cash.
Finally, from a time perspective, I would use 10-15 year time frames as they have sciatically a higher chance of completion.
What is the platform like to use?
In terms of ease to use and moving digitally, it is one of the best around due to its online system and electronic applications.
https://www.investors-trust.com/products/fund-platform/
You also have online access and 24/7 support which you can trade and switch funds if needed.
In terms of setting up, you will need to fill out an electronic form the Investors Trust electronic system will then give you an email confirmation and ask for a Docu sign or E-signature with the terms and conditions.
With your login, you can reset your password.
Also having a breakdown of funds and sectors that I personally like
It gives pretty easy-to-navigate systems outlining the policy structure
Conclusion and rating other options
As with a lot of products in the expat space, for saving it is not the cheapest, however, out of most others ITA evolution is one of the better options due to its fund range and online system.
I would prefer to use this than most other saving plans. If I were to rank it, it would get 3.5 out of 5 with individual ratings being
- Cost 2.5/5
- Online system 4.2/5
- Funds 4/5
- Protection and location 3.5/5
If you have been proposed this. Firstly, question why? Why have you been proposed this over other platforms such as Novia which is FCA-based and costs 0.34% and is fully flexible. Over an inflexible commission-based product that cost around 2-3% and will lock you in for the next 15 or so years.
In my time I have only spoken to one person that actually wanted this (he was a CFA hedge fund manager that was looking for a very small amount of his wealth into a pension supplement over 25 years and went over all the charges and calculations himself and understood the commissions and was willing to take the loss if needed as was only around 3% of his overall monthly salary he was contributing to match his pension that would be contributing to in the Netherlands).
So, would heavily advise against these products and ignore the nonsense about the locality bonus, extra allocations etc as these plans have around 80% chance of failing and hardly seen anyone out of 100s that are happy with them and or earned any real money (over inflation) with them.
Personally, if you are looking to invest on your own go in IBKR and invest in index funds using dollar cost average this will cost next to nothing in costs and be more flexible.
On advisor led I would only go for fee-based platforms such as Praemium (Morningstar Welath) or Novia.
I hope that this is useful and helps you out if you have been proposed this product. If you have any questions please feel free to contact me via my contact page if you need support.
Other reviews you might find helpful:
- Quilter International Executive Redemption Bond Review
- Capital International Group – Platform Review 2022
- RL360 PIMs Review
