oneplan financial report by principle first

19th March 2010

for: James Smith and Linda SmithOnePlan Financial Report

Your personalised OnePlan financial reportto help you sustain yourcurrent lifestyle and savefor your future one

PAST PERFORMANCE IS NOT A GUIDE TO FUTURE RETURNS, AND INVESTMENT RETURNS MAY FALL AS WELL AS RISE.

THE RISK PROFILE OF ABOVE INVESTMENTS WILL NOT SUIT EVERY INVESTOR AND MUST BE DISCUSSED AND THE

RISK PROFILE CLARIFIED BEFORE PROCEEDING WITH ANY INVESTMENT ADVICE. Most investments are considered to be

medium-term commitments over at least a 5 year period. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP

REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. We offer the option to pay for mortgage advice by

way of a fee. Principle First Financial Services is a trading style of GMF Marketing Services Ltd, which is authorised and

regulated by the Financial Services Authority and the Financial Regulator.

Principle First Financial Services are one of

the few Independent Financial Advice

Companies in the UK to achieve Chartered

Status. We were awarded this title in 2008 by

the Chartered Institute of Insurance.

The award and title are an acknowledgement of

our professionalism and dedication to providing

the highest levels of customer service and

financial planning.

At Principle First, we are proud of the strategy

that has placed us among the leading financial

advice companies in the UK. Sustainability is a

key ethic within the organisation, and we try to

reflect this to our clients.

Principle First Financial Services is a trading

name of GMF Marketing Services Limited who

are regulated and authorised by the Financial

Services Authority. Our firm reference number is

409667, and any details relating to our firm can

be found at www.fsa.gov.uk

Financial planning is essential for every

consumer, and can range from the desire to

pay off your mortgage within a certain time

frame, to ensuring that you minimise risk and

maximise the performance of a £10,000,000

investment portfolio.

Our clients' financial targets can be quite

diverse. The ideal financial plan will ensure

that you reach a state of financial

independence.

At Principle First we believe that there is a

template upon which your financial plan can be

constructed. From this we create a

personalised report that will attempt to identify

and address any area of your financial planning

that needs to be initiated, or simply amended.

About Principle First -The Financial Advisers

About Principle First

Introduction to FinancialPlanning

The more information a client offers to us, the

more effective our advice. All our financial

advisers are employed by Principle First, and

take personal responsibility for the advice

they give.

This document effectively illustrates the

suitability of our recommendations. We

endeavour to provide you with honest and true

advice based on the information you have

provided to us. We also take due care to

ensure the suitability of our advice, and assure

you of our duty of confidentiality and discretion

regarding the decisions you make.

In formulating our advice, we draw upon a

range of technological systems to ensure that

the programme we develop for you is up to

date and fitted precisely to your requirements.

Please remember we are Independent Financial

Advisers with no ties to any particular product

provider, this ensures that all our

recommendations are unbiased and are

developed for the benefit of the client.

When devising a financial plan for you, we

have taken into account your current financial

circumstances. The report is very specific and

if you feel we have not addressed any needs

then please let us know.

At Principle First we have developed a culture

of Treating Customers Fairly (TCF), ensuring not

only that you are happy with us as individuals

and as a company, but that we are advising you

only on the products that are suitable for you.

This report is our biggest commitment to

treating your fairly, and ensuring you have a

point of reference as we move forward to

develop your financial plan.

You have taken the first step in securing your

financial future, and the financial future of your

family.

Our Advice & ResearchProcess

When you are studying yourfinancial report...

Principle First’s mission is to provide financial

planning advice that is easy to understand,

accessible to all, and above all relevant for a

world in an era of rapid economic, social and

environmental transition.

In the 250 years since the birth of the Industrial

Revolution, the Anglo-Saxon socio-economic

model has been based on the belief that our

natural resources are limitless, existing solely

for the purpose of supporting a “consume and

destroy” model of living. Not surprisingly, this

model is proving to be unsustainable.

Today, an awakening is taking place. In every

walk of life, there is a growing consciousness of

the need to change our lifestyle to one more

respectful of the world's finite resources, and of

the millions who work harder, longer, and for

less than we would ever dream of, so that we

can be 'happy'.

'Sustainable' is a word which will soon inform

every decision-making process in governments,

corporations, families and the individual. For

decades, we have avoided the sustainability

question in relation to so many areas of our

socio-economic model. Now, we can ignore the

issue no longer.

For the average person, future wealth planning

must be based upon a sustainable and

respectful model, and not on short-term

bubbles in property or elsewhere. It should

begin by emphasising the value and importance

of old-fashioned but timeless ideals such as

hard work, patience, determination, and fiscal

prudence.

The question we ask you constantly to consider

is “Can I sustain my current choice of lifestyle

and still save for my future one?”

Gareth Flanagan

Managing Director

Principle First

The Financial Advisers

Our Mission

OnePlan Financial Reportfor: James Smith and Linda Smith

Prepared by: Michael Kennedy

Senior Pensions Adviser at Principle First

14th April 2010

2.0 Financial ObjectivesPrinciple First - The Financial Advisers

5.0 Pension & Retirement Planning

5.1 Principle First’s Approach to Pension& Retirement Planning

5.2 Retirement Planning for Client 1

5.3 Retirement Planning for Client 2

7.0 Tax Efficient Products

8.0 Estate & Inheritance Tax Planning

8.1 Wiriting A Life Policy Trust

8.2 Loan Trust

8.3 Discounted Gift Trusts

8.4 Writing A Will

8.5 Estate Planning Recommendations

8.6 Conclusion & Summary

3.0 Personal Insurance & Family Protection Planning

3.1 Principle First’s Approach

3.2 Key details of the existing ‘Protection Plans’ in place for John Smith &Catherine Smith

3.3 What issues should you consider when deciding on your life cover provision?

3.4 Our Recommendations for your Life Cover

3.5 What issues should you be considering when deciding on your Critical Illness Cover?

3.6 Our recommendations for your Critical Illness Cover

3.7 What issues should you consider when deciding on your Income Protection Cover?

3.8 Our recommendations for your Income Protection Cover

3.9 Cost effective alternative to Unemployent Cover

Contents

1.0 Your Key Details

6.0 Savings & Investment Planning

6.1 Identifying Your ‘Risk Profile’

6.2 Principle First’s Asset Type to Risk Profile Strategy

6.3 Principle First’s strategy for fund selection against asset types

6.4 Industry Ratings

6.5 Product Selection

6.6 Recommendations for an investor with a ‘moderately aggressive’ investment risk profile

6.7 Ongoing Investment Portfolio

4.0 Debt Management &Mortgage Planning

4.1 Recommendations

1.0 Your Key Details: Below are the key details we have collated in order to continue with our recommendations, please check these to ensure that they are accurate.

Key Details James Linda Joint Total

First Name James Linda

Surname Smith Smith

D.O.B 06-04-1974 10-07-1975

Age 36 35

Gross Monthly Income £2500 £1500 £4000

Net Monthly Income £1599 £1198 £2797

Smoker / Non Smoker Smoker

Selected Retirement Age 65 65

Years to retirement 24 25

Marital Status Married Married

Number of Dependants 2

Value of Total Assets £288,400 £9,700 £650,000 £948,100

Value of Total Debts £85,000 £85,000 Other notes if applicable: Please note that as your current life assurance policies are not written in Trust, they too would be added to your total estate on joint death. For example, in the worst event of joint death, a total of £200,000 would be paid out. This would be added to the value of your property, increasing the total value of your estate to £1,148,100.

2.0 Financial Objectives From time to time you will have specific financial objectives. However, for the purposes of constructing a long term financial plan, these should be standard. As a client of Principle First, we continually strive to: 2.1 build a financial plan that will set a benchmark, and allow you to assess annually your current and future financial planning needs, to reach the goal of financial independence 2.2 ensure that you, your family and your income are adequately protected, in the event of your death, or being unable to work due to critical illness, accident, sickness or disability 2.3 ensure that, in the event of any fatality, your household income remains unaffected. If you were to die or become ill, to ensure that your spouse or family have a replacement income, so that their disposable income would remain the same 2.4 ensure that all protection planning is structured in the most tax efficient manner, through the use of trusts, etc 2.5 assess and monitor your debt to ensure you’re paying as little as possible for borrowings, and, where applicable, you are able to repay the debt in the shortest possible time 2.6 ensure that your debt is structured in the way that best suits your current risk profile. For example, you may wish to ensure that the cost for servicing the debt, i.e. the interest rate, is on a fixed rate basis, so that your debt is constant for a certain period of time 2.7 ensure that you have adequate savings in place for any existing children, or children you have planned for the future. You wish to ensure that adequate capital is accumulated to cover one-off items of expenditure, for example education 2.8 ensure that adequate provision has been made for your retirement. You will wish to ensure you have an adequate body of capital to sustain a relaxed lifestyle, in keeping with the one you currently enjoy 2.9 facilitate your wish to invest any available lump sum, regular income or capital. You wish to ensure that these funds are nurtured in line with your risk profile, and that the risk you take is sustainable without being excessive 2.10 ensure that any investments, current or planned, are invested in the most tax efficient manner with regard to Income Tax, Capital Gains Tax and Inheritance Tax 2.11 ensure that you have taken the necessary steps to limit any Inheritance Tax liability that may arise on your estate, upon your death 2.12 implement the above investments while ensuring that any foreseeable changes, financial or otherwise, are taken into account and factored into your financial plan 2.13 ensure that all these objectives are met and reassessed on an annual basis.

3.0 Personal Insurance & Family Protection Planning 3.1 Principle First’s Approach 3.1.1 Many of our new clients have a variety of existing insurance policies that they have built up

over the years. Many have initiated new policies as they borrowed for mortgage purposes. When protecting yourself or your family, there are set equations designed to calculate how much cover you should have.

3.1.2 At Principle First, we do not review what you already have and try to better that on cost. Instead, we first assess what cover you should have, and then examine and evaluate the cover you have in place. If you are overpaying for cover as a whole, we will inform you of this, and the savings you make can flow to other areas of your financial plan. 3.1.3 Principle First do not always recommend the cheapest insurance policy. The quality of any ‘life’ cover policy is often determined by what it does not cover rather than what it does cover. Some of the policies offered in the ‘Life’ market fall short of the benchmark we would recommend for our clients.

3.2 Key details of the existing ‘protection plans’ in place for James and Linda

Owner Cover Company Monthly Premium

Current Value

Policy Number Trust Y/N

James £100,000 Death Cover

Aegon Scottish Equitable

£52.00 - L019204306 No

Linda £100,000 Death Cover


£49.00 - L019957453 No

James £17,000 p/a Income Protection

Friends Provident £31.00 - 1985214 n/a

James £75,000 Critical illness


- - L019204306 n/a

Linda £75,000 Critical Illness


- - L019957453 n/a

TOTAL £132 -

James

Linda

Both

Total payable on Death £100,000 £100,000 £200,000

Total Payable on Critical illness £75,000 £75,000 £150,000

Total Income Protection £17,000 p/a - -

Total spend per month is currently £132

As your current policies are not written in Trust, in the tragic event of joint death, the lump sums would be added to your estate as mentioned, therefore increasing your taxable estate by £200,000. James, your current Income Protection plan with Friends Provident appears to be providing you with just over 50% of your gross income which is the recommended amount.

3.3 What issues should you consider when deciding on your life cover provision? 3.3.1 In the case of a couple, we always recommend that you have 2 single life policies. This is a very cost effective manner to ensure that, if both partners were to die, a larger lump sum would form part of your estate. The effective use of writing policies ‘in trust’ will ensure that funds will pass to the beneficiaries of your life policies with no tax liability, and avoid time delays while your solicitor establishes probate on your estate. 3.3.2 When putting life assurance in place, setting policies ‘in trust’ is a very valuable tool in your strategy to protect your family. Policies that are not written in trust, but which are on a single life basis, will not pay all proceeds to the remaining spouse, but instead will pay the first £125,000. Anything over this amount will be split 50/50 between the remaining spouse, and the deceased spouse’s relatives. 3.3.3 When clients have a young family, we advise that if the worst were to happen and both spouses were to die at the same time, the payout amount from both policies, be used to generate an income to financially help those who would care for your family. For example, if both spouses were to die and £300,000 was paid out each in trust. This total trust of £600,000 would generate at a rate of 5% an income of £30,000 to help financially the friend or family member that would care for your children, ensuring that those responsible will not suffer financially. 3.3.4 Writing policies in trust can also ensure that Inheritance Tax of 40% can be avoided, when the policy pays out to your family. 3.3.5 Please also remember that any protection benefits you have as an employee will be forfeited, should you move to another employer, or become unemployed.

3.4 Our Recommendations for your Life Cover For adequate protection in the event of death, you should have enough cover to clear debts, and a further lump sum to invest, which will generate an income equal to the income lost. For example, £100,000 invested at a rate of 5% would generate an annual income of £5,000. Taking into account your income and debt, we recommend the following: Life Cover Recommendations for: James

Principle First recommends sufficient life cover so that, in the event of the death of James a lump sum of £600,000 would be paid out and then invested to provide to Linda an annual income of 5%, equal to your annual gross income of £30,000. This, coupled with the current debt of £85,000, will necessitate an overall amount of life cover for James equalling £685,000.

Principle First’s whole of market search indicate the best value for the quality of cover detailed in the schedule 3.1.6. can be obtained with Aegon Scottish Equitable. Life Cover Recommendations for: Linda

Principle First recommends sufficient life cover so that, in the event of the death of Linda a lump sum of £360,000would be paid out and then invested to provide James with an annual income of 5%, equal to your annual gross income of £18,000. This, coupled with the current debt of £85,000 will necessitate an overall amount of life cover for Linda equalling £445,000.

Principle First’s whole of market search indicate the best value for the quality of cover detailed in the schedule 3.1.6. can be obtained with Aegon Scottish Equitable.

If both of you were to die tragically at the same time, a total amount would be paid into a trust of £1,130,000, ensuring that those responsible for looking after your children would receive an annual income of £56,500, until the age of 18/21. At this stage your children would then inherit their share of the estate.

3.5 What issues should you be considering when deciding on your Critical Illness Cover?

Critical illness is the most expensive of insurances. This is due to the high risk of you contracting a critical illness and making a claim. It has been researched that one in three will contract a critical illness during their life. This highlights the need for single policies, rather than a joint policy, as the likelihood of both spouses contracting a critical illness is significant. If a claim is made on one of the policies the other remains in force at a time when it is most needed.

As there are many elements of your financial plan that will draw upon your monthly budget, we recommend that, as a minimum, your critical illness cover be equivalent to 2 years of your net income (combined if a couple). This will ensure that, should you be diagnosed with a critical illness, a lump sum would be payable equalling 24 months income. Please note that this is a minimum amount of recommended cover. Depending on your available budget, you may wish to increase the amount of critical illness cover, within the broader context of your financial plan 3.6 Our recommendations for your Critical Illness Cover Covering the value of both spouses’ income, where applicable, ensures that both partners can financially afford 2 years off work during the time of diagnosed illness. Critical Illness Cover recommendations for: James

We recommend that James is covered for the amount of £67,128 so that, in the event that you are diagnosed with a critical illness, this is 2 years of total / joint net income.

Critical Illness Cover recommendations for: Linda

We also recommend that Linda is covered for the amount of £67,128 so that, in the event that he/she is diagnosed with a critical illness, this provides 2 years of total / joint net income.

Premium Summary: Life & Critical Illness recommendations for recommendations for James:

Cover up to Age: 65years Monthly Premium: £73 Provider: Aegon Scottish Equitable

Life & Critical Illness recommendations for recommendations for Linda:

Cover up to Age: 65years Monthly Premium: £64 Provider: Aegon Scottish Equitable

3.7 What issues should you consider when deciding on your Income Protection provision? 3.7.1 In the event that you are unable to work due to accident, sickness or disability, Income Protection (or Permanent Health Insurance, as it is technically known) will pay up to 50% of your gross income. This is the maximum payable under tax law, and, coupled with your benefit entitlements, would guarantee a large percentage of your previous income until your selected retirement age, or until you were able to return to work, which ever is the sooner. 3.7.2 If you are unable to work due to accident, sickness or disability, you are entitled to certain benefits. If you are employed, you are entitled to £79.15 per week or £343 per calendar month, payable from day 4 of your illness and for up to 28 weeks. Please note that if you are self-employed, you do not have this entitlement. 3.7.3 After week 28, you are entitled to claim Employment & Support Allowance, whether you are

employed or self employed. This is currently equal to £95 per week. Please be aware that you are means tested and physically assessed, prior to receiving this benefit.

3.7.4 In many cases, the benefit authorities may tell you that they agree that you are no longer physically able to carry out your own occupation, but that you may be fit to carry out work that does not match your previous employment. 3.7.5 Income Protection Insurance on an ‘own occupation’ basis means that: if you are unable to carry out the job you did prior to sickness, you are still entitled to claim. 3.7.6 If it is affordable, we would recommend to all our clients that they avoid the uncertainty of benefit reliance, by insuring their income against sickness.

3.8 Our Recommendations for your Income Protection Cover Income Protection Cover recommendation for: James N/A

In the case of James we recommend that, based on current gross income, you commence an Income Protection policy which will, after the selected deferred period of 26 weeks , provide a sum assured equal to 50% of your gross income. This ensures that, if you are unable to work due to accident, sickness or disability, you will receive a tax-free income of £15,000 per annum until you are able to return to work, or reach your selected retirement age of 65. At the moment you have Income Protection in place for a cost of £31 that will provide you with an annual income of £17,000. The best that we could source from the whole of the market was £15,000 and the premium was £35.74 per month. Therefore, in this instance, we recommend that you stay with your current provider.

Income Protection Cover recommendation for Linda Up to Age: 65years Monthly Premium: £8.00 Provider: Cirencester Friendly

In the case of Linda, we recommend that, based on current gross income, you commence an Income Protection policy which will, after the selected deferred period of 26 weeks , provide a sum assured equal to 50% of your gross income. This ensures that, if you are unable to work due to accident, sickness or disability, you will receive a tax-free income of £8736 per annum until you are able to return to work, or reach your selected retirement age of 65.

Comment on any Employee Benefits that are currently available.

Based on our recommendations, the table below indicates what income would continue to be available, if you were unable to work due to accident, sickness or disability.

Gross Income

Net income

Income Protection 50% of Gross

Monthly State Benefits

Total Monthly income

% of Net Income Insured

James £2500 £1599 £1250 n/a self emp £1250 50%

Linda £1500 £1198 £750 £343 £1103 75%

3.9 Cost Effective Alternative to Unemployment Cover If employed, rather than self-employed, we must highlight another optional insurance which protects your income in the event of losing your job. Many of these polices will pay out only for a 12-month period, from the date when you are 3 months unemployed. Due to the claim rates on such policies, it is our opinion that, if you are able to hold 50% of one year’s gross income in savings to use in the event of unemployment, coupled with the available benefits, this may be an alternative method of alleviating this worry.

4.0 Debt Management & Mortgage Planning Please find below a summary of your existing debt. As previously mentioned, it is very important that you (and your family, if applicable) have the debt insured in the event that the worst should occur.

Owner Debt Type Amount outstanding

Remaining Term

Monthly Cost Lender Name

Joint Mortgage £85,000 18 years £600 Halifax

TOTALS £85,000 18 years £600

It is important to note that you also have a holiday home valued at approximately £180,000. You do not have a mortgage on the property, therefore it is classed as an asset only.

James, you have also recently inherited your parent’s property. Your mother is still residing property, and of course you have no mortgage liability. Again this property is classified as an asset only, and is currently valued at approximately £250,000.

We will recommend strategies to repay the debt at the lowest cost, ensuring that you have the lowest interest rate possible. Your priorities in regards to your debt should be as follows:

- Ensure that your interest rate, and therefore the monthly cost of borrowing the money, is as low as possible - Aim to repay your mortgages and debts as soon as possible - Ensure that the rate type suits your risk profile. For example, a cautious client may be more suited to a fixed rate product

4.1 Recommendations for Debt Management & Mortgage Planning

Mortgage Details Repayment

Lender Alliance & Leicester

Loan Amount £85,000

Term 18 Years

Repayment Type Capital & Interest

Monthly Cost £503.93

Initial Interest Rate 2.79 %

Product Term 2 Years

Redemption £2004.90 if repaid in full within the first two years

Valuation fee N/a

Mortgage A/C Fee N/a

Product Fee £495

Broker £499

General Commentary: Based on the information provided, i.e. your property value is approximately £180,000, with an outstanding balance of £85,000 over a term of approx 18 years; I have researched the whole of the market in relation to mortgage products. I have kept the mortgage on a Capital and Repayment basis and have defined the product selection by keeping costs to a minimum. I have researched products that do not have a valuation fee, have the added benefit of a free legal service, and also have selected a maximum arrangement fee of £600. As far as I am aware, you wish to have your mortgage paid off as soon as possible & do not want to incur any additional costs. At the moment, the most suitable product will therefore be with Alliance & Leicester at a rate of 2.79% (variable rate). The monthly cost of this would be approx £503.93. (For comparative purposes, the best fixed rate deal available would be a 2 year rate of 4.29% and the monthly cost would be £565.49).

5.0 Pension & Retirement Planning 5.1 Principle First’s Approach to Pension & Retirement Planning 5.1.1 It is recommended that, for you to have a good standard of living come retirement,

and assuming that all debt has been repaid and there are no monthly commitments, you should plan for a retirement income equal to 60% of current gross income. Please remember that your income will obviously change the older you become, and therefore must be reviewed regularly.

5.1.2 Please note that pension income is taxed according to Income Tax legislation applicable at retirement age. 5.1.3 Many people are not aware that placing savings within a pension is the most tax efficient manner in which to invest for the future. 5.1.4 When you contribute an amount to a pension, the government will, depending on whether

you are a basic or higher rate taxpayer, rebate the relevant level of tax into your pension. If you earn up to £37,400 per annum over the basic tax allowance, and are a basic rate taxpayer, you will qualify for the basic rate of 20% tax relief on pension contributions. Therefore, the government will increase every £100 you pay into a pension to £125 (£100 being 80% of £125).

5.1.5 If, however, you earn over £37,400 per annum over the basic allowance, and are paying a

rate of tax of 40% on any amount above that threshold, you qualify for 40% tax relief equal to that amount. This will mean that for every £100 you contribute to a pension, the government will increase it to £166 (£100 being 60% of £166).

5.1.6 Like all investments, it is very important to review your pension contributions annually.

This is true for the following reasons: 5.1.6.1 You must ensure that you are contributing the correct amount, based on the ongoing performance of current contributions and existing funds, in order to achieve your target. 5.1.6.2 Market fluctuations will affect the performance of some funds, so they should be monitored

regularly. 5.1.6.3 As you approach your selected retirement age or indeed any other time in your life, your investment risk profile may change, and the funds you invest in should reflect this. For example, it would not be advisable to have your pension savings in high-risk funds a year before retiring, as the risk that the fund could decrease would be too high. Generally, as you come closer to your selected retirement age, you may wish to become more risk-averse, in a planned strategy to protect your retirement income. We will review risk with you annually. 5.1.7 We would recommend that you target a retirement income of 60% of your gross income

today, and this should increase on an annual basis in step with the Retail Price Index (RPI), so that your income at retirement has the buying power of 60% of your income today. However, if this is not possible due to budget constraints, it is advisable to allocate what is affordable today to help plan for your income in retirement.

Below is a summary of your existing pension plan, and a table demonstrating the need for future contributions, based on an assumed level of growth of 7% per annum.

5.2 Retirement Planning for James In the table below you will find information of any current pension schemes that you currently have. If applicable, these are to be taken into account, when planning future pension strategy.

Provider Type Current Value Assumed Value at Retirement Age

Assumed Income at Retirement Age (p.a)

Legal & General

Personal Pension £38,400 £198,000 £11,800

On the basis of what you currently have, you should be targeting a pension fund in today’s money terms valued at £300,000, to generate an income on retirement of £18,000. It is obvious from the above that you have a capital shortfall of £102,000, which will translate into an income shortfall in retirement of £6120.

The monthly cost for you to achieve this is £128, assuming a growth rate of 7% between now and retirement age. With the current tax relief, you will need to make a monthly contribution of £102.40, to which the Government will add £25.60, ensuring that you are on track to reach your target in retirement. Please also note that the contributions and projected value of fund at retirement age should

be evaluated on an annual basis to insure that your pension contributions and fund value are going to be inline with cost of living and purchasing power at the time.

We are recommending that you transfer your existing pension to the Scottish Widows Retirement Account for Retirement Planning. The reason we have chosen a non-stakeholder pension is due to the fact that they do not offer the option of selecting external funds, and the annual management charges are generally higher than that of the Retirement Account.

5.3 Retirement Planning for Linda In the table below you will find information of any current pension schemes that you currently have. If applicable, these are to be taken into account, when planning future pension strategy.

Provider Type Current Value Assumed Value at Retirement Age

Assumed Income at Retirement Age (p.a)

Friends Provident

Personal Pension £9,700 £15,000 £900 p/a

On the basis of what you currently have, you should be targeting a pension fund in today’s money terms valued at £180,000, to generate an income on retirement of £10,800. It is obvious from the above that you have a capital shortfall of £165,000, which will translate into an income shortfall in retirement of £9,900.

The monthly net cost for you to achieve this is £116.19, assuming a growth rate of 7% between now and retirement age. With the current tax relief, you will need to make a monthly contribution of £93 to which the Government will add £23.24 helping to ensuring that you are on track to reach your target in retirement. Please also note that the contributions and projected value of fund at retirement age should

be evaluated on an annual basis to insure that your pension contributions and fund value are going to be inline with cost of living and purchasing power at the time.

We are recommending that you transfer your existing pension to the Winterthur Personal Pension for Retirement Planning. The reason that we have chosen a non-stakeholder pension is due to the fact that they do not offer the option of selecting external funds, and the annual management charges are generally higher than that of the Winterthur Pension.

6.0 Savings & Investment Planning 6.1 Our Approach to Savings & Investment Planning

We advise all clients to hold a certain amount of cash in an account for easy access. Over and above this necessary emergency fund, we would recommend that clients who want to achieve competitive growth on their savings, invest for the medium term according to our investment principles.

6.2 Identifying Your ‘Risk profile’ Risk is a priority, prior to considering performance. Performance can be short-lived, if you do not

factor in your risk profile. There are many options available for placing your funds in the investment markets. By identifying your risk profile, we are able to highlight the funds that are suitable for you, as an investor.

Risk Profile for James

Selections made by James on risk profile questionnaire Strongly Agree

Somewhat Agree

Somewhat Disagree

Strongly Disagree

I would feel comfortable if my investments could easily rise and fall by a quarter (25%) or more in a year 7 5 2 1

If my investments fell significantly in value I might see this as an opportunity to buy more at cheaper prices 7 5 2 1

I would not feel comfortable if my investments could fall in value at all 1 1 4 7

I prefer the security of bank accounts to stock market related investments 1 1 4 7

I can sleep at night knowing that my investments might rise and fall quite rapidly in the short term 7 4 2 1

Score of 24 indicates a ‘Moderately Aggressive’ Investor risk profile Total 24

Risk Profile for Linda

Selections made by James on risk profile questionnaire Strongly Agree

Somewhat Agree

Somewhat Disagree

Strongly Disagree

I would feel comfortable if my investments could easily rise and fall by a quarter (25%) or more in a year 7 5 2 1

If my investments fell significantly in value I might see this as an opportunity to buy more at cheaper prices 7 5 2 1

I would not feel comfortable if my investments could fall in value at all 1 1 4 7

I prefer the security of bank accounts to stock market related investments 1 1 4 7

I can sleep at night knowing that my investments might rise and fall quite rapidly in the short term 7 4 2 1

Score of 24 indicates a ‘Moderately Aggressive’ Investor risk profile Total 24

6.3 Asset Allocation

The key to ensuring clients achieve maximum potential growth with their investment portfolio is to make certain their money is invested in sectors that suit their risk profile. Based on your risk profile, we identify suitable asset classes to invest your money. The percentage of your funds allocated to different asset classes is also determined by your profile. However, advice is “key” at Principle First. From time to time we will avoid certain sectors due to overall poor performance or negative market conditions, as market conditions can change. To ensure clients receive up-to-date advice and better returns on their investments, we will avoid certain sectors, if required.

Below is a table illustrating the percentage breakdown of the asset classes used to make up our 6 bespoke Double Helix Fund Portfolios

Principle First Fund Portfolios

UK EQ

EU EQ

US EQ

JAP EQ

ASIA EQ

GEM PROP UK Gilt

UK Corp

INT BOND

CASH

Very Defensive Portfolio 0% 0% 0% 0% 0% 0% 10% 10% 0% 0% 80%

Defensive Portfolio 0% 0% 0% 0% 0% 0% 26% 15% 46% 8% 5%

Cautious Portfolio 27% 1% 1% 1% 1% 1% 17% 4% 42% 0% 5%

Balanced Portfolio 38% 7% 11% 3% 5% 0% 3% 0% 26% 0% 7%

Moderately Aggressive Portfolio 52% 11% 6% 0% 6% 0% 0% 0% 10% 0% 5%

Aggressive Portfolio 22% 2% 4% 0% 5% 66% 0% 0% 0% 0% 1%

6.4 Fund Selection

The selection of the best investment funds from each of the major asset classes is carried out using ‘Double Helix’ - Principle First’s bespoke fund selection and performance monitoring platform. Six Fund Portfolios have been created to cater for the varying attitudes to risk of the typical investor; ranging from the 'Defensive Portfolio' to the ‘Aggressive Portfolio'. The asset class composition of each portfolio is designed to maximise growth and minimise risk in accordance with its, specific risk profile. The Double Helix platform works by applying specific filters against 24/7 real time data, providing continuous ‘DNA’ level analysis of each and every one, of the 3000+ Global and UK investment funds in existence.

Key filters for fund selection: - Volatility (risk) over: 1,3,5 year periods - Past Performance over: 1,3,5 year periods - Fund Manager: time with fund and sector - Industry Ratings: (see below for more detail)

This approach to fund selection by Principle First is unique to any UK Independent Financial Adviser. It enables us to provide every investor regardless of the amount under investment, with the best-informed advice that we can, relative to their willingness to take risk, and their long-term expectation for growth.

Aside from our six Fund Portfolios, which make up the core of our investment strategy, we can also develop personalised portfolios. Typically this may be needed for clients who may require more income than growth, or for clients who have a particular preference for, say, ethically marketed funds.

The independent companies who issue industry ratings are given access to information from

S&P Rating laims-paying ability, i.e. its financial capacity to meet its insurance

s,

Morning Star Rating g ™ is a quantitative assessment of a fund's past performance - both

Crown Rating press Crown Ratings are a quant-based ratings system designed to

lative to

ld Broad Street Research Limited (OBSR) vestment research approach that has been in

This on

Many portfolios may have an element of high, medium or low risk investments within them,

Please note that we provide further information highlighting the research and criteria we r

.6 Product Selection

There are many products that will ensure you have adequate savings and investment .

ISA’s (Individual Savings Accounts) Structured Products s

s

6.5 Industry Ratings: fund managers that would not normally be available for general viewing. In some cases, the fund manager will not give access, and as a result no rating is given. Assesses a company's c obligations. S&P forms its opinion by examining industry-specific risk, management factor operating performance and capitalisation. The Morning Star Ratin in terms of return and risk - and is given as a measurement from one to five stars. It uses focused comparison groups – Morning Star Categories - to better measure management skill. The rating is also adjusted for all sales charges and exit fees, to reflect actual returns received by the investor.

The Financial Exhighlight funds that have had superior, consistent performance in relation to risk, retheir peer groups, the fund sectors as defined by the IMA and the ABI. Crown Ratings are compiled using three key measurements of a fund’s performance - alpha, volatility and consistency. OResearch Approach & Methodology - uses an in

place since 1994. The emphasis is on looking forwards, not backwards, and for this reason, we place a great deal of importance on the qualitative aspects of our research. Our conclusions are nonetheless informed by detailed statistical (quantitative) analysis. means we are aware of past results, rather than driven by them, and we use the informati to validate our qualitative research. however, the above analysis method highlights their overall risk rating of the cumulative portfolio. use when selecting the funds within our portfolios. This information is displayed within ou website, however we can provide a hard copy on request. 6 provisions in place. Each product type has its particular tax and structural advantages Children’s’ Trust Funds Venture Capital Trust Unit Trusts Enterprise Investment Scheme Investment Trusts

6.7 Recommendations for an investor with a ‘Moderately Aggressive’ Investment Risk Profile

Please find enclosed details of our Fund Portfolio specially created and managed for investors with a ‘Moderately Aggressive’ investor risk profile. In it we have selected suitable funds within specific asset classes designed to maximise growth of your investments while managing risk/volatility to a level which is in harmony with your confirmed profile as that of a ‘Moderately Aggressive’ investor’.

Please note that we do not recommend funds solely on the basis of previous performance. We are recommending funds based on our own in-house research, and on how we predict they will perform in the future. The purpose of our ongoing research is also to highlight future opportunities. When reading the Analytics summary of the funds we recommend, please be aware of the following points: - The Fund Manager is the company responsible for investing the money

- The Name is the name of the fund and generally indicates the sector the fund invests in

- The Yield is the average historical income from the assets held within the fund, and is represented separately to growth

- Performance is quoted over the last year and last 3 years

- QTL represents the Quartile position within the sector over the timeframe For example if there were 100 funds in a sector,1st quartile funds would be the top 25% rated by performance in that sector, 2nd quartile funds would be in the 2nd 25%, and so on

- Crown Rating is the assessment given to each fund as explained earlier in our fund research section

- Volatility is the average deviation, and expresses the risk element of a fund. Volatility will be measured between 0 to 75, 75 being the higher risk

Recommended fund summary enclosed

Please note that if you have existing investments we are happy to run a portfolio scan and compare our recommended portfolios/ funds against any existing investments you may hold. The following portfolio suits your risk profile. We advise that you ensure all your existing and new investments, whether they are ISA’s, pension funds or lump sum investments, are invested into our recommended portfolio.

These portfolios are continually assessed and amended accordingly to suit market conditions and the findings of our analysis.

However by monitoring the portfolios we build and advise our clients to invest in, we are able to move the majority of our clients if we feel that there is a problem with a fund.

You will see from the recommended portfolio that the growth has been 47.84% over the last 12 months, and the risk / volatility was 17.64 in a scale of 0 to 75. By using such a portfolio of funds for your pension, savings and investments, we are maximising the opportunity for growth, while minimising risk to fit your specific profile

5 Moderately AgressivePortfolio 2010

12 April 2010

Portfolio Composition 1 Year 3 Year

Fund Manager Name Original %Holding

Hist.Yield Perf. Est.

Contrb. Qtl Perf. Est.Contrb. Qtl Crown

RatingM&G UK Recovery - Jan 95 30.00 1.24 56.36 16.91 1 14.63 4.39 1

Cazenove Invest Fund Mgmt Ltd European - Jul 93 11.00 1.88 36.49 4.01 3 13.76 1.51 1

JO Hambro Capital Management UK Opportunities - Nov 05 11.00 3.14 41.24 4.54 4 8.35 0.92 1

Legal & General UT Mgr Ltd UK Alpha - May 05 11.00 0.00 76.08 8.37 1 19.91 2.19 1

M&G UK Corporate Bond - Apr 94 7.00 3.66 18.90 1.32 3 22.41 1.57 1

First State Investments UK Ltd Global Emerging Markets Leaders - Dec 03 6.00 0.35 49.34 2.96 4 60.52 3.63 1

UBS Asset Management US Equity - Oct 02 6.00 0.04 41.83 2.51 2 4.43 0.27 4

Fidelity (FIL Investment Intl) South East Asia - Jan 95 5.00 0.74 62.62 3.13 2 69.14 3.46 1

Invesco Perpetual Fund Mgrs Asian - Jan 95 5.00 0.65 61.64 3.08 2 46.86 2.34 2

Legal & General UT Mgr Ltd Cash - Jan 95 5.00 0.33 0.13 0.01 4 7.55 0.38 3

Invesco Perpetual Fund Mgrs Corporate Bond - Jul 95 3.00 4.40 31.93 0.96 2 20.57 0.62 1

Total Portfolio 100.00 1.42 47.84 21.71

Selected Benchmark FTSE All Share - Dec 85 51.09 -0.41Performance figures to last price date.Estimated contribution values are based on the percentage weightings being correct at the start of the analysed performance period.

Portfolio Ratios

Fund Manager Name Volatility Alpha Beta Sharpe r2

M&G UK Recovery - Jan 95 20.49 5.00 1.02 0.05 0.91

Cazenove Invest Fund Mgmt Ltd European - Jul 93 21.14 5.88 0.98 0.08 0.79

JO Hambro Capital Management UK Opportunities - Nov 05 16.11 2.85 0.76 0.00 0.83

Legal & General UT Mgr Ltd UK Alpha - May 05 22.80 7.77 0.91 0.13 0.59

M&G UK Corporate Bond - Apr 94 5.95 7.33 0.17 0.66 0.31

First State Investments UK Ltd Global Emerging Markets Leaders - Dec 03 20.29 18.01 0.92 0.68 0.76

UBS Asset Management US Equity - Oct 02 20.87 2.34 0.96 0.00 0.79

Fidelity (FIL Investment Intl) South East Asia - Jan 95 29.84 21.81 1.26 0.52 0.66

Invesco Perpetual Fund Mgrs Asian - Jan 95 27.41 15.63 1.24 0.37 0.76

Legal & General UT Mgr Ltd Cash - Jan 95 0.54 2.50 -0.01 0.00 0.14

Invesco Perpetual Fund Mgrs Corporate Bond - Jul 95 8.24 6.14 0.31 0.34 0.52

Total Portfolio 17.64 7.04 0.88 0.19 0.92

Selected Benchmark FTSE All Share - Dec 85 19.23 n/a n/a -0.01 n/a Ratio figures based on last 36 months total return performance. Ratio figures are annualised where applicable. The benchmark for each holding is the portfolio benchmark.

Asset Allocations'

Name Original %

UK Equities 49.02%

European Equities 10.30%

UK Fixed Interest 10.00%

Money Market 9.37%

Asia/Pacific Equities 9.00%

North American Equities 5.92%

Global Emerging MarketEquities 5.78%

Other International Equities 0.62%

Sector Allocations'

Name Original %

Financial 12.29%

Industrials 11.32%

Telecom, Media & Technology 9.48%

Money Market 9.37%

Consumer Products 9.29%

Oil & Gas 8.33%

Basic Materials 8.15%

Health Care 6.84%

Services 6.51%

Others 18.44%

Region Allocations'

Name Original %

UK 59.02%

Europe ex UK 9.86%

Money Market 9.37%

Pacific Basin 8.62%

North America 5.92%

Asia 4.81%

Americas 0.93%

Australasia 0.62%

International 0.52%

Asia Pacific 0.35%

Top 10 Holdings Original %

1 BP 2.18%

2 GLAXOSMITHKLINE 1.91%

3 TULLOW OIL PLC 1.83%

4 HSBC HLDGS 1.74%

5 ROYAL DUTCH SHELL B ORD 1.53%

6 UNILEVER 1.32%

7 VODAFONE GROUP 1.05%

8 FIRST QUANTUM MINERALS 0.78%

9 INVENSYS PLC 0.63%

10 NATIONAL GRID 0.63%

Portfolio breakdown and holdings are based on latest published data for each constituent which may have different publication dates.

6.8 Ongoing Investment Portfolio Management Finally, the most important aspect of any investment strategy is the regular monitoring of the investments. We continually monitor the values of your investment portfolio, and make further fund recommendations if we feel it is necessary. In addition to this, you will have 24-hour access to our online client area. Here you can monitor your investment and pension values, compare them to industry averages, and produce charts and fact sheets to help you gauge their performance.

Annual reviews are the key to successful investing; we can carry this out via your “One Plan” client area, over the telephone, or face to face. It is important that we re-assess your risk on an annual basis, as year on year certain asset classes will out-perform others and our experts can help you address this by re-balancing your portfolio.

This is all completed as part of the annual review.

7.0 Tax efficient Products At this point it is also important to make you aware that there are many products available on the market, with certain tax incentives that can help limit your Capital gains, Income and Inheritance Tax liabilities. These are products signed off by the Revenue Commission (HMRC) to stimulate various sectors in the economy. At this stage, we may not yet have identified whether these products are applicable to you. However, we feel that it is worthwhile informing you of them for the future. EIS (Enterprise Investment Schemes) Under EIS rules you can receive 20% income tax relief if you invest in an Enterprise Investment Scheme, however you need to hold your investments in an EIS for a period of at least 3 years. EIS schemes can also be used to defer Capital Gains tax liabilities until final encashment. Venture Capital Trusts (VCT’s) VCT’s attract 30% income tax relief, and all growth is free from capital gains tax or income tax. VCT’s should be used as an alternative or an addition to an ISA. Both of the above options have protected or growth options, this means that you can take less risk for a lower return, and still obtain the tax advantages of these products, or you can potentially have a greater return with more risk, and still obtain the tax advantages.

If investing in any of the above, it is important to note that these products also qualify for business property relief, which ensure that on death they will fall out side of your estate for inheritance tax purposes.

8.0 Estate & Inheritance Tax Planning One of the most complex areas of financial planning is that of estate planning. This is the advice process, which structures your estate efficiently and ensures that, on death, no part of it will be taxed at 40% under current Inheritance Tax (IHT) legislation. Put quite simply, estate planning keeps your estate intact for your beneficiaries to inherit.

Your estate is assessed by adding up the value of your assets and subtracting the total amount of debt and liabilities.

Once we calculate this figure, we can compare it with the current tax-free allowances of £325,000 for an individual, or £650,000 for a married couple or civil partnership. Any wealth you have above and beyond your allowance threshold, 40% will be payable to the Inland Revenue on your death, if the correct planning is not in place.

From the information you provided we have been able to calculate the Inheritance Tax liability, if you were to die, to be £162,240. This is calculated below: Current Value of Estate £1,148,100 - £85,000 = £1,063,100 Less threshold £1,063,100 - £650,000 = £413,100 Taxable Estate x 40% £413,100 Inheritance Tax Liability £162,240 There are many ways in which we can avoid this liability, through good and necessary financial planning. Please see below a few examples: 8.1 Writing a life policy in Trust This does not actually mitigate the Inheritance Tax liability, it is merely a way of ensuring that the beneficiaries have the available capital to pay the inheritance tax liability without eroding the value of the estate. It works in the following way. If both spouse or single spouse (whichever is applicable) were to die a lump sum would be paid from a life assurance policy, through a trust to the beneficiaries of your estate. It would be written in trust, so as to bypass your estate and not cause a further Inheritance Tax liability. This method is particularly relevant to those whose estate mainly consists of property. For those with more liquid assets or investments, there are several other efficient methods of estate planning that have no monthly cost.

8.2 Loan Trusts A Loan Trust Plan involves you, the client making a loan to a trust and then having this money gradually paid back to you to spend. A trust is set up and trustees are appointed. You make an interest free loan to the trustees, who invest the amount loaned in a bond. The loan is then paid back in instalments to you until the loan is fully repaid. On your death, any outstanding loan will form part of their estate for IHT purposes, but the growth will be classed as outside of your estate. In this example it is important that you spend the loan repayments, as any repayments that are not spent will accumulate in your estate. 8.3 Discounted Gift Trusts In this example of estate planning funds or money are invested under a Discounted Gift Trust. It is suitable for clients who are looking to move some of the investment out of their estate immediately and receive fixed regular payments now with any remainder passing to their beneficiaries when they die. The value of the client's estate is reduced from the start of the plan and if they survive seven years the investment is fully removed from the estate. They can receive a regular payment from the plan and then any remaining amount is paid to the beneficiaries on death. 8.4 Writing a Will We advise all clients to write a will, and to provide us with a copy to review. If you have a will at this time, please provide it. If not, please talk to us with a view to writing a will. As Chartered Financial Planners, we will be able to contribute ideas to your will planning requirements. 8.5 Estate Planning Recommendations

We have agreed that we will review this area once you have read through this report in detail.

8.6 Conclusion & Summary We hope that you have found this report helpful. We appreciate that it is quite detailed, but as a respected firm of financial planners, we feel it incumbent upon us to make you aware of the need to address all areas of financial planning upon which your current and future lifestyle will rest. At this point, the costs to you of satisfying your financial planning needs have been identified. Meeting all the enclosed recommendations may not be within your budget. Going forward, it is therefore important to prioritise your objectives, and review on an annual basis. Our financial plan is tailored to your particular circumstances. It is important for you to know this, rather than sweeping certain objectives under the carpet, simply because you cannot afford to meet them at this time. Taking into account the issues you decide to address after reading this report, we will send you an updated version of your financial plan, on an annual basis. If any circumstances should change, year on year, we would be grateful if you would inform us.

There are certain risks in all areas of advice. If we transact any financial product on your behalf, this will be followed with a suitability report detailing why we found this suitable to your needs. The relevant risk warnings will also be present within these communications.

It is entirely your choice at this stage, on which recommendation you wish to put into effect at this time. Please do not be concerned about making the wrong decisions. If we can find a better alternative, or believe you are not making the correct choice, we will advise. Finally, we hope that you have found your new plan to be informative and thought provoking. We are delighted that you have made contact with Principle First and we look forward to working with you in the future to help you move closer to a point of financial independence.

PAST PERFORMANCE IS NOT A GUIDE TO FUTURE RETURNS, AND INVESTMENT RETURNS MAY FALL AS WELL AS RISE. THE

RISK PROFILE OF ABOVE INVESTMENTS WILL NOT SUIT EVERY INVESTOR AND MUST BE DISCUSSED AND THE RISK PROFILE

CLARIFIED BEFORE PROCEEDING WITH ANY INVESTMENT ADVICE. Most investments are considered to be medium-term

commitments over at least a 5 year period. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A

MORTGAGE OR ANY OTHER DEBT SECURED ON IT. We offer the option to pay for mortgage advice by way of a fee. Principle First

Financial Services is a trading style of GMF Marketing Services Ltd, which is authorised and regulated by the Financial Services

Authority and the Financial Regulator.

Principle First

7 Racecourse Road

Derry

BT48 7RB

Tel. 028 7127 3030

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