Parents should beware risks of CTF-to-Jisa transfers – Orbis

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Parents should beware risks of CTF-to-Jisa transfers – Orbis

Moving assets from a child trust fund into a Junior Isa is a welcome move, but parents and guardians need to understand the risks and choices available, Dan Brocklebank has said.

The director of savings provider Orbis Access, a new platform designed to make it easier for advisers and their clients to manage their portfolios online, warned that parents and guardians should be made aware of various investment considerations, charges and fees.

He said: “A recent Cass Business School report confirmed that too often fees are skewed in favour of the fund manager rather than structured, so that investors and fund managers share both the losses and the gains. This is arguably never more important than when thinking of suitable long-term vehicle through which to invest for your children.”

He added: “It is still very complex hunting for the best providers and deals. We know how busy parents are but we urge them to take a few minutes to consider their options.

“Making a change could result in potentially greater savings and more money for their children down the line. It will be time well spent.”

Mr Brocklebank warned parents to decide if and how they wanted to save for their children – cash or stocks and shares.

He also said: “People must also consider whether or not they will need to access the money saved before the child reaches 18 years of age, and how responsible they think their future 18-year-old will be.”

A third consideration was whether to put money into active or passive funds. If they opt for a stocks & shares Jisa, parents/guardians need to decide whether they want the money actively managed or invested in index-tracker funds, as there could be cost implications to consider.

Orbis Investments, which recently launched Orbis Access, manages around £15bn.

Adviser view

Alistair Cunningham financial planning director at Wingate Financial Planning in Croydon, said: “As Child Trust Funds were available for a relatively short period it will often make sense to replace them with Jisas. Parents need to act.”