Frequently asked questions

Who is Cavendish Online?
What is Execution Only or Discount Broking?
How does Cavendish Online differ from other discount brokers?
How can we offer these discounts?
What are Cavendish Online's charges?
What discounts can I expect?
What is renewal or trail commission?
Can I move my existing ISAs and Peps to Cavendish Online and have the renewal commission returned to me?
How can we provide such low charges?
Does Cavendish Online deal with Fund Supermarkets?
What Money Laundering information is required?

Who is Cavendish Online?
Cavendish Online is an execution-only independent financial adviser. The firm was established in 2000 under the auspices of Cavendish Financial Management Ltd as an appointed representative. This relationship ceased on 30th September 2007 when Cavendish Online became directly authorised by the FSA.

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What is Execution Only or Discount Broking?
Execution-only services or discount brokers are authorised as independent financial advisers and regulated by the Financial Services Authority. It may sound like a contradiction, but a discount broker is simply an independent financial adviser that does not give advice. Discount brokers, receive high levels of initial and renewal commission from investment and life assurance companies due to a high volume of business. They also operate on lower margins than independent financial advisers because they do not give specific advice so do not have to pay for the services of an adviser. In order to offer discounted plans and investments, the brokers sacrifice some of their commission to benefit the investor. This commission is reinvested to improve the investment.

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How does Cavendish Online differ from other discount brokers?
Cavendish Online differs from other execution-only services in that it reinvests ALL of the available initial and renewal commission to the investors chosen investment, thereby increasing the discount. Our only charge is a small, fixed administrative fee, that is not related to the size of your investment. If we cannot reinvest the commission, as is the case for ISA and Pep renewal (trail) commission, we will enter your plan into the Renewal Commission Cashback Service.

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How can we offer these discounts?
For the privilege of knowing what you want, we will give you the maximum discount. Whereas other advisers take a proportion of the initial commission and/or receive renewal commission, we will not take any of the commission, either initial or renewal, and just charge a small, fixed fee for processing your application for any investment or policy you arrange through us. We do not provide ongoing valuations or investment recommendations. You will receive valuations from the companies that hold your investments.

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What are Cavendish Online's charges?
The only money we earn is the fee that you pay us. All commission is either reinvested or rebated to you. The product provider's charges are the same as through any other adviser. There are no other hidden costs. Our fees are:

*Search includes a review of the rates available on the industry leading "Exchange" database and the FSA website.

For each application we are happy to provide two quotations. If you require additional applications please contact our administration team who will be happy to discuss your requirements. If an assurance policy is rated and you choose not to proceed we will refund one half of our fee.

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What discounts can I expect?
Most insurance and investment companies offer intermediaries, including independent financial advisers, commission on products they sell on their behalf. The amount of the commission varies from product to product and company to company, but it can be as high as three quarters of the first year's premium on regular premium contracts, 110% on protection contracts and 5-7% on single premium insurance based contracts. On ISAs, PEP transfers and unit trusts, investment companies pay between 3 and 5% of the investment as commission.

The following tables demonstrate how the re-investment of commission affects the performance of the investment, comparing Cavendish Online with an IFA on full commission and a commission based discount broker.

With Profits Bond

Example courtesy of Friends Provident 30/10/2000
* The Net initial investment value would suffer a 5% penalty if the bond were surrendered immediately, so showing £23,750 for the Full Commission broker, £25,000 for the Discount broker and £25,469.17 for Cavendish Online. It is assumed that the discount broker reinvests the initial charge of 5% and retains the 1.75% override commission.

Personal Pension Plan

Term Assurance

The table shows joint life term assurance quotations for a male and female, both aged 35, for £100,000 level term assurance over 25 years.

* "When you're better off" shows the time period over which the difference in premium equates to our £35 fee. This will vary depending on the size of the premium.

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What is renewal or trail commission?
Renewal commission is a commission paid each year that a policy or investment is in force. It can be calculated from the value of the fund (fund based renewal or trail) or based on each premium paid for regular premium contracts (renewal). ISA renewal commission is usually 0.5% of the value of your funds on an annual basis. If you pay your ISA on a monthly basis there are two sets of ongoing commissions being paid, the initial commission of about 3% per contribution (which we reinvest) and a renewal (trail) of 0.5% of the fund each year (which we will enter into our Renewal Commission Cashback Service.)

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Can I move my existing ISAs and Peps to Cavendish Online and have the renewal commission returned to me?
Yes. Cavendish Online's Fundsupermarket allows you to transfer some or all of your ISAs and Peps under one account. This makes the administration and management of your investments much more straightforward. Please click here to go to our Fundsupermarket section for further details.

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How can we provide such low charges?
Because we are not providing advice and by streamlining our administration we can keep our costs down to a minimum. You get the benefit of purchasing what you need and want, probably at the lowest cost in the UK. BUT remember to qualify for the discount you must send the completed application form to us and not direct to the product provider.

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Does Cavendish Online deal with Fund Supermarkets?
Yes, via Fidelity's Fundsnetwork. Further details are on the Fundsupermarket page.

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What Money Laundering information is required?
Previously Cavendish Online made use of the Postal Concession whereby the investment and insurance companies used a client's bank details to verify their name and address. This option no longer exists and we have alternative options as listed below. Fidelity and Legal and General continue to do their own verification and our clients do not usually need to provide additional proofs of identity for investments with these companies.

1. If the monthly premium is below £50.00 per month per policy (not applicant) then we use the Low Premium Exemption and no further information is required.

2. If the premium is over £50.00 per month then clients will need to supply originals or certified copies of their Passport or Driving Licence AND a recent utility bill (not mobile phone) showing their address. This must be for each applicant and the premium payer if different.

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