ARF charges

Marc said:
Unfortunately the agency risk in financial services bakes an inherent conflict of interest into the “advice process” such as it is to the extent that one of my clients, a retiring GP was told 95% of people elect for an ARF.

We recommended he take the scheme annuity on offer
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95% of people probably do invest in ARFs.

I have bought maybe 3 annuities for clients in the last 10 years and one of them was from an ARF. I show client the annuity available to them and the ARF options and the pros and cons of each. Clients make up their own mind. And I get paid for implementing what they want.

I don't see how you can exclude yourself from this inherent conflict? In your GP case, you could have taken 1% plus 0.75% ongoing. Well done for giving the best advice in the clients interests. There are lots of us you work for our clients and get paid for it and don't just see their money as a way of earning big commissions.
 
Steven Barrett said:
It's not that complicated. When you come to draw down your pension, look at everything, the annuity rates available, the ARF options. Weigh up the pros and cons and go for the one that suits your circumstances the best.
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I don't think that's a decision you should be making when you come to draw down your pension - I think most people would like to have a good idea of what they are going to do a few years before that.
I agree its not complicated, but finding all the options available to weigh up independently (i.e without paying away valuable basis points to most likely biased broker) is the part I have always struggled with.
 
Steven Barrett said:
95% of people probably do invest in ARFs.

I have bought maybe 3 annuities for clients in the last 10 years and one of them was from an ARF. I show client the annuity available to them and the ARF options and the pros and cons of each. Clients make up their own mind. And I get paid for implementing what they want.

I don't see how you can exclude yourself from this inherent conflict? In your GP case, you could have taken 1% plus 0.75% ongoing. Well done for giving the best advice in the clients interests. There are lots of us you work for our clients and get paid for it and don't just see their money as a way of earning big commissions.
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“Lots” not in my experience.

everlake.ie

You’re Too Late! Everlake

I’ve just returned from a conference in Cape Town and still the question of ethics and financial advice is being examined.
everlake.ie everlake.ie
Annuities are still getting the same bad wrap and I am willing to bet most ARF files don’t even contain an annuity comparison.

The question is phrased “you don’t want an annuity do you?. No, grand so”

Whilst back in April 2020 rates were still low

everlake.ie

Do You Need to Review Your ARF Strategy? - Everlake

More people invest in an Approved Retirement Fund (ARF), over the certainty of an annuity. But do you need to review your ARF strategy?
everlake.ie everlake.ie

By 2021 it was already becoming more relevant

Key Post - People should consider buying an annuity on retirement | Askaboutmoney.com - the Irish consumer forum
https://www.askaboutmoney.com/threa...-an-annuity-on-retirement.224265/post-1730363


Annuity rates have shot up more recently with the rise in bond yields but attitudes haven’t shifted at all.

I’ve been banging this drum for almost a year now

This post from November last year
everlake.ie

Is it time to look more closely at an annuity? - Everlake

It's time to rethink annuities over ARFs, or consider a hybrid model that combines both in a tax efficient manner and increases your options.
everlake.ie everlake.ie
 
Rasputin said:
I don't think that's a decision you should be making when you come to draw down your pension - I think most people would like to have a good idea of what they are going to do a few years before that.
I agree its not complicated, but finding all the options available to weigh up independently (i.e without paying away valuable basis points to most likely biased broker) is the part I have always struggled with.
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Who do you think I am looking at everything with? I am not doing it for myself, it's not my money. I talk to my clients about their options and they make the decision as to which suits them the best.
 
Marc said:
“Lots” not in my experience.

everlake.ie

You’re Too Late! Everlake

I’ve just returned from a conference in Cape Town and still the question of ethics and financial advice is being examined.
everlake.ie everlake.ie
Annuities are still getting the same bad wrap and I am willing to bet most ARF files don’t even contain an annuity comparison.

The question is phrased “you don’t want an annuity do you?. No, grand so”

Whilst back in April 2020 rates were still low

everlake.ie

Do You Need to Review Your ARF Strategy? - Everlake

More people invest in an Approved Retirement Fund (ARF), over the certainty of an annuity. But do you need to review your ARF strategy?
everlake.ie everlake.ie

Annuity rates have shot up more recently with the rise in bond yields but attitudes haven’t shifted at all.

I’ve been banging this drum for almost a year now

This post from November last year
everlake.ie

Is it time to look more closely at an annuity? - Everlake

It's time to rethink annuities over ARFs, or consider a hybrid model that combines both in a tax efficient manner and increases your options.
everlake.ie everlake.ie
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And you purchase annuities for clients for free? I'm struggling to see how there is no conflict with annuities but there is with ARFs? All about the ongoing fee?

It is an advisors job to show retiree's both options and talk through them with the client. If they don't, they aren't doing their job correctly.
 
Steven Barrett said:
And you purchase annuities for clients for free? I'm struggling to see how there is no conflict with annuities but there is with ARFs? All about the ongoing fee?

It is an advisors job to show retiree's both options and talk through them with the client. If they don't, they aren't doing their job correctly.
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An annuity doesn’t have an ongoing fee an ARF does, it’s really that simple

Its the adviser’s job to positively recommend the most suitable and appropriate option and manage conflicts of interest in favour of the client.

Clients shouldn’t have to pick from a range of brands and a range of products.

Professional advice means exercising professional judgment. I recommend this product, this fund, from this provider in writing on my PI policy.

I’m not selling shoes
 
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murphaph1 said:
That's really crazy. We have had a means of fairly comparing loans based on APR for decades yet no such consumer friendly mechanism exists in the pensions industry it seems.
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The problem with loans (and there's a similar but worse problem with pensions etc), is that the APR is made up number. It will rarely represent the actual cost to you, unless the entire term of the loan is on a fixed rate.
 
Marc said:
Its the adviser’s job to positively recommend the most suitable and appropriate option and manage conflicts of interest in favour of the client.

Clients shouldn’t have to pick from a range of brands and a range of products.

Professional advice means exercising professional judgment. I recommend this product, this fund, from this provider in writing on my PI policy.

I’m not selling shoes
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If you recommend an ARF to a client and they tell you that, having listened to your advice and read your reports and charts, they would prefer an annuity. Or vice versa. What do you do?
 
A report by mostly actuaries (not in the industry) about the pricing structures created by actuaries (in the industry).

A report that deliberately excludes the execution only pricing structures of ARFs available in the market.

This is (first) report on charges and is limited in scope. It covers only one product typefor investing the proceeds of a pension plan (ARFs sold through intermediaries by insurance companies) and does not fully address intermediary charges, which may be as much or more than the charges studied here.

But not less.

It's barely credible that the pension council members do not know what AAM readers do.
 
KOW said:
Less than a year ago I was exactly in the same boat. You seem to know what you want. Shop around for the best deal exactly the same as you would changing your car.
When changing the car you come across sales men, sales executives. sales managers. principals etc etc.
When setting up your ARF you will come across all types with an array of letters behind their names. RUN.
Keep it simple. You are only looking for a passive global fund with cash mix at a decent cost.

When you get sorted you will scratch your head and ask yourself who benefits from all the nonsense and you will come up with the answer.
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But are you buying a Mercedes or Nissan car? Both cars get your from A to B, but at very difference prices- Why doesn't the whole country just drive the cheapest car?
 
tictokboc said:
But are you buying a Mercedes or Nissan car? Both cars get your from A to B, but at very difference prices- Why doesn't the whole country just drive the cheapest car?
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tictokboc said:
But are you buying a Mercedes or Nissan car? Both cars get your from A to B, but at very difference prices- Why doesn't the whole country just drive the cheapest car?
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What does this mean? Your shopping around for a product/service. At the end of the day after research etc one has to make a choice based on the information gathered. Nobody is going to do it for you.
 
RedOnion said:
The first result is a broker and the 0.25% is their charge:
"We charge our clients a built-in annual fee of just 0.25% of their ARF fund value (regardless of the ARF fund size) levied directly from the ARF. Our overall services include..."
(Onequote.ie)

Why not just post the link since it beats all known AMCs?
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The language is a bit loose in that article, but careful reading shows a truer picture of the charges...
"

Typical Charging Example:​

Once you set up your ARF the “Fund Manager” and “Financial Advisor” charges will be expressed as a single AMC charge in your policy contract, so for example (450K) ARF investment) a 0.75% FMC + a 0.25% advisor service charge, would result in a total annual charge of 1.10% PA, displayed as a 1.00% AMC. However, a small additional operational charge may also exist e.g. Zurich PRISMA 3 has an additional operational AMC charge of: 0.05% PA. So in this example, the real AMC would amount to: 1.05% PA"

They define the charges as (AMC is used in both definitions, so could lead to confusion)....

"1. Annual Management Charge (AMC)
This is an annual charge levied by the Fund Manager for the ongoing investment management of your ARF funds. Depending on the fund type, it may also include additional nominal costs, which relate to the daily operation of the fund, such as accounting, legal, and regulatory fees. These charges tend to be very small (relative to the base AMC), but you should still insist on their full disclosure for a true cost comparison.

2. Financial Advisor Charge (Total AMC)
This is an annual support charge made payable to your Financial Advisor (again levied directly against your ARF fund) for the provision of ongoing strategic investment advice, together with any related legal and tax guidance over the lifetime of your ARF investment. With us, it also covers your ARF set-up!"

The "we charge... a built-in annual fee of just 0.25%", means the Financial Advisor Charge above.
 
KOW said:
What does this mean? Your shopping around for a product/service. At the end of the day after research etc one has to make a choice based on the information gathered. Nobody is going to do it for you.
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Why not ? Bonkers.ie does the leg work for utility and broadband providers. Why don't we have something similar for the largest investment decision many people are going to make in their lives ? Instead charges are cloaked in smoke and mirrors to protect vested interests (e.g. brokers) who are making a killing. Why is the average punter not being protected from sharks by the financial regulator ? Is our economy too small to allow transparency and fair pricing ?
 
Flybytheseat said:
Why not ? Bonkers.ie does the leg work for utility and broadband providers. Why don't we have something similar for the largest investment decision many people are going to make in their lives ? Instead charges are cloaked in smoke and mirrors to protect vested interests (e.g. brokers) who are making a killing. Why is the average punter not being protected from sharks by the financial regulator ? Is our economy too small to allow transparency and fair pricing ?
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That’s not really comparing like with like. Someone who’s managing one of my biggest assets doesn’t have to be the cheapest.
 
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