# RL360 Quantum - Proposed Pension for Expat



## Sagit

Hi All,

I recently investigated starting a pension plan from Dubai. 

The proposed pension fund is with RL360, based in the Isle of Man. The proposed term is 24 years.

- The key features including fees are here: http://www.rl360.com/generic/downloads/qu004.pdf
- The brochure is here: [broken link removed]

Some key points:
- There is an initial allocation period of 24 months. The committed premium must be paid each month for those 24 months, or the entire sum is forfeit.
- They give you bonuses along the way. For example, if you commit to 1000 euros each month for the first 24 months, when you make the initial deposit of 1000 euros in the first month, they give you 450% of 1000 euros as a bonus (so you would then have 5500 after one month, rather than the 1000 you put in)
- After 24 months, you can reduce the premium (or increase it).
- You can make ad-hoc lump sum payments.
It's a whole of life insurance policy
- You can withdraw at any time with penalties during the term, or any time after the term without penalties.
Figures are given for projected growth rates of 4%, 6%, 8%.
- There are over 100 funds to choose from and you can change these when you like
If a fund fails, you lose the money rather than RL360.

*EDITED FOR FEES:*
The fees are like this:

_Initial_ unit charge of 6% per year, to be taken throughout the premium term.
Contract charge of 0.125% per month
Policy fee 8 dollars per month
Annual fund management fee (.5%)
Financial advisor charge 0.125% per calendar quarter
 
Would appreciate your opinions!


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## elacsaplau

Hi Desert

I suppose there are a number of elements in choosing an appropriate pension arrangement, including tax efficiency, quality of investment choice, flexibility and charges.

I have not looked at the investment choice as in your case (not necessarily always), it is of secondary importance.

Obviously, I've no idea of your precise personal situation and goals but in general.....

1. Circumstances change. You are in Dubai now but you may not remain there forever and even if you do, your job in Dubai may change, the legislation in Dubai may change, etc., etc.

2. What is being proposed to you is an investment contract which really only makes any sense (because of its charging structure) if you pay the contributions for the full period of the term.

3. This is because the company is, in my view, taking extremely high charges in relation to your contributions in the first 2 years of your policy. Ordinarily, these charges are to pay for a very substantial commission to an intermediary and healthy profits for the company.

4. In essence, what is being proposed is a contract where RL360 gain a substantial profit up-front, the agent gets a substantial commission up front and you only get reasonable contractual terms if you continue paying for the full period of the contract. *And very very few people will actually do that.*

5. RL360 is using two types of units in its charging structure - initial units and accumulation units. The initial units are the units you purchase in the first 2 years of the contract *and have a management charge of 7.5% p.a. for every year the policy is in force and if you cash-in your policy, this 7.5% will be (broadly) taken for each unexpired year to the end date of the policy.*

6. I hope this helps explain the points made in your post but just to expand a little with one approximate example:
- say you were to pay the €1,000 per month for 24 months and you received the "bonus" of €4,500 - giving a total of €28,500;
- each year that the policy is in force, you will be charged 7.5% of this or more than €2,000; and
- if you wish to cancel the policy, you will effectively suffer a very substantial penalty - e.g. you can see from their literature, that if you cancel after 4 years, they would take a charge of 81% of the then value of the initial units.

_RL360 giveth and RL360 certainly taketh away!_

7. The problem with these type of contracts is that you do not have genuine flexibility. You are paying up front for a service for the next 24 years which you are unlikely to use.

8. I am not familiar with the tax regime in Dubai so just to say, the tax treatment of the proposed contract seems reasonable, but certainly not generous. It may be that it is the most tax effective structure to your pension arrangement at this time. However, legislation or your circumstances are likely to change (e.g. say you returned to Ireland, or got a job in Dubai with a company who sponsored a pension plan for its employees, etc.) and in taking advantage of any such improved "structural" options to your pension planning, you would presumably cease contributions to the RL plan with the consequent penalties, as discussed.

9. A lot of industries have their skeletons. You will no doubt be familiar with people who have been disappointed by savings and investment contracts. My sense is that one the greatest tarnishes on the assurance industry is due to this type of charging structure and so in my view you should "run, run as fast as you can".


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## Sagit

Wow, thanks for the analysis. Truth be told, my wife and I have already signed up for this but have only paid one installment of 1k (as we are in our first month of the policy). I would be more than happy to cut my losses and forfeit this sum at this point. 

I am very disappointed - my financial advisor seemed to be on my side. For example, we could have put up to 2k per month into this, but she advised only 1k in case we had buyers remorse and he advised us to build up cash as well. This seemed like honest advice. But obviously if the RL360 product that she sold us is extortionate, then she's not on our side. I also don't understand why it's a whole of life assurance policy (as we have a term insurance policy already). 


What kind of pension would you recommend for someone like me? My wife and I are just 31 each and really only starting out.


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## Jim2007

Desert said:


> Wow, thanks for the analysis. Truth be told, my wife and I have already signed up for this but have only paid one installment of 1k (as we are in our first month of the policy). I would be more than happy to cut my losses and forfeit this sum at this point.



Walk away from this, in fact better to run...  I've not done the math on it, but given at a well constructed portfolio should generate a return of between 6% - 8% pa and your are paying fees of about the same amount, I'd expect you will come out with very little over what you put in.



Desert said:


> I am very disappointed - my financial advisor seemed to be on my side. For example, we could have put up to 2k per month into this, but he advised only 1k in case we had buyers remorse and he advised us to build up cash as well. This seemed like honest advice. But obviously if the RL360 product that he sold us is extortionate, then he's not on our side.



This approach is actually a sales strategy, used by some companies...



Desert said:


> What kind of pension would you recommend for someone like me? My wife and I are just 31 each and really only starting out.



Given the tax situation where you are, stop thinking pension and start thinking wealth accumulation...  From your point of view there are two things you need to achieve - savings to live off on retirement and secondly some kind of insurance in the event of you becoming incapacitated before reaching retirement.


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## elacsaplau

Hi Desert

I actually had drafted a detailed reply but somehow managed to lose it.....sorry.

I've got to dash now so in brief, obviously I agree with Jim in terms of walking away from this.,

There is obviously the broader question of putting your retirement planning on an appropriate footing, but in the meantime I'd write to cancel the policy *immediately* and seek re-imbursement of the premium paid. It is possible that there is a "cooling off" period in Dubai (google this term and also look at the penultimate 2 paragraphs in left hand column of page 4 of the policy terms).


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## Sagit

Thanks all. There is no cooling off period but when I rang RL 360, I was informed that they consider cancellation requests on a case by case basis. My concern now is the financial advisor. She has set up a life insurance policy for us (and that is a decent deal) plus an offshore account for us. He will not be pleased with a cancellation and may seek to bill us for the previous meetings we've had (she said she would not bill us for setting up the account and for the meetings _if_ we went with a pension policy as then she would charge via commission). 

I am flabbergasted as she gave the distinct impression that fees were minimal - she explained that everyone gets a fee - her, the fund manager, rl360 - but she made it sound very minimal. And she projected average growth rates of 6% year on year after fees and inflation had been considered!


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## Steven Barrett

Desert

I only read your OP and was thinking to run away as fast as you can. Any investment that takes your first 2 years premiums is a no no. The reason the management charge is so high is the advisor is getting massive commission, it is probably 50% - 60% of first years premium. So your advisor is probably going to earn between €6,000 - €7,200 from your €1,000 a month. Still think he is on your side? 

Also, never mix life cover with pensions in the same plan. As you get older, the cost of the life cover increases expediently and eats into the value of your pension plan, right at the time when you are trying to accumulate as much money as possible. 

When you cancel, ask you advisor how much he was making off the policy. See what he says. 


Steven
www.bluewaterfp.ie


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## Sagit

SBarrett said:


> Desert
> 
> I only read your OP and was thinking to run away as fast as you can. Any investment that takes your first 2 years premiums is a no no. The reason the management charge is so high is the advisor is getting massive commission, it is probably 50% - 60% of first years premium. So your advisor is probably going to earn between €6,000 - €7,200 from your €1,000 a month. Still think he is on your side?
> 
> Also, never mix life cover with pensions in the same plan. As you get older, the cost of the life cover increases expediently and eats into the value of your pension plan, right at the time when you are trying to accumulate as much money as possible.
> 
> When you cancel, ask you advisor how much he was making off the policy. See what he says.
> 
> 
> Steven
> www.bluewaterfp.ie



Hi Steven, 

She says it is structured as a life assurance policy to make it tax efficient. If in the case that one of us dies before the policy matures the second policyholder would receive 101% of the value upon a death claim. The 1% is what makes it a life assurance and tax efficient policy. At least that's the explanation given.

The fees are like this:

_Initial_ unit charge of 6% per year, to be taken throughout the premium term.
Contract charge of 0.125% per month
Policy fee 8 dollars per month
Annual fund management fee (.5%)
Financial advisor charge 0.125% per calendar quarter
Quite worried now that there'll be financial repercussions vis-a-vis the advisor's hourly rate if we cancel.


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## elacsaplau

Desert

The point you make re it being a nominal life assurance policy is correct.

I'll revert later on what to say to your esteemed advisor! 

In the meantime, can you let me know what fund(s) are you invested in please?


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## Sagit

Certainly - Aberdeen liquidity (USD) lux, which is a fund suitable for those with a balanced risk profile (apparently)


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## elacsaplau

Hi Desert

You seem like a decent skin – but you may need to be prepared to be more assertive with your so-called advisor. What he has sold you is really awful and he should be told this in very clear terms.

Let me summarise my understanding of the position:

- He sold you a life assurance policy which you are happy with and for which he received a commission payment (likely to be in excess of the annual premium);

- He set up an offshore account for you (how hard can that be?);

- He signed you up for a completely inappropriate “pension” contract in which you are likely to lose €1,000 unless in the unlikely event that RL360 plays ball;

- The only reason the loss isn’t more than €1,000 is because your 6th sense kicked in and you got unanimous advice on this forum to run a mile from this product; and

- You are worried that your advisor will come looking for a fee!

Seriously are you crazy??!! This guy gives you crap advice that costs you money and you are worried of a fee claim from him?

If I were you, I would send him an e-mail listing all the points that you are unhappy with. From a tactical point, I would start out by seeking a full return of the contributions you made. This is actually legitimate as you simply would not have made these contributions had he been genuinely honest with you.

This actually would be my bottom line – but I sense you are more philosophical about this than I would be – so after a bit of hand-bagging, you might agree that your counter claims neutralise one another.

You can, of course, expect a robust defence of his position from your advisor. In addition to the loss of his commission, the essence of all this is that you are calling into question his professionalism and his integrity.  I expect that attempts will be made to blind you by science, etc.

Because of this, I would try to deal with him in writing. Depending on how this develops, you can seek guidance on how best to apply other options available to you – e.g. you could threaten to make a formal complaint to whatever regulatory authority is relevant, etc. (and arguably you should do this in order to help prevent others being similarly duped).

You will have worked out how bad I thought the proposed contract was from my initial post. What I didn’t realise then was that in addition to the crazy charges I knew about, there was an additional 0.5% p.a. charge for your beloved advisor and an additional 0.5% p.a. fund management charge. To be honest, these additional fees make it much worse than I had initially thought.

Also, in my initial post, I did not examine the investment element of the plan. I now know that the Aberdeen Liquidity Fund was recommended to you. I take it that this fund choice was not recommended as part of some sort of short term tactical asset allocation plan but as a suitable long-term fund. And so is this fund suitable to your long-term needs? You’ve guessed it!!

The link below is to the relevant page on the underlying fund manager’s website. You are a long-term investor so I am frankly bewildered to learn where your money has gone to work – see the critical question below in italics.

http://www.aberdeen-asset.com/aam.nsf/luxembourginst/liquidity

_What are liquidity funds and who should invest in them?
Liquidity funds are a convenient vehicle in which to invest short term cash._

And if you are in any doubt of the implications of this, you can follow the link on this page to get the performance for your chosen fund – and note an annual gross return before any our beloved fees of c. 1% p.a. over the last number of years.

In short, if someone had gone out of his way to structure a more inappropriate investment, it would frankly have been difficult to do. Hopefully, you will now be prepared to tell him where to put any fee demand?!!!


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## Sagit

Thanks, thanks, and thanks again. Your post has emboldened me and given me a strategy from which to approach this issue. I've just drafted an email!

Interestingly, this advisor is part of a small professional association that is separate from the firm where she is currently based. In the news section of her association's website, I see that the association recently entered into a partnership with a certain fund called - you guessed it! I have been incredibly naive, yet thought I was being so careful. Dubai isn't a regulated place, so it seems the firm that the advisor is based in cannot be threatened for giving dodgy advice.

My wife and I were just trying to do the responsible thing and not wait too long to start our pension. It's the mantra on sites like Business Insider to not delay, due to the power of compound interest, etc. Yet I can now see, quite clearly, that there can be no compound interest growth on my RL360 policy in the short term given the way it's structured. And I have lost all confidence in it at this point.


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## Steven Barrett

Desert

I echo what elacsaplau has said. The charges on this pension are outlandish. €60 a month taken out off your premium and 2.5% off your fund value. If you are only getting 94% of your premium invested, I would suspect that a renewal commission kicks in in year 2.

And how an advisor can tell someone in their early 30's to stick their money in cash is beyond me. Even if you were the most risk adverse person in the world, inflation is a massive danger for someone with a 30 year term.

Don't worry about them trying to charge you an hourly rate. They did an atrocious job in advising you and shouldn't be paid. It's part of the commission world that you put in work and don't get paid for it, so she'll live with losing your business. She'll make it up elsewhere.

Living in Dubai, am I right in saying that your earnings are tax free anyway? So with no tax relief on the premiums, why not invest in ETF's or the like and build up some cash too? Much lower costs and you can access the funds whenever you want.



Steven
www.bluewaterfp.ie


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## Sagit

Hi Steven,

I've been properly educating myself since the first replies to this thread started coming through. I am so grateful for all of your advice. And yes, ETFs are looking like a no-brainer for me at this stage. I'm currently reading a kindle book by Andrew Hallam and it concurs and expands upon what all of you are saying.


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## elacsaplau

Hey Desert

You're welcome! And please don't be too hard on yourself, in the long-term, this is just a minor hiccup. It seems to me that you are very well positioned financially.

What's really disappointing is that this type of product continues to be sold.

And clearly there are many clients who have fallen foul of this, otherwise they wouldn't continue to be able to sell it.


And then we come to those who sell such products. I think a large part of the problem is that the fee relationship between client and his financial advisor is generally not as transparent and as well understood as in other professions. For example, my sense is that you have no idea what commission has been and will be paid to your advisor on an *initial* and *on-going* basis for establishing your life assurance and pension contracts. This reduced clarity is in contrast with other professions - you visit your GP, you pay his fee and you can have a very high degree of confidence that you will, in return, receive absolutely unbiased advice. Could you imagine now unnerving it would be if at the end of a consultation you enquire "how much do I owe you, Doc?" and he goes "nay, don't worry, you buy this medication and we'll call it quits"?!


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## Steven Barrett

elacsaplau said:


> This reduced clarity is in contrast with other professions - you visit your GP, you pay his fee and you can have a very high degree of probability that you will, in return, receive absolutely unbiased advice. Could you imagine now unnerving it would be if at the end of a consultation and you enquire "how much do I owe you, Doc?" and he goes "nay, don't worry, you buy this medication and we'll call it quits"?!



I use that analogy all the time!! 

Like with the banks in Ireland and some of the bigger brokers, the staff are under strict instructions to sell and move on. Their remuneration is based on initial commission only, so they try to get as much up front. 

Modern thinking advisors prefer to develop long term relationships with clients, recognising that while they may not maximise income in year 1, you will have a profitable relationship with your clients over the years. From a personal point of view, you also get great pleasure when you see a client make a major financial purchase or decision, something that you may have been working with them on for a number of years beforehand. 


Steven
www.bluewaterfp.ie


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## Jim2007

Desert said:


> In the news section of her association's website, I see that the association recently entered into a partnership with a certain fund called - you guessed it!



Just for other people reading this, Aberdeen Asset Management is a reputable funds provider and there is nothing wrong with the fund per say, it is just the wrong fund for you.


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## Sagit

Bronte said:


> As common Desert, you are 31 years old and old enough to know sales guys are never on your side !


The thing is though, I didn't engage her to sell me anything. We had several lengthy meetings over several weeks. We approached her and had very frank discussions. I was also looking up loads of articles along the lines of "how to know when you're financial advisor is not on your side", and she seemed to be playing a blinder. Based on the desired future that my wife and I outlined to her, we asked her to make recommendations to make it a reality, she came back to us and recommended this policy, not as a salesman, but as an advisor (of course we now know she is a salesperson masquerading as an advisor).
It came down to this: if I'm sick and I go to the doctor, I tend to assume they    know what they're doing and have my interests at heart. I naively assumed it was the same with this advisor.



> In relation to being naive, and Dubai, don't assume that Irish regulation would be much better, people get conned everyday into these products.  Not sure what Business Insider is, but while it is true that you can never start your pension early enough, do they also have articles explaining how to pick a correct product.  Is their website full of ads for different providers and is Business Insider therefore biased.


Actually, Business Insider is just an online newspaper full of little articles. They never extol a product - it's just a constant mantra of "start your pension early" - but they never really explain how exactly you're supposed to do that. That's why we approached the "advisor" - to actualize the idea of starting a pension.



elacsaplau said:


> Hey Desert
> 
> You're welcome! And please don't be too hard on yourself, in the long-term, this is just a minor hiccup. It seems to me that you are very well positioned financially.
> 
> What's really disappointing is that this type of product continues to be sold.
> 
> And then we come to those who sell such products. I think a large part of the problem is that the fee relationship between client and his financial advisor is generally not as transparent and as well understood as in other professions. For example, my sense is that you have no idea what commission has been and will be paid to your advisor on an *initial* and *on-going* basis for establishing your life assurance and pension contracts. This reduced clarity is in contrast with other professions - you visit your GP, you pay his fee and you can have a very high degree of confidence that you will, in return, receive absolutely unbiased advice. Could you imagine now unnerving it would be if at the end of a consultation you enquire "how much do I owe you, Doc?" and he goes "nay, don't worry, you buy this medication and we'll call it quits"?!



Yep, that's it in a nutshell. We are in a decent position financially, in that we net around 90k per year have 20k in savings, no debts, but no assets either. This year and next year we plan on saving 100k, and maintain a 50k per year rate of savings for as long as possible thereafter while we are expats. The question is, what the heck do we do with those savings?

So, we've _now_decided to split it 40:60, i.e. 40% goes to pension (soon to be European ETF, a global ETF, and low-interest first world government bond index), while 60% stays in cash, with a view to preparing to buy a modest home for ourselves, somewhere, sometime. The idea is that we would buy a home with a very small mortgage. 



Jim2007 said:


> Just for other people reading this, Aberdeen Asset Management is a reputable funds provider and there is nothing wrong with the fund per say, it is just the wrong fund for you.


Yes, thanks for clarifying that. I do not mean to disparage Aberdeen.


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## Sagit

General update:

I've requested that the policy be closed. The company is being a bit vague, but it seems I might get reimbursed after all. 
The advisor was a bit upset! She said she took it "personally" and felt that "it's a missed opportunity" and was a bit short at the end of the phone call. 

Anyway, time to move on!

I've decided to go the ETF route. You folks have all been so helpful here, that I hope you don't mind if I ask a few more questions on my thread in the ETF forum here.


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## Steven Barrett

She won't last long in the sales game if she takes every rejection personally. I'd say she's more upset with the loss of €6k commission than anything else.


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