# Charges for Executive Pension (Zurich)



## time to plan (10 Feb 2021)

Just looking to see if I'm missing anything re charges for an Executive Pension I'm setting up (I'm a proprietary director).

I've not gone via a broker but have approached Zurich directly and spoke to a Certified Financial Planner, who is a 'Tied Agent'. I'm happy that I'll only get advice around Zurich products.

I'm particularly interested in charges. Zurich will reduce its AMC from 1.0% to 0.75%. I have a list of all funds, including those that have an additional AMC (funds managed by 3rd party companies e.g. Blackrock). Allocation is 100%. Are there any other charges I should be on the lookout for?

Thanks in advance.


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## Marc (10 Feb 2021)

The headline annual management  charge is not the real cost

There are hidden charges that are not disclosed because Irish pensions are not subject to the same disclosure requirements as direct investments.

You can get a better idea of the likely real charges from this document



this document is prepared under the PRIIPs regulations that do not apply to an Irish pension fund.
The levy that applies to personal investments of 1% has been amortised over 7 years to give an upfront cost of 0.15%pa but it is reasonable to leave that in, since the pension doesn’t come free.

A similar level (although these regulations have still not been brought together) of disclosure applies to UCITS funds

so we can make a comparison with the Zurich document and say Vanguard’s funds here



			https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf
		


so now we are accounting directly for underlying transaction costs on a similar disclosure basis.

for many funds the drag from transaction costs (stamp duty, bid offer spread, brokerage charges etc) are on the order of the annual management charge due to high portfolio turnover (picking stocks in an effort to beat the market)

in numerous studies turnover of funds has been found to average around 80% of holdings on an annual basis. A good rule of thumb is the real cost of your fund is about twice the annual management charge.

this means that for a fund invested in Irish equity for example they are adding at least 0.8%pa to the running costs just from stamp duty (1% stamp duty x 80% turnover)

In the vanguard document substitute in the column PI the following pension wrapper charge

Exec pension/buy out bond etc 0.40%pa
(Subject to a min €300pa so not suitable for smaller pensions under say €80k)
PRSA 0.50%
advice fees are payable in addition but are agreed
with the investor rather than a third party commission at the control of the product provider


and now you should be able to see how much margin is built into an Irish unit linked contract for sales commission and life company profit.

I’m not engaging with every petty attack on my posts by a particular group of posters my reasons are set out in this post



Marc Westlake CFP®, TEP, APFS, EFP ,QFA
CHARTERED, CERTIFIED & EUROPEAN FINANCIAL PLANNER™ professional
AND REGISTERED TRUST & ESTATE PRACTITIONER









						Home - Everlake
					

Expert financial planning, combined with ethical, transparent advice. Add value and meaning to your wealth, at every stage in your financial journey.




					www.globalwealth.ie


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## Gordon Gekko (10 Feb 2021)

That’s an interesting document; is it accurate though? The entry and trading costs might be helpful but are the 1% levy and the maximum AMC baked in there?

For example, I’ve a PRB/BOB with an AMC of 0.5%. I don’t for a minute think that the total costs are 0.5%, but I’d be surprised if they’re more than 1%.


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## LDFerguson (10 Feb 2021)

time to plan said:


> Just looking to see if I'm missing anything re charges for an Executive Pension I'm setting up (I'm a proprietary director).
> 
> I've not gone via a broker but have approached Zurich directly and spoke to a Certified Financial Planner, who is a 'Tied Agent'. I'm happy that I'll only get advice around Zurich products.
> 
> ...



Tied agents of the pension companies rarely offer the company's best available charging structures unless put under pressure.  What age are you and what's the size of the contribution?  Is it a once-off lump sum or regular contribution?  

Regards, 

Liam
www.ferga.com


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## Zenith63 (10 Feb 2021)

Marc said:


> Yes the hidden charges that are not disclosed because Irish pensions are not subject to the same disclosure requirements as direct investments.
> 
> You can get a better idea of the likely real charges from this document


Interesting doc thanks Marc. Though even after looking at some of the funds my pension is in, I’m not sure I’m much wiser for it. The way the information as presented doesn’t lend itself or the average person interpreting it.

Do we really have much control over these internal fund costs though? If you could choose one S&P500 fund over another with higher internal costs then great, but that’s not an option and choosing funds based on lowest internal costs instead of diversity, risk tolerance etc wouldn’t make much sense.


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## time to plan (11 Feb 2021)

LDFerguson said:


> Tied agents of the pension companies rarely offer the company's best available charging structures unless put under pressure.  What age are you and what's the size of the contribution?  Is it a once-off lump sum or regular contribution?
> 
> Regards,
> 
> Liam



Thanks, Liam (and others) for responding. 

I'm 48, no lump sum (just starting pension now), putting in €4,000 per month. I'm always happy to exert some pressure to get a better deal, and also to look around to see if a competitor (not a tied agent) can beat it. I'm also trying to work out if there are other charges or commissions I haven't thought of, or is it all so opaque, it's difficult to get a handle on?


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## GSheehy (11 Feb 2021)

time to plan said:


> Are there any other charges I should be on the lookout for?



I would guess that there's a policy fee of €3.50 per month on the contract you've been offered.

There's the €8 pa Pension Authority Fee.

Plus, I'd be surprised if there weren't exit charges in the first 5 years of the contract. Some folk don't mind exit charges as they think they won't have a reason to move within the penalty period. But, they're a good earner for Life & Pension companies.

You'll probably have to ask what the commission is as there's no obligation on them to disclose it to you.


Gerard

www.prsa.ie


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## Zenith63 (11 Feb 2021)

FWIW these are my fees, ignoring internal fund fees, with a direct Zurich exec pension -

Contribution Allocation Rate - 100%
Annual Management Charge - 0.75%
€3.50 policy fee per month
Early Encashment Penalties in the first five years: 5% Yr One, 4% Yr Two, 3% Yr Three, 2% Yr Four, 1% Yr Five, 0% Yr Six+
Four free fund switches per policy year
Fund choice from Zurich's full fund range
Zurich Trustee Services are normally €5 per month.  However, this charge is currently waived.

Not too worried about the policy fee or trustee fee, they’re both a pittance compared to the AMC once your pot heads over say €50k.

I didn’t find much better value when I looked to be honest. A reputable financial advisory firm, who gave some really good advice in fairness, recommended the same Zurich Exec pension but with a 1.25% AMC to cover their advisory costs. I would have ended up in the exact same funds but with 0.5% less of my pension pot per annum.


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## time to plan (11 Feb 2021)

Zenith63 said:


> FWIW these are my fees, ignoring internal fund fees, with a direct Zurich exec pension -
> 
> Contribution Allocation Rate - 100%
> Annual Management Charge - 0.75%
> ...



Thanks Gerard and thanks Zenith (again).

I'm not worried about early encashment. Those other fees are pretty small. It looks like I'm not far off the mark here, but always open to cutting non-trivial costs. I'll check about commission as well.


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## LDFerguson (11 Feb 2021)

time to plan said:


> Thanks, Liam (and others) for responding.
> 
> I'm 48, no lump sum (just starting pension now), putting in €4,000 per month. I'm always happy to exert some pressure to get a better deal, and also to look around to see if a competitor (not a tied agent) can beat it. I'm also trying to work out if there are other charges or commissions I haven't thought of, or is it all so opaque, it's difficult to get a handle on?



Assuming that you want Zurich Life, that's about as good as you'll get for a monthly contribution.  You'd have to look at other companies for lower charges, and that's a bigger decision with more variables to consider.  I'd second everything that has been said in subsequent posts by @GSheehy and @Zenith63.  Make sure that the fee for trusteeship is being picked up by Zurich, be aware of the policy fee, Pensions Authority fee and early exit charges.  Ask the tied agent to disclose commission as commission disclosure is not an obligation on Executive Pension contracts.  After 5 years when you've come out of the early exit charge period, have a look then as you should be able to get lower annual charges on the lump sum you've accumulated by then.


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## Marc (11 Feb 2021)

At that level of contribution you will still be better off with an "unbundled" scheme without a life co.

Save up your first years contribution in the company and pay a lump sum at the end of the year to kick off the scheme then add annually to the plan at around €50kpa you will soon cover the minimum fee.

So you would be paying
0.40% for the pension wrapper
around 0.18% for investment funds (based on Vanguard Global Stock Index investor share class) 
0.58% leaves room to pay an adviser to make sure you don't make any mistakes


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## time to plan (11 Feb 2021)

Marc said:


> At that level of contribution you will still be better off with an "unbundled" scheme without a life co.
> 
> Save up your first years contribution in the company and pay a lump sum at the end of the year to kick off the scheme then add annually to the plan at around €50kpa you will soon cover the minimum fee.
> 
> ...


Thanks, Marc.


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## Dave Vanian (11 Feb 2021)

Marc said:


> At that level of contribution you will still be better off with an "unbundled" scheme without a life co.
> 
> Save up your first years contribution in the company and pay a lump sum at the end of the year to kick off the scheme then add annually to the plan at around €50kpa you will soon cover the minimum fee.
> 
> ...



The saving here looks like 0.17% per year compared to what the OP already been offered.  And the €3.50 per month policy fee.  

The broker would have to charge something on top of this, surely?  What would the broker's charge be?


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## Bern78 (11 Feb 2021)

Sorry to hijack thread but what do people think of these fees on a pension- it’s a company one:

allocation rate 105.25
AMC 0.75
Policy fee :3.49 per month

no other fees or so they told me- I didn’t specifically ask about early encasing fees- not sure if they exist for a company scheme.

I understand the allocation rate but why do they give everyone diff ones.


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## Zenith63 (11 Feb 2021)

Marc said:


> At that level of contribution you will still be better off with an "unbundled" scheme without a life co.
> 
> Save up your first years contribution in the company and pay a lump sum at the end of the year to kick off the scheme then add annually to the plan at around €50kpa you will soon cover the minimum fee.
> 
> ...



When you say unbundled, you're referring to a Small Self-Administered Pension Schemes (SSAS) right?  My understanding when I setup my Exec pension, from posts here and articles elsewhere, was that the costs of these schemes meant your pension pot needed to be €200k or higher to cover the fixed annual costs.  I guess you wouldn't agree?  I understand the big cost of a SSAS is the annual trustee fee which can be a few thousand, is that included in your figures or have I got that wrong?

My take at the time was I should setup an Exec pension, build the pot up to €200-300k and then consider a SSAS if I wanted to go that route.

And thanks again for your input!


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## Zenith63 (12 Feb 2021)

I wonder has anybody else on the forum setup a SSAS and could share some information on the costs they had to pay?  It would be interesting to put them side-by-side with the likes of an Exec pension and see where the crossover point is etc.


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## time to plan (12 Feb 2021)

I've now got some more documentation so there are a couple of other things I'm trying to understand.

1. Commission:

Terms of Business doc states maximum up front and ongoing commissions. Does this description of upfront and ongoing commission mean that my funds are reduced to pay the commission, or is it just advice to me so that I understand that the agent is receiving commission from Zurich, so is not an independent adviser?

2. Bid / Offer prices
What is the effect of Bid / Offer prices on my fund if any?

Overall I can see that there is a 0.75% AMX and 100% allocation, but I'm looking to understand whether there are any gotchas for my pension in the commission and bid / offer prices. Sorry if these are basic questions.


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## Marc (12 Feb 2021)

Zenith63 said:


> When you say unbundled, you're referring to a Small Self-Administered Pension Schemes (SSAS) right?  My understanding when I setup my Exec pension, from posts here and articles elsewhere, was that the costs of these schemes meant your pension pot needed to be €200k or higher to cover the fixed annual costs.  I guess you wouldn't agree?  I understand the big cost of a SSAS is the annual trustee fee which can be a few thousand, is that included in your figures or have I got that wrong?
> 
> My take at the time was I should setup an Exec pension, build the pot up to €200-300k and then consider a SSAS if I wanted to go that route.
> 
> And thanks again for your input!



The old posts are out of date.

The fixed cost is €300 or 0.40% therefore the breakeven point is €75,000.

However, that is the breakeven with the fixed costs, and you are really trying to compare with the pretend cost of an insured scheme which is hiding the real total cost of the pension and therefore no accurate comparison can really be made.

I’m not remotely prepared to accept that 0.75% amc is the real cost


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## Dave Vanian (13 Feb 2021)

Marc said:


> The old posts are out of date.
> 
> The fixed cost is €300 or 0.40% therefore the breakeven point is €75,000.
> 
> ...



The OP in this thread quoted charges that included the tied agent's commission.  From what I can see, you're showing charges that exclude the broker's fee/commission.  That also makes it impossible for anyone to compare.  On top of the charges that you're talking about here, what's the broker fee / commission?


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## GSheehy (13 Feb 2021)

time to plan said:


> Overall I can see that there is a 0.75% AMX and 100% allocation, but I'm looking to understand whether there are any gotchas for my pension in the commission and bid / offer prices. Sorry if these are basic questions.



When you asked the direct agent what commission he/she was going to earn from your transaction did he/she tell you how much it was, or are they refusing to disclose that?

Gerard

www.prsa.ie


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## time to plan (13 Feb 2021)

GSheehy said:


> When you asked the direct agent what commission he/she was going to earn from your transaction did he/she tell you how much it was, or are they refusing to disclose that?
> 
> Gerard


They said zero commission. I’m just a naturally suspicious person. But also, having been told there is 100% allocation and 0.75% AMC, I’m wondering whether commission is relevant. Is it a sepearste potential charge from those two factors?


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## Zenith63 (13 Feb 2021)

GSheehy said:


> When you asked the direct agent what commission he/she was going to earn from your transaction did he/she tell you how much it was, or are they refusing to disclose that?


Does that actually matter?  I presume the commission comes out of the AMC, in which case whether the provider gives the agent all of it or none of it makes no difference to us punters, right?


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## GSheehy (13 Feb 2021)

Zenith63 said:


> Does that actually matter?  I presume the commission comes out of the AMC, in which case whether the provider gives the agent all of it or none of it makes no difference to us punters, right?



I doesn't matter at all, if you're happy to deal with someone who isn't giving you all the information you need to make an informed decision.


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## time to plan (13 Feb 2021)

Zenith63 said:


> Does that actually matter?  I presume the commission comes out of the AMC, in which case whether the provider gives the agent all of it or none of it makes no difference to us punters, right?


That’s my assumption too, but always best check your assumptions.
I’m also trying to work out the implications of the Bid / Offer price spread on a fund.


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## Zenith63 (13 Feb 2021)

GSheehy said:


> I doesn't matter at all, if you're happy to deal with someone who isn't giving you all the information you need to make an informed decision.


Perhaps I’m missing something, but what information am I missing?  The AMC is say 0.75%, if that is split 50/50 with the agent or 100/0 makes literally no difference to me, right?


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## time to plan (13 Feb 2021)

GSheehy said:


> I doesn't matter at all, if you're happy to deal with someone who isn't giving you all the information you need to make an informed decision.


From my perspective, I’m not looking for advice, just to set up a pension. But I’ll check out LA Brokers.


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## GSheehy (13 Feb 2021)

@Zenith63 

You're missing this:



time to plan said:


> They said zero commission.



Do you believe that? That the tied agent is doing this for nothing?


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## time to plan (13 Feb 2021)

GSheehy said:


> @Zenith63
> 
> You're missing this:
> 
> ...



I can’t say I remember the exact wording of the conversation but it was focussed on whether there were any charges that affected my fund beyond AMC and allocation. He told me he gets paid for selling. I would like to understand the impact of the Bid / Offer price gap. .


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## Zenith63 (13 Feb 2021)

GSheehy said:


> @Zenith63
> 
> You're missing this:
> 
> ...




I know nothing about how the people in this industry are compensated to be honest, I’d assume similar to my own that there is commission involved.

But you’re saying that my decision would be influenced by knowing what the commission paid is and I don’t see how?  I can see that when dealing with an independent financial advisor that is important, because their commission structure might help you determine if there is a bias towards one pension provider over another. However when you’re dealing directly with a single pension provider, that bias cannot be there, you’ve already chosen that provider.


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## GSheehy (13 Feb 2021)

Zenith63 said:


> I know nothing about how the people in this industry are compensated to be honest, I’d assume similar to my own that there is commission involved.
> 
> But you’re saying that my decision would be influenced by knowing what the commission paid is and I don’t see how?  I can see that when dealing with an independent financial advisor that is important, because their commission structure might help you determine if there is a bias towards one pension provider over another. However when you’re dealing directly with a single pension provider, that bias cannot be there, you’ve already chosen that provider.



Of course your decision is influenced by what the commission paid is, the charging structure you receive is a reflection of the commission structure.

That holds true for all distribution channels.

Gerard

www.prsa.ie


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## Zenith63 (13 Feb 2021)

GSheehy said:


> Of course your decision is influenced by what the commission paid is, the charging structure you receive is a reflection of the commission structure.
> 
> That holds true for all distribution channels.
> 
> ...


With respect Gerard, you’re saying our decision should be influenced by this information, I think it is irrelevant and irrational to allow it to do so or to even concern yourself with it.  Again only in the case where you are dealing directly with a pension provider, it is highly relevant when dealing with independent advisors and transparency here is critical.

Where am I wrong in this logic?


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## Marc (13 Feb 2021)

I would certainly agree with this line of reasoning.

Q: What are the real costs of this contract?
A: We are not required to tell you so we are going to pretend it is just 0.75%

OP: OK let's make all of our comparisons as if the 0.75%pa was the real charge because the salesman, who literally can't offer me an alternative and who is clearly being paid to sell me ONLY this contract, has told me that's what I'm paying.

I’ll never understand why, when you can obtain a demonstrable better quality pension (more choice and transparency) for a lower cost that anyone would continue to pursue this line of reasoning.

I wouldn't buy a TV like this let alone a pension


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## time to plan (13 Feb 2021)

Can anyone advise as to the implications of the bid / offer price gap? Thanks in advance.


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## Marc (13 Feb 2021)

It depends what you are buying

some funds are literally direct stock portfolios so the insurance company is paying stamp duty and brokerage commissions to buy a concentrated portfolio and then “unitising” this to create its own fund with a price.

so the more the fund is turned over (trying to beat the market) the more you are exposed to transaction costs inside the fund. So that’s one place spreads directly hurt your return.

since you could buy a low cost index fund to achieve the same result it is questionable why any prudent investor would ever go down the first route.

secondly you might purchase an externally managed fund.
Typically you will be buying a “mirror fund” so the insurance company is creating a unit price for its version of the underlying fund. This is clearly adding a layer of costs compared to the directly invested original fund.

I looked at this question recently and found that Fidelity funds via Irish Life had an effective total ongoing annual cost of over 3%pa and underperformed the direct investment which could have been purchased in Luxembourg as a result.

so, the only way to know what you are actually paying here is to establish your own pension trust, drop in a dealing and custody account and purchase the underlying investments directly.

you will be able to access audited report and accounts for each fund and a KIID document which discloses the real charges.

none of this is possible with a insurance company and you are trying to find an answer to a question that is deliberately being withheld.

If knowing how much you are really paying in charges is important, then a product from an insurance company that simply doesn’t have to tell you can’t be right answer.

On that basis alone most people would run a mile surely?


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## Zenith63 (13 Feb 2021)

Marc said:


> I’ll never understand why, when you can obtain a demonstrable better quality pension (more choice and transparency) for a lower cost that anyone would continue to pursue this line of reasoning.


Thanks Marc, I think this actually gets to the nub of the conversation; how can we demonstrate which pensions are actually the best options for people on AAM.  I don't think the discussion of whether an agent gets 50/50 or 75/25 split from a clearly advertised AMC adds a jot to that discussion, in fact it distracts from it.

So getting back to it, does anybody have the fee structure for an SSAS they've setup so we can compare to the likes of the EPP I've outlined above?


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## Sarenco (13 Feb 2021)

Marc said:


> In the vanguard document substitute in the column PI the following pension wrapper charge
> 
> Exec pension/buy out bond etc 0.40%pa
> PRSA 0.50%pa
> (Subject to a min €300pa so not suitable for smaller pensions under say €80k)


So that's a total cost to an investor of 0.70% (0.30% + 0.40%) to invest in a global equity tracker through an unbundled pension wrapper.

Is that correct?  Or are there any advisory fees or commissions that aren't being mentioned?


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## Dave Vanian (13 Feb 2021)

Sarenco said:


> So that's a total cost to an investor of 0.70% (0.30% + 0.40%) to invest in a global equity tracker through an unbundled pension wrapper.
> 
> Is that correct?  Or are there any advisory fees or commissions that aren't being mentioned?



I've asked Marc the same question twice in this thread and so far he hasn't replied.  So while he seems keen to suggest that life insurance companies aren't disclosing all their charges compared to "unbundled" pensions, we don't know the broker fee / commissions involved with the unbundled pension plans, which are an additional charge.


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## SGWidow (13 Feb 2021)

Understood Dave

Last week I asked another adviser a specific question re charges - no response.

I repeated the question in a separate thread this morning - again no response.

I genuinely believe that advisers are reluctant to answer specific questions regarding charges which is a pity.


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## Dave Vanian (13 Feb 2021)

This thread does make me think.  

We have a Zurich Life tied agent claiming that they're working for zero commission.  

For all other financial services products, commission disclosure has been mandatory for years.  But due to a loophole in that legislation, commission disclosure is not mandatory on Executive Pensions.  Is it really acceptable for a salesman to hide behind that loophole and refuse to disclose commission just because they can get away with it when selling this particular type of product?  Several people on here seem to think it is.  

We have a broker saying that unbundled products are better and more transparent, but not saying how much the additional broker commission / fee is, thus only disclosing some of the charges.    

Is it any wonder why the public is wary of tied agents and brokers?


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## time to plan (13 Feb 2021)

Dave Vanian said:


> This thread does make me think.
> 
> We have a Zurich Life tied agent claiming that they're working for zero commission.
> 
> ...


I think what I really want to know is the  total cost. I put money in. Hopefully there is growth which add to the money put in. Then deducted from that sub total are costs. There are some one off costs on entry (e.g. reduction in allocation) or exit and some recurrent (e.g. AMC, trusteeship fees). I’m not sure commission comes into it as  an additional cost item variable as it is really an operating cost for Zurich, accepting that it must impact on the AMC etc.

What I don’t understand is the Bid / Offer price gap. If it is 5%, is in effectively a 5% one off charge on all money put into a fund (or taken out if you prefer to look at it that way)?


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## RedOnion (13 Feb 2021)

time to plan said:


> What I don’t understand is the Bid / Offer price gap. If it is 5%, is in effectively a 5% one off charge on all money put into a fund (or taken out if you prefer to look at it that way)?


You need to find out if it applies to your contract or not.
It mainly applies to older contracts, and continues to be published by Zurich for those older contracts where it applies.


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## Gordon Gekko (13 Feb 2021)

I’ve money with them and one of the features is no bid/offer spread.

Advisors like Marc seem to take the worst life company contracts and compare them with incomplete numbers for their own offering.

If get access to the 0.4% wholesale rate for an Executive Pension and buy ETFs, how much is Marc charging me and how much is the stockbroker charging me? And where is my money?


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## time to plan (13 Feb 2021)

Gordon Gekko said:


> I’ve money with them and one of the features is no bid/offer spread.
> 
> Advisors like Marc seem to take the worst life company contracts and compare them with incomplete numbers for their own offering.
> 
> If get access to the 0.4% wholesale rate for an Executive Pension and buy ETFs, how much is Marc charging me and how much is the stockbroker charging me? And where is my money?


Thank you. I will check for that in my contract. I’m that case 0.75% AMC and 100% allocation seems pretty good. Will have a quick scout around to see if a discount broker can beat it and report back.


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## Gordon Gekko (13 Feb 2021)

time to plan said:


> Thank you. I will check for that in my contract. I’m that case 0.75% AMC and 100% allocation seems pretty good. Will have a quick scout around to see if a discount broker can beat it and report back.



I don’t think you will.

Personally, I’d be very happy to have an Executive Pension through Zurich Life at 0.75%. Are there other costs behind the scenes? Of course there are. The underlying shares have to be traded etc. But I’d have more faith in Zurich Life doing it on a massive institutional scale and extracting efficiencies than I would dealing with most Irish brokers.


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## Marc (13 Feb 2021)

Just so we are all clear then

You are not paying 0.75%pa. We don’t know what you are paying, but it’s not 0.75%pa.
You could obtain a more transparent contract for 0.40%pa plus underlying fund costs which reflect the investment choices you wish to make and which are more flexible, more transparent and offer considerably more choice with access to around 10,000 investment funds.

You can negotiate your advice  fees directly with your adviser to reflect the risk to their business and the ongoing commitment you are looking for in terms of ongoing service.
You can have your assets held in custody with one of the World’s most secure custodians with around $2 trillion in custody assets and who’s parent has over $200 trillion in custody assets and is the custodian bank for the Federal Reserve.
Or
You can have a contract which is opaque, is not required to the disclose the true costs so plainly doesn’t, does not clearly disclose the sales commissions and which is held on the balance sheet of an insurance company so that if the balloon goes up, you are just in a long line of creditors. Equitable Life?

Those are the choices in Ireland today and increasingly smart investors are choosing the former over the latter.


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## Gordon Gekko (13 Feb 2021)

Marc said:


> Just so we are all clear then
> 
> You are not paying 0.75%pa. We don’t know what you are paying, but it’s not 0.75%pa.
> You could obtain a more transparent contract for 0.40%pa plus underlying fund costs which reflect the investment choices you wish to make and which are more flexible, more transparent and offer considerably more choice with access to around 10,000 investment funds.
> ...



This is just more hot air unfortunately and yet again doesn’t answer the question that’s been asked by many people on many different occasions.

Marc, typically what would those underlying fund costs and additional advice fees look like?

Say for €100k, €300k, and €1m?


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## time to plan (13 Feb 2021)

Marc said:


> Just so we are all clear then
> 
> You are not paying 0.75%pa. We don’t know what you are paying, but it’s not 0.75%pa.
> You could obtain a more transparent contract for 0.40%pa plus underlying fund costs which reflect the investment choices you wish to make and which are more flexible, more transparent and offer considerably more choice with access to around 10,000 investment funds.
> ...


Why am I not paying 0.75%? Zurich has costs. Building rental, staff, advertising. Why is commission any different?


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## Marc (13 Feb 2021)

Charges for Executive Pension (Zurich)
					

Just looking to see if I'm missing anything re charges for an Executive Pension I'm setting up (I'm a proprietary director).  I've not gone via a broker but have approached Zurich directly and spoke to a Certified Financial Planner, who is a 'Tied Agent'. I'm happy that I'll only get advice...



					www.askaboutmoney.com


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## SPC100 (14 Feb 2021)

Assuming you are going to invest in one of their passive funds you can calculate the historic cost....This is how I would approach the problem.

Get unit prices for the fund, say 1, 5 and ten years ago.
Get prices for the underlying index on the same days.

Compare the return the fund and the index got. The difference is the drag/cost added by zurich.

If you are choosing an active fund then this strategy will not work.


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## SPC100 (14 Feb 2021)

Other notes on costs - Numbers from memory so might be slightly off - and they are based on investing in the fund in a non pension wrapper, so only an indication. 

It is well known that the AMC covers only some portions of the costs/charges. But it is not the correct thing to focus on, you want to know the total reduction in performance that you experience.

The excellent doc Marc posted indicated that e.g. prisma has 2.7p.c. p.a. reduction in yield (i.e. cost to you) and blackrock global passive equity of about 1.7p.c. (over 7 years).

my first conclusion: active investing is costing 1 p.c. more a year vs passive. Stick with passive funds.

Looking at the passive,... I guess blackrock's cost is about .2 p.c. also we can call say .2 p.c. of the cost, the government cost over the 7 years.

Second conclusion Zurich is 'adding' at least 1.3p.c of cost to the passive fund..... Which is a lot more than your stated AMC.

note I'm not involved in finance industry, just a punter that has grappled/been interested with the same cost question for decades.


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## SPC100 (14 Feb 2021)

As it is all so opaque, I decided to move to davy in 2012.

I'm charged 50 percent of .75p.c of my davy balance every 6 months (i.e. .75% per year). And I invest in passive low cost ETFs. So I am fairly confident my total holding costs are less than 1p.c. p.a.

The only other 'costs/performance reduction' that I'm aware I'm exposed to:

Foreign currency Dividends accrue currency exchange costs.

The drag of 'cash' from dividends until I manually reinvest dividends by purchasing ETFs.

To purchase additional ETFs I may suffer, some purchase fees, additional 'costs' from currency exchange (depending on where I buy the ETF) and a bid/offer gap on the trade.

Potentially some reduction in return from sub-optimal etf internal taxes depending on which ETF I buy.


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## Smoneen (14 Feb 2021)

As SPC100 notes above those figures from the PRiIPs document relate to investment bonds not investing in a pension. The AMC used in that document is 1.5% & then theres the 1% insurance levy.

@time to plan
Can you let us know:
1: will you have a policy fee, if so how much
2: will there be early surrender penalties
3: what fund are you interested in / looking at?

As mentioned earlier its very unlikely that you will have a b/o spread. Just more ridiculous requirements that need to go into customer brochures. I’ve said it on here before pre-sale disclosure / customer brochures really need an enormous overall to help stop the exact position you’ve found yourself in.


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## Dave Vanian (14 Feb 2021)

Marc said:


> Just so we are all clear then
> 
> You are not paying 0.75%pa. We don’t know what you are paying, but it’s not 0.75%pa.
> You could obtain a more transparent contract for 0.40%pa plus underlying fund costs which reflect the investment choices you wish to make and which are more flexible, more transparent and offer considerably more choice with access to around 10,000 investment funds.
> ...



Just so we are all clear then.  You joined this thread suggesting an alternative which you claim is better, more transparent etc.  You quote some of the charges of your suggested alternative, so readers could compare with what the original poster had been offered.  But you left out one important charge - sales commission / fee - which in your example is something that the customer must pay in addition to the other charges you quoted.  The OP showed figures which included sales commission.  Yours exclude sales commission and despite repeated requests, you haven't even given an example of the sales commission / fee.

I've highlighted a line in your most recent post above.  (You may have to "Click to Expand" to read it.)  Read my last paragraph again.  Then read the highlighted line again.


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## Gordon Gekko (14 Feb 2021)

Dave Vanian said:


> Just so we are all clear then.  You joined this thread suggesting an alternative which you claim is better, more transparent etc.  You quote some of the charges of your suggested alternative, so readers could compare with what the original poster had been offered.  But you left out one important charge - sales commission / fee - which in your example is something that the customer must pay in addition to the other charges you quoted.  The OP showed figures which included sales commission.  Yours exclude sales commission and despite repeated requests, you haven't even given an example of the sales commission / fee.
> 
> I've highlighted a line in your most recent post above.  (You may have to "Click to Expand" to read it.)  Read my last paragraph again.  Then read the highlighted line again.



Dave, don’t forget the comparison between the worst that the life company has to offer versus partial information regarding the alternative.


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## Smoneen (14 Feb 2021)

My favourite part was the choice of 10,000 funds! Now how in their right mind does one whittle down a choice of 10,000.


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## Zenith63 (14 Feb 2021)

Smoneen said:


> My favourite part was the choice of 10,000 funds! Now how in their right mind does one whittle down a choice of 10,000.


In-fairness though that is actually a valid advantage; while there are quite a few funds available in my Zurich pension, I would like some more choices around for example green energy funds and a plain old S&P500 index fund.


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## Sarenco (14 Feb 2021)

I wonder does any broker offer an execution-only, unbundled, PRSA with no ongoing advisory fees or trail commissions?

Obviously there would be establishment costs but a pension wrapper with a fixed annual cost of ~€500pa would be a very attractive option for somebody with a decent sized pension pot.


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## time to plan (14 Feb 2021)

_tax_


Smoneen said:


> As SPC100 notes above those figures from the PRiIPs document relate to investment bonds not investing in a pension. The AMC used in that document is 1.5% & then theres the 1% insurance levy.
> 
> @time to plan
> Can you let us know:
> ...


Funds I am looking at are:


​Asia Pacific Equity​Indexed TopTech 100​Indexed Emerging Markets Equity (BlackRock)​Indexed Eurozone Equity (Blackrock)​Gold (5%)

Open to other suggestions although my instinct is more towards passive funds. For context I have an index linked UK public sector pension worth £7k pa as well.

Trusteeship fee is waived. I would need to dig around for any other fees. There are early surrender penalties for first five years which I’m comfortable with.


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## time to plan (14 Feb 2021)

Sarenco said:


> I wonder does any broker offer an execution-only, unbundled, PRSA with no ongoing advisory fees or trail commissions?
> 
> Obviously there would be establishment costs but a pension wrapper with a fixed annual cost of ~€500pa would be a very attractive option for somebody with a decent sized pension pot.


Would it be attractive to a broker?


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## time to plan (14 Feb 2021)

Dave Vanian said:


> Just so we are all clear then.  You joined this thread suggesting an alternative which you claim is better, more transparent etc.  You quote some of the charges of your suggested alternative, so readers could compare with what the original poster had been offered.  But you left out one important charge - sales commission / fee - which in your example is something that the customer must pay in addition to the other charges you quoted.  The OP showed figures which included sales commission.  Yours exclude sales commission and despite repeated requests, you haven't even given an example of the sales commission / fee.
> 
> I've highlighted a line in your most recent post above.  (You may have to "Click to Expand" to read it.)  Read my last paragraph again.  Then read the highlighted line again.


In the absence of additional information, let’s assume that there is an additional 1.5% to 2.0% added to that 0.4%. Ouch.


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## Sarenco (14 Feb 2021)

time to plan said:


> Would it be attractive to a broker?


Well, they would get an establishment fee.

I’ve never really understood why brokers get an ongoing commission for essentially providing no meaningful ongoing service.


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## Marc (14 Feb 2021)

“In the absence of additional information, let’s assume that there is an additional 1.5% to 2.0% added to that 0.4%.”

Why would you make such an assumption. What additional information?

from an earlier post 

At that level of contribution you will still be better off with an "unbundled" scheme without a life co.

Save up your first years contribution in the company and pay a lump sum at the end of the year to kick off the scheme then add annually to the plan at around €50kpa you will soon cover the minimum fee.

So you would be paying
0.40% for the pension wrapper
around 0.18% for investment funds (based on Vanguard Global Stock Index investor share class) 
0.58% leaves room to pay an adviser to make sure you don't make any mistakes


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## Gordon Gekko (14 Feb 2021)

Sarenco said:


> Well, they would get an establishment fee.
> 
> I’ve never really understood why brokers get an ongoing commission for essentially providing no meaningful ongoing service.



Does the responsibility for ongoing suitability monitoring not rest with the broker?

I’ve always thought that something like the following would be pretty fair:

- 102% allocation, of which 1% goes to the broker and 1% to the client’s fund
- 0.75% Annual Management Charge, of which 0.25% is paid to the broker
- 5 years of exit penalties to protect the life company’s outlay


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## Sarenco (14 Feb 2021)

Marc said:


> What additional information?


What you charge for the product you have been touting on this thread.

You have been asked repeatedly to provide this missing information but so far have declined to do so.


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## Sarenco (14 Feb 2021)

Marc said:


> 0.58% leaves room to pay an adviser to make sure you don't make any mistakes


So what’s the advisory fee?

We know that it costs 0.70% to invest in a global stock index fund through your unbundled executive pension.

But we don’t know what you charge folks to access this product.

Without this information, we can only assume your fees are significant.


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## time to plan (14 Feb 2021)

Marc said:


> “In the absence of additional information, let’s assume that there is an additional 1.5% to 2.0% added to that 0.4%.”
> 
> Why would you make such an assumption. What additional information?
> 
> ...


We have no better information. That’s why. So <1.5%? Then 1.0%? Fair assumption?


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## time to plan (14 Feb 2021)

Sarenco said:


> So what’s the advisory fee?
> 
> We know that it costs 0.70% to invest in a global stock index fund through your unbundled executive pension.
> 
> ...


But <1.5% pa unless I’m misreading.


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## Marc (14 Feb 2021)

Totally misreading.

Let’s make the assumption of the same ongoing advice cost of 0.25%pa to meet the  minimum ongoing regulatory obligations (suitably, appropriateness, update identity verification etc) and making your own investment decisions. If you wanted more ongoing hand holding obviously the ongoing fee would be higher.

But under your assumptions, the total annual cost would be 0.83%. Less if you held cheaper funds more of you held more expensive funds.

For comparison, my own analysis of Zurich’s index funds in 2016 compared funds published performance with the underlying index they were tracking.

for example the Zurich Japan index fund underperformed its benchmark by 1.193%pa

so lots of room to get a more flexible and transparent contract with no early surrender penalties which was my original point


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## time to plan (14 Feb 2021)

Well 0:25% is <1.5%, but thanks for  confirming 0.25% as the additional cost.
Out of interest, is the Zurich Japan fund a typical underperformance it a particularly poor example?


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## SPC100 (14 Feb 2021)

As per the reductoin in yield figures from the earlier doc, for Zurich funds, this would appear to be not atypical.


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## SPC100 (14 Feb 2021)

so, assuming no advice;

0.25% to meet the minimum ongoing regulatory obligations (suitably, appropriateness, update identity verification etc
0.40% for the pension wrapper
-----
.65% + the costs of the investment you choose.

That sounds very competitive, I think that is probably a market leading rate?

One would save 100 euro a year for every 100k invested vs Davy PRSA (at .75%). and 2,000 a year if you had a 'maxed out' fund of 2million.

Although I guess if you 'only' have 100k invested, 100 euro might easily be wiped out depending on the charges/commissions for executing trades (and exchanging currency).


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## Sarenco (14 Feb 2021)

Marc said:


> Let’s make the assumption of the same ongoing advice cost of 0.25%pa


Thank you.

So the cost of investing in a Vanguard global index tracker through your unbundled offering, with no hand holding, is 0.30% (fund cost), plus 0.40% (wrapper cost - subject to a €300 minimum), plus 0.25% (ongoing advice cost).

Or 0.95% in total.


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## SPC100 (14 Feb 2021)

No. He said

around 0.18% for investment funds (based on Vanguard Global Stock Index investor share class).


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## Marc (14 Feb 2021)

The share class we purchase is actually 0.11%pa OCF

on platform funds have no dealing charges

euro share classes means no FX to worry about


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## Sarenco (14 Feb 2021)

SPC100 said:


> No. He said
> 
> around 0.18% for investment funds (based on Vanguard Global Stock Index investor share class).


I took the 0.30% figure for a global stock index fund from the very useful Vanguard document that Marc linked to in his initial post -



			https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf
		


I assume there are no other trading costs associated with Mark’s unbundled offering and that 0.95% captures all investment costs.


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## Sarenco (14 Feb 2021)

Marc said:


> The share class we purchase is actually 0.11%pa OCF


Good stuff.

Tracking error (gross of fees) should be minimal once stock lending income is included - last year it was only 0.076% per the latest annual report.

So that leaves us with an “all in” cost of 0.86% for an unbundled PRSA that is invested in Vanguard’s global equity tracker.

Good to see that there are no additional trading costs.

A few final questions:-

1.  Who acts as the trustee/custodian?; 
2.  Are all fees inclusive of VAT?; and
3.  Is the advisory fee negotiable for larger (say, €1m plus) pension pots?

Thanks.


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## SPC100 (14 Feb 2021)

Can you show verbose workings for your .86% please?

There are only a few funds with Ongoing costs of .11% in that document. IIRC from previous posts Marc, I think you mentioned that you have access to institutional (I think this means Large customer?) vanguard pricing, which makes vanguard fees cheaper? Or maybe I am misrembering.

Eitherway, to confirm, e.g. for 'IE00B3RBWM25 Vanguard FTSE All-World UCITS ETF - (USD) Distributing', what would the vanguard costs be in your wrapper?


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## Steven Barrett (15 Feb 2021)

Late to this party but there are a few points that I feel need to be clarified:


What does it matter what the advisor is being paid? Who do you think pays for it? The advisor fee is recouped from your management fee. Also, if you are getting advice from someone of a sizeable amount of money, they should not hide behind, I am not obligated to tell you or lie and say they aren't charging you anything at all.
In saying that. 0.75% amc is a decent charge.
Bid/Offer spread - This is the difference between what you buy your units for and sell them for and is usually 5%. It is largely done away with and the contract in question doesn't have a bid/ offer spread. How do you know? The allocation rate on contracts with a bid/offer spread is usually higher than 100%.
PRSA's are more expensive that personal pensions and executive pensions so people should look at this option last and not first.
Why doesn't an advisor do an execution model with an upfront fee and no ongoing? Firstly, if you do business through an advisor, you are our client. The insurance company would have my company down as the agent on your policy and continually send me copies of any documents issued to you. They would also tell you to speak to the advisor with an queries you had. If audited by the Central Bank, your file could be picked out just as likely as anyone else. And the Central Bank aren't keen on execution only business. Another, more important reason is the financial model has changed. The days of advisors having 5,000 "clients" are gone. Advisors prefer to have ongoing relationships with a small number of clients and be paid for that relationship rather than having loads of one off transactions. You will also get a number of these clients coming back to you with queries. While not enough to bill them individually, there'll be enough that you end up spending some of your week working for free. 

Steven
www.bluewaterfp.ie


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## time to plan (15 Feb 2021)

This has been really useful. Thanks everyone for your contributions. What I'm left scratching my head about is the implications of the internal costs in the document that Marc shared.

If I take an example of a passive fund: Indexed Global Equity (BlackRock), the document says...

What are the costs?
The Reduction in Yield (RIY) shows what impact the total costs you pay will have on the investment return you might get. The total costs take into account one-off, ongoing and incidental costs. The amounts shown here are the cumulative costs of the product itself, for three different holding periods. They include potential early exit penalties. The figures assume you invest €10,000. The figures are estimates and may change in the future.

Costs Over Time
The person selling you or advising you about this product may charge you other costs. If so, this person will provide you with information about these costs, and show you the impact that all costs will have on your investment over time.

Investment: €10,000


ScenariosIf you cash in after 1 yearIf you cash in after 4 yearsIf you cash in after 7 years
(Recommended Holding Period)Total Costs€663.10€893.33€1,412.03Impact On Return (RIY) Per Year6.63%2.05%1.68%
 
Composition of Costs
The table below shows:
• The impact each year of the different types of costs on the investment return you might get at the end of the recommended holding period.
• The meaning of the different cost categories.

This table shows the impact on return per year

*One-off Costs*Entry Costs0.15%The impact of the costs you pay when entering your investment. This includes the costs of distribution of your product.Exit Costs0.00%The impact of the costs of exiting your investment when it matures.*Ongoing Costs*Portfolio Transaction Costs-0.02%The impact of the costs of us buying and selling underlying investments for the product.Other Ongoing Costs1.56%The impact of the costs each year for managing your investments.*Incidental Costs*Performance Fees0.00%The impact of performance fees.Carried Interests0.00%The impact of carried interests.
 
The big % is clearly Other Ongoing Costs - 1.56%,and I'm trying to understand what it means. It looks as if that will never appear on any statement. Does it essentially represent a drag on the performance of the fund as a hidden cost? Does it matter (it seems like it does to me)? Is Marc's approach better in terms of costs / charges, in that the funds are lower cost? Am I over-thinking all this or missing an important point somewhere?


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## Gordon Gekko (15 Feb 2021)

I’m not convinced that we’re interpreting that document correctly.

The 1.56% must include the Annual Management Charge, but at what rate?

And as this is an Investment Bond, is the 1% levy included somewhere which wouldn’t be the case with pension money?

The document looks to me like a worst case scenario, e.g. if there’s an adviser getting 5% upfront, and the management fee is at its highest.


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## time to plan (15 Feb 2021)

Gordon Gekko said:


> I’m not convinced that we’re interpreting that document correctly.
> 
> The 1.56% must include the Annual Management Charge, but at what rate?
> 
> ...


Another way of looking at this is:

Zurich is charging a 0.75% AMC. Aside from some small pension and trusteeship fees, does that 0.75% cover all costs including commission Zurich pays to the Tied Agent, Zurich costs and profit for the pension, and the Blackrock costs and profit for the fund? Or are some additional costs (which impact on my RoI) hidden in these ongoing costs (and if so, how much?)


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## Sarenco (15 Feb 2021)

SPC100 said:


> Can you show verbose workings for your .86% please?


Sure. 

PRSA wrapper cost of 0.50%, advisory cost of 0.25% and fund cost (OCF) of 0.11% (per Marc's later post).

There would also be non-material tracking error (gross of the fees) - it was 0.076% last year.


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## Marc (15 Feb 2021)

This thread has once again captured the essence of the frustrations of many investors in Ireland today. 

Trying to arrange a pension isn't straightforward and you really should take some competent objective advice.

*Charges with Life Companies*

This is my 27th year as a Financial Adviser and I can tell you this. I don't know what you are really paying for an Irish Insurance Company Pension.

We know what the contract fee is, for example 0.75%pa
But we don't know what the fund expenses are or if they are included in the contact fee or if they are in addition, or a combination of the two. We just don't know. This is why we call it a bundled contract. Its opaque.

So, therefore we really don't know what the real total cost is to the end investor because there is no ex-ante disclosure document for Irish Unit-linked pensions which is equivalent to that available for an Investment Bond.

So, its pointless debating the ex-ante cost -we just don't know what it is but it isn't 0.75%pa do we all at least agree on that point yet?

However, we can look ex-post (after the fact) which is like looking at footprints in the snow that all funds leave behind. So that when the Insurance Company says;"no, we didn't walk across your lawn" you can at least point to the footprints.....

We can assess what the impact of tracking error is on a particular index fund for example this is the Zurich Emerging Markets Index vs the benchmark MSCI Emerging Markets index



So we can see that over 6 years the Zurich fund under performed the benchmark by *0.79%pa annualised*

But *all funds *under perform their benchmarks due to trading costs, brokerage commissions, bid offer spreads, stamp duty, dividend withholding taxes etc.

So, let's compare with the Vanguard fund that our clients invest in




To my mind, this thread is really about the fallacy of trying to avoid seeking advice to arrange something as important as a pension.

"I've decided I'm going with "x" because I've heard of them, they advertise on TV and everything."

So what exactly do you get for the might of the big company you've heard of?

Well, in this example at least an additional drag on performance of 0.22%pa plus some additional volatility for the same underlying index.

This is a very common theme I've seen on askaboutmoney over the years.

Posts along the lines of "I don't need advice, I know what I want" very often turn into the longest threads because in reality this really is a very complex subject and as some of the more informed posts will tell you. It really is worth paying for advice to get this right.


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## Zenith63 (15 Feb 2021)

Marc said:


> This thread has once again captured the essence of the frustrations of many investors in Ireland today.
> 
> Trying to arrange a pension isn't straightforward and you really should take some competent objective advice.
> 
> To my mind, this thread is really about the fallacy of trying to avoid seeking advice to arrange something as important as a pension.


Firstly to say I really appreciate the time you've taken to provide the information you have in this thread and others Marc.

Unfortunately though the overriding sense I've come away from this thread with is that no matter which way I go, it is all fairly opaque and it's unclear how much of this is necessary or by-design.  Accusations of lying and grubby hands getting hold of commission leave me feeling I should not trust anybody.  Maybe that's just me...


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## Sarenco (15 Feb 2021)

Marc said:


> Well, in this example at least an additional drag on performance of 0.22%pa plus some additional volatility for the same underlying index.


Wouldn't that suggest that you would have come out ahead if the AMC on the Zurich contract was at least 0.22% lower than the cost of the unbundled wrapper (including advisory costs)?


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## time to plan (15 Feb 2021)

Sarenco said:


> Wouldn't that suggest that you would have come out ahead if the AMC on the Zurich contract was at least 0.22% lower than the cost of the unbundled wrapper (including advisory costs)?


It's a very interesting discussion. Marc's figures suggest that for these particular funds, you would get a 0.22% better return with Vanguard inside PRSA than you would within a Zurich EPP, but with a 0.08% more costs, so 0.14% better return p.a. allowing for costs. This assumes I can get a competent broker for 0.25%. Any recommendation as to this? I'm not sure Marc is offering to do this for 0.25% p.a. but happy to be wrong there!


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## time to plan (15 Feb 2021)

Another probably newbie question. Does the pension structure Marc describes (PRSA?) work as an Executive Pension with the high rates of maximum contributions (employer + employee combined) or would I be limited at age 50 to a maximum tax relief limit of 30% of earnings up to maximum earning limit of 115k p.a. (so maximum tax free contribution of 34.5k). An attraction f an Executive Pension as I understand it is the ability to pile large sums of cash out of the company without attracting CT, PRSI, income tax, USC etc. I'm trying to understand if that can be replicated in Marc's structure.


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## Marc (15 Feb 2021)

All my calculations assume an exec pension (0.40%pa)
A PRSA is 0.50%

But I think all this is clearly demonstrating that you actually need advice.

To be clear: Asking questions on AAM is not the same as receiving regulated and insured advice.

Like many people you are seeking the holy grail of stripping out the “middle man” and I totally get that who doesn’t want to get the best deal?

But you are funding your pension here not buying a TV and it’s very clear to me that you clearly require a lot of advice.

As Stephen says in an earlier post this requirement won’t go away just because you establish a pension. There are obligations created by Regulation. These add costs and those costs need to be paid for. Ireland has about the same population as Greater Manchester so making comparisons with our insane neighbours over the water only goes to demonstrate a complete lack of understanding of basic economics.

The regulatory definition of “execution only” is actually quite a high bar and there is no way you’d manage it. We would only consider an execution only transaction from a qualified Professional investor. Otherwise we would simply be abandoning our fiduciary responsibilities to someone trying to save a few Euro.

happy to advise a fee-paying client and absolutely certain we would cover the additional costs just on the basis of the fund picks from an earlier post.

all the best


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## Conan (15 Feb 2021)

Marc’s graph is interesting. But that‘s looking back at how two or three funds (indices) have performed. What’s much more difficult is to estimate how these funds might perform in the future or which funds to might perform closest to the Index return. 
By their very nature, most indexed funds will tend to underperform the Index (since the Index has no costs included).


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## time to plan (15 Feb 2021)

Marc said:


> All my calculations assume an exec pension (0.40%pa)
> A PRSA is 0.50%


Thanks again Marc. So assuming I can find a broker for 0.25% p.a., who is the trustee of the pension and what is the charge for trusteeship? I'm trying to get my head round what it "looks like" if you take it out of the hands of a pension co. like Zurich.


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## time to plan (15 Feb 2021)

Conan said:


> Marc’s graph is interesting. But that‘s looking back at how two or three funds (indices) have performed. What’s much more difficult is to estimate how these funds might perform in the future or which funds to might perform closest to the Index return.
> By their very nature, most indexed funds will tend to underperform the Index (since the Index has no costs included).


Marc has already been generous with his time and advice, but it would be interesting to see the equivalent Blackrock Emerging Markets tracker fund plotted alongside Zurich and Vanguard.


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## Sarenco (15 Feb 2021)

Marc said:


> But I think all this is clearly demonstrating that you actually need advice.


You are obviously entitled to you opinion but I fundamentally disagree.

In the UK, I could open a Self Invested Personal Pension with Vanguard with an account fee of 0.15%, capped at £375, and invest the lot in a target date fund with an OCF of 0.24%.  So that's 0.42% in total.  Or less for a larger portfolio.

Meanwhile in Ireland we get to choose between insurers with opaque costs or expensive unbundled pension wrappers.


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## SGWidow (15 Feb 2021)

Fair play, Sarenco

Nail on the head. 

What this thread shows is that people in Ireland seem to have to pay an agent's fee for an on-going service whether they need it or not!


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## time to plan (15 Feb 2021)

Zenith63 said:


> When you say unbundled, you're referring to a Small Self-Administered Pension Schemes (SSAS) right?  My understanding when I setup my Exec pension, from posts here and articles elsewhere, was that the costs of these schemes meant your pension pot needed to be €200k or higher to cover the fixed annual costs.  I guess you wouldn't agree?  I understand the big cost of a SSAS is the annual trustee fee which can be a few thousand, is that included in your figures or have I got that wrong?
> 
> My take at the time was I should setup an Exec pension, build the pot up to €200-300k and then consider a SSAS if I wanted to go that route.
> 
> And thanks again for your input!


I’m going back a few posts here. Is the SSAS a necessary component of Marc’s structure and are their fees involved (e.g. trusteeship) that are required on top of the 0.40% and 0.18% and 0.25%? If so, what to these fees work out at?

Thanks again.


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## Marc (15 Feb 2021)

The 0.4% is for Trusteeship and custody combined

Incidentally, all our clients receive a comprehensive  fee disclosure document in both percentage and Euro terms including 
Custody and pension trustee charges
Adviser charges 
Fund management charges including transaction costs 
investment management charges if appropriate 

This is a full MIFID II EU regulation disclosure document customised for the actual portfolio costs incurred by a particular investor

It saves a lot of time trying to figure all this out


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## time to plan (15 Feb 2021)

Marc said:


> The 0.4% is for Trusteeship and custody combined


Thanks Marc.
So practically speaking, who would I pick up the phone to, to get such a pension (and I’m not even sure what I’m asking for) at the costs you describe. Passive funds / trackers suit me fine so this might be a good option.  I’m not fussed if a minimum charge of 300 in year 1 breaks the % cost barrier as I’m looking to put in just shy of 50k p.a. so it’s a short term hit and not huge in absolute terms.


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