# PRSA for One Euro!



## Belinda (2 Oct 2003)

I am a broker and am thinking of selling PRSAs for one euro.

I'd appreciate feed-back from AAM readers on the viability of the business model I'm thinking of using.  

This will be an execution-only service, so the PRSA purchaser will have had to have done his/her own research to avail of the special offer.  

With all the press coverage I should get, the enquiries will come flooding in.  But sure the only ones who'll know which PRSA fund they want will be readers on AAM and a handful of other well-versed punters.  The rest won't have a clue and will need guidance in relation to the massive list of contracts and funds on offer.

For these customers I'll charge 250 euros.  After all, there's much compliance to be completed and a fair bit of work involved in getting everything put to bed.  You don't think I work for nothing, do you?  I have a wife and kids to feed.  

And sure many of them will be at the 50 per month level where the highest commission PRSA would pay me only 90 euros.  I'm laughing all the way to be bank. 

Anyone think it'll work?

Are there others out there already offering this service? 

Belinda


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## Tommy (2 Oct 2003)

If you are seriously considering this idea as a means of expanding or enhancing your business then I hope that you are not making a mistake by publishing it here, perhaps for others to copy.

If you want myself or any of the mods to remove your post, please email either myself or one of the other mods and we will oblige.


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## Belinda (2 Oct 2003)

*€1 PRSA*

Thanks Tommy, 

I am interested in hearing different views on the idea.

Belinda


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## rainyday (2 Oct 2003)

*Re: €1 PRSA*



> I have a wife and kids to feed.



Mmmmm - Funny how someone called Belinda would have a wife & kids to feed. I smell a rat!


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## Belinda (2 Oct 2003)

*The cynicism!*

Rainyday,

Does one's nom de plume have to reflect one's gender?

Belinda


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## Observer (2 Oct 2003)

*PRSA*

Would you buy a PRSA for €1 from a Transvestite broker????


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## POAP (3 Oct 2003)

*1 euro pension*

maybe I am getting paranoid but does the language and general gist of this query sound like it might be "Laser" ?


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## hesperus (3 Oct 2003)

***

worse again its CLUBMAN back in disguise


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## Belinda (3 Oct 2003)

*Thank you Observer*

Thanks for a good laugh this morning Observer. 

I'm not Laser - but would still love to know if this business model already exists or if it might be a winner for my small outfit. 

Belinda


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## frankg (3 Oct 2003)

*PRSA*

labrokers are doing it for ZERO


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## Gavin (3 Oct 2003)

*Zero*

I thought there was a 100 charge with LABrokers?


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## Alan Moore (3 Oct 2003)

*Business Model....*

I'd be a bit sceptical of making the business model work having had a look at same. There are a number of established operators in this market already and the PRSA market is relatively small ( in that there haven't been very many sold ). Suggest you talk through your business plan with some of the providers who may give you a good idea of the viability given the sales they have seen.


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## Thomas (3 Oct 2003)

*PRSA*

Ark sold 55,000 SSIAs but only 100 PRSAs so far.

What is your personal experience Alan. How many have you sold?


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## gerry (4 Oct 2003)

*prsa sales*

PRSA sales have been minimal. Take up extremely poor. Hype of sorts over nothing.


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## extopia (6 Oct 2003)

*Re: prsa sales*

Sales will probably improve now that employers have had to nominate a provider, who can now market directly to those employees, who by law must be given time off by employers to set up their PRSA.

"Belinda" will have missed this boat having not signed up any employers yet for "her" clever product.


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## Summer (6 Oct 2003)

*PRSA*

I can't help but feel that PRSA's were launched as a result of Charlie McC being pension orientated. When the SSIA's mature the PRSA's  might be a good home for them if the tax breaks were available/improved. So Belinda might have to wait a couple of years but the rewards could be great.
Summer


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## Alan Moore (6 Oct 2003)

*PRSA Sales......*

Have probably sold about 40 but most were to employees of one company. Strip these out and I can count PRSA sales on one hand.


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## Laser (6 Oct 2003)

*Friuty*

You'd be crazy to sell anything below cost, and suicidal to approach selling financial advice on the basis that cheapest is best, or that it will win you any customers. This has been tried and failed by many others ahead of you.

Custmers like these have no respect for you as an advisor, except that you've given them a below cost deal. As soon as a cheaper more cheerful offer is made these types desert the ship, understandably so since they represent the skinflint population.

You'd be best advised to move upmarket, and build with solid referrals from people you've impressed with skill, attention, and service. These types recognise that hiring someone on the basis of cheapest quote is plain dumb in many cases, from house construction to professional services like legal, taxation, and financial advice.

Refer your skinflint clients here instead.


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## zag (6 Oct 2003)

*move upmarket*

Laser I can't really say this without you taking it personally so please excuse but [deleted]

**********
Note from zag - if you address something at someone, they can't but take it personally, whether it is good or bad.  Slagging posters (or making personal comments about their work style) is not advancing the discussion of the topic at hand.


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## Laser (6 Oct 2003)

*Now now*

What about the Rules we've been hearing so much about! 

I gave the young person some advice about how not to approach building a business model. Unless there's mega capital around to take the strain, this cheapie approach is doomed to win plaudits here but fail to survive and make good profits in the real world. The best thing I can do here is constantly challenge your incorrect view of how the market really operates.

 At least it might help one advisor from taking on a business model that just doesn't work.


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## Ralph (7 Oct 2003)

*how the market really operates.*

But Laser, Vanilla isn't everyones favourite yet you use your intellect to insist that it is!


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## Laser (7 Oct 2003)

*Ice cream ideas*

Ah c'mon Ralph, give it up. The basic proposition of any venture outside of Charities etc is to make a profit, ie costs plus a margin. I've continuously argued that (a) most Irish people want face to face advice which costs at least €150 per hour to deliver when all business costs are added, and (b) a reasonable margin would allow that to float to €200 per hour.

If you take 4 billable hours per day and a 44 week year at 5 days per week, a cost recovery alone amounts to €132,000 which isn't too far removed from the cost of maintaining a financial advisor when labour costs, travel, admin, indemnity insurance etc is taken into account. Even if 8 hours was billable it still amounts to a moderate €264,000 contribution to costs.

Personally I wouldn't hire someone unless they could generate at least €350,000 btw, of which they'd get about a third. But apart from my position any person not setting a turnover target of at least in the region of €150,000 is probably wasting their time. When the sums are done the person will find that they'll be lucky to get a third of that in remuneration, and that's for a boot of the car operation with one employee back in a shared office.

If the advisor wants to operate upmarket they'll need to spend a lot more, hence the earlier figure of €350,000. That's reality.

Here on AAM you can pontificate all you like about paying €100 for advice, meeting, (statutory) fact-find,  (statutory) report, processing, and issuing, but you're not in the real world. Anybody who thinks he can make a profit using the RyanAir model but without the physical ability to deal with the vast volumn necessary to make it work, probably would want to see his pharmacist.


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## Ralph (7 Oct 2003)

*Lasers laceration*

Ahh... Laser, so its the excess of revenues over outlays which causes you such unease - and why wouldn't it? 

By your feeble expletives I'd say you are a threatened species and without foresight I predict you may well become an endangered one.

Time is money so I'll have to agree to differ with you on the subject. But I part knowing I'll always rejoice in my difference.

RGDS  Ralph


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## Ludraman (7 Oct 2003)

*Re: Endangered species*

Hi,

Must agree with Ralph there.....you've given away too much info. Haven't done your profession any justice recently. (although I am beginning to wonder which side you're really on?).You've also made a presumption about Irish people believing that good service must cost more. Don't underestimate us. The last few years have changed alot. Legal and financial debate doesn't frighten us anymore!

Regards your opinion;

"These types recognise that hiring someone on the basis of cheapest quote is plain dumb in many cases, from house construction to professional services like legal, taxation, and financial advice."

Firstly I would like to refer to one of your previous posts 



where you appear disgusted with comparisons of painting and financial advice. Would construction and financial advice be the same, or is construction also too complicated for us plebs?

Secondly, your quote is not really true, in my opinion. If my time has the potential to earn more revenue than the body I would normally hire to carry out a task (be it financial or construction), then I would hire someone to do the task.

My time does not generate +150/ph, so I'm definately not going to give that to somebody for unguaranteed, non-lifesaving "advice" and also on the basis of them only having earning potential of 4hrs per day (paying for a possible efficency issue?). In the meantime, I and many others will carry out our own research into PRSA's and investment, with the help of publications and AAM for example.


Out of curiosity, with reference to your indemnity insurance mentioned: hypothetically when would you be liable to a client?

I reckon Clubman's only tired. Why wouldn't he be?


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## Laser (7 Oct 2003)

*As expected*

Throughout my engagement with AAM, challenging the illogical approach to the market in general, and where you expect Irish people to get reasonable personal financial advice for arbitrary sums that you've decided by consensus, nobody has yet argued coherently to oppose my case.

Instead, just like the above it has unearthed intolerance, and bigotry towards professional advisors. Neither of the above tackles the fact that distribution of financial advice costs more time and money than you wish to admit. I've conceeded that certain AAM participants might earn a skinflint cost, but I've persistently argued that transposing this notion to customers in general, while castigating professional advisors for charging market reality rates, whether by fees or commissions, amounts to prejudice.

No single counter post since I started to challenge you, has dealt with the central issue. Instead you've resorted to deploying tactics like the above, contrary to your own rules, in some cases deleted my posts, and in one case resigned from AAM. Very telling indeed.

(You engage in intelligent debate, it seems, on a selective basis, but when your core belief is threatened by logical argument, you adopt the typical stance of intolerence).


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## Ludraman (7 Oct 2003)

*Re: As expected*

I'll get back to you (as best a pleb can)on the rest later, but at present I'm concentrating on my skinflint salary.

However, I'm still curious:

"Out of curiosity, with reference to your indemnity insurance mentioned: hypothetically when would you be liable to a client?"


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## Observer (7 Oct 2003)

*Belinda's Plan*

I've taken up Laser's challenge. Belinda's plan is based on charging €250 for an advisory PRSA. To generate €150,000 in turnover as suggested by Laser, (and where two thirds are costs which I think is reasonable), Belinda would need to sell 600.

As I recall most insurance companies as a whole haven't sold this amount. Still if Belinda is hugely successful he or she would need to sell 13 per week over 46 weeks, or an average of 2.6 per day. I'm familiar with industry productivity, and what's involved in the process from marketing to closing sales, and these numbers are not achievable.

The suggestion to sell execution only which accounts for a very tiny fraction of the market, for a Euro is obviously a loss leader, so Belinda would be subsidising this business with the €250 earned through advisory business.

The real question is (a) would AAM types actually pay Belinda €250, (and many might not perhaps), and (b) can Belinda survive on €250 per case if productivity is closer to market averages of four to six sales per week. Belinda also hasn't stated how much he/she expects to sink into the marketing budget to create sufficient public awareness to drive the model.


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## Dermot (7 Oct 2003)

*Any types*

Is Belinda really Belinda? I'd say its Brendan or Alcapone stirring it again and Alan probably has a high percentage of the PRSA market with his 40 cases so far. Observer unlike the SSIA scheme there is no deadline on the PRSA so no need to worry about 46 weeks. If the public are not aware now they will never be aware.

If commission on PRSAs was say 100% of the first years premium do you think take up would be greater? You bet it would.

Instead of wasting millions on advertising providers could create a budget to make selling of PRSAs more attractive for sales staff but which didn't increase charges to customers. Obviously the product has to be sold and not bought so advertising has been money spent inappropriatly.


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## daltonr (7 Oct 2003)

*Re: Belinda's Plan*



> The real question is (a) would AAM types actually pay Belinda €250,



Observer,

I've given up correcting Laser on this because he refuses to acknowledge it, but I'd prefer if you didn't propagate his misrepresentation of other peoples views.  I'm sure that's not what you meant to do BTW.

When you suggest that "AAM types" might not be willing to pay €250 for advice, you are doing a disservice to everyone on AAM. I think what you meant to say was "would people who know they need a pension but don't know where to start be willing to pay €250 for help and advice?".  AAM covers the spectrum of financial knowledge, from beginners to financial professionals.

If the advice started with an explaination of the option of paying a flat fee, of even €800 or €1000 or having 5% of contributions taken for the life of the pension, and the implications of each charging structure, i think most people would prefer the flat fee (only my opinion based on asking about 10 people with no particular financial knowledge).

As for Belinda's approach I think providing an almost free execution only service to get media attention is certainly an interesting offer.  I'd probably time limit it and then set the price at a reasonable level like €100.

If (s)he feels she can provide a hand holding service for €250 then fair play.  It may be possible on something as specific as a PRSA.  Obviously general financial planning would require more in depth analysis of the client and discussion of options, I don't see how that could be done for €250.

As for whether the Execution Only model itself has any future.  I think there's plenty of evidence that it has.  Execution Only stockbrokers seem to be doing ok.  It's a lot simpler to self learn the benefits of pensions, than trade stocks for a couple of decads, so if anything I'd expect execution only pensions to do better than execution only stockbrokers.

-Rd


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## rainyday (7 Oct 2003)

*Laser*

Just for the record, I'm not going to be entering into any debate with Laser (or his/her other pseudonyms). Not anything to do with the opinions or views he/she expresses - all the do with the manner and tone in which he/she has expressed them in the past. Any interpretation of my silence as indicating a 'threatening of my core beliefs' is faulty.


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## Ludraman (7 Oct 2003)

*Re: Laser*

I think you should stay/add rainyday. 

This debate is quite interesting. There have been 357 hits here and 2573 in Lasers previous debate. Of course many are repeat hits, but I'm sure the proportion are persons with a PRSA/Financial advice interest.

What proportion of these viewers/contributors (many plebs and "skinflints"), will have a completely negative view of the "professional" and high fee exacting, end of the profession. Again, Laser, I honestly don't think you've done your profession any good. Your argument may have foundation, but your delivery and justifications not.


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## POAP (7 Oct 2003)

*charges*

I don't obect to paying anybody for any advice or service, what I do object to however is how i am charged for it.

With pensions, insurance etc., it seems to me that charges are not clear cut with terminology such as bid/offer spreads, policy charges, management charges, intial units.

If Laser can calculate a cost per hour for these services, why not just charge per hour then ?


For example a fixed lump sum to set up Pension for the advisor with additional advice being charged at an hourly rate, (The better the advisor the more they could charge). Rather than 5% per year for however long it lasts.

If these charges end up being too much for the average joe and the government wants him to have a pension - tax him more


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## gerry (7 Oct 2003)

*I agree with Laser*

A lot of what Laser says makes full sense.

There are some people who will always look for a deal, be it 10% discount off a suit or execution only, low commission etc.

BUT for every one that does there are another 4 who don't either because they are too busy (making money at whatever they do), or haven't the knowledge or expertise to know where they can get discounts.

Just because Quinn Life or LA offer discounts doesn't necessarily mean that cheapest is best. I for one would not take out another policy with Irish Life (LA / PRSA) having had poor returns on a policy( my family too).

There is a role to be played by a fee based or commission based adviser - there are good and bad though as in all industries.

I know one accountant that offers an "IN" to their clients for property purchase. The accountants buy say an apartment block for €10,000,000 and then sells the apartments on an individual basis to the clients, organise mortgage, life cover, tenants, collection of rents, furnishing property etc and charge about €15,000 for the service. Clients are delighted to have hand held and because they have bought in bulk, the appreciation of apartment can offset the fee charged in the first place. Is this not an example where good advice is worth buying ?

Similarly I wouldn't have taken out a SSIA with Quinn Life (see previous posts elsewhere).

Laser and his type can find out angles on individual companies and products eg, Guaranteed Annuity Rates, which policies should be increased and which shouldn't - could be a very costly mistake if one gets it wrong.

Enhanced allocation rates available for regular and single premium pensions.

Closing down sales - life cover, serious illness and guaranteed life cover. The point is every client is different and has different needs and wants and some advisers can provide the tailored product.

Just my opinion though....


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## Alan Moore (7 Oct 2003)

*Clarification of business model*

Some contributors would seem to be of the understanding that 1 euro would be the total income from each case for setting up a PRSA on an execution only basis and would therefore be a loss leader.

I suspect that this isn't totally true and that the business model is based on the assumption that on achieving a certain volume of business that the prsa provider(s) will pay a bonus to the introducer. And that it is this bonus that makes the model possibly workable.

But I could be wrong.

In reply to POAP

"For example a fixed lump sum to set up Pension for the advisor with additional advice being charged at an hourly rate, (The better the advisor the more they could charge). Rather than 5% per year for however long it lasts"

Would agree but the reality is that a lot of people won't pay an upfront charge for advice and are comfortable paying for it by way of reduced allocation. Its a bit like borrowing for a new car. You know its costing you more than it should over the long term but you are not been hit with an upfront charge. Maybe too simplistic but once the cost is out of sight it is out of mind in many cases. 

"With pensions, insurance etc., it seems to me that charges are not clear cut with terminology such as bid/offer spreads, policy charges, management charges, intial units......why not just charge per hour then ?"

Thats a bit too simplistic. e.g. bid/offer can't be expressed in terms of hours as it has to be dependent on fund size.


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## daltonr (7 Oct 2003)

*Re: Clarification of business model*

Alan,



> Would agree but the reality is that a lot of people won't pay an upfront charge for advice and are comfortable paying for it by way of reduced allocation.



I'd agree with this.  Perhaps they'd be happier paying a couple of hundred up front if they knew the long term impact of contribution fees, particularly if contributions increase.  

What would your opinion be of financial advisers giving clients the the option and explaining the difference?

Also...

What is your opinion on the major banks charging a 5% contribution fee.  Is what they do when dispensing "Advice" sufficient to justify the price?

What I'm trying to get at here, is is the 5% charge a reasonable reflection of value, or is it simply a reflection of the clients ingorance of just how much 5% can add up to.

Particularly when we are dealing with a client who knows they want a PRSA, but just needs some hand holding.

Any thoughts?

-Rd


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## Paul (7 Oct 2003)

*Clarification of business model*

Call them whatever you like but people who skin a flea for its hide are the ones with the money.  They dont waste it. As for execution look at the business LA has taken in SSIA, and other insurances.


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## Alan Moore (7 Oct 2003)

*Re: Clarification of business model*



> What would your opinion be of financial advisers giving clients the the option and explaining the difference?



Some do, some don't. Thats a fact of life. Some brokers are uncomfortable explicitly opening up the commission can of worms, some aren't.



> What is your opinion on the major banks charging a 5% contribution fee. Is what they do when dispensing "Advice" sufficient to justify the price?



Would back Laser up on this one (sorry Rainyday), 5% of what? I can't genrealise about the quality of advice from the banks either.

"What I'm trying to get at here, is is the 5% charge a reasonable reflection of value" ...... yes in some cases.

"or is it simply a reflection of the clients ingorance of just how much 5% can add up to" ......... yes in some cases.



> Particularly when we are dealing with a client who knows they want a PRSA, but just needs some hand holding.



It'd be very rare you meet a client that knows they want a PRSA and its a bit more complicated than that. Advice is not limited to deciding that a PRSA is the pension product that the client needs. A good advisor will also assess:

A) Does a PRSA fit in with the clients budgeting
B) Advise on the funding required to achieve the clients goal.
C) Ensure that a PRSA is the financial priority
D) Ensure that the funds chosen meet the clients risk profile and that the client understands the potential downsides.


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## rainyday (7 Oct 2003)

*Re: Clarification of business model*



> Would back Laser up on this one (sorry Rainyday), 5% of what? I can't genrealise about the quality of advice from the banks either.


No apology needed, Alan. I'm well aware that there may be some value in Laser's arguements. I'm simply making a personal choice not to engage in debate with him/her, given their track record.


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## daltonr (8 Oct 2003)

*Re: Clarification of business model*

Alan,

Out of interest, have you noticed any changes in recent years in terms of people asking about commission?

> 5% of what.

With PRSA's and the ability to switch the adviser is gambling that the contributor won't switch to another PRSA in the near future.  That sort of business model seems dodgy to me.  

What happens IF the Late Late Show or Joe Duffy discusses that fact that you can avoid paying 5% of all your contributions in fees by switching to an execution only PRSA?  Perhaps with a couple of examples of how easy it is to do and how much you can save.  larger contributors would be more likely to move than smaller ones, and these are the very clients that you'd depend on.

I don't see any inbuilt protection for people who depend on these 5% fees, if their clients up and leave.  This is the aspect of the 5% contributions fee that I've had a problem with understanding.  It seems like a bad deal for everyone.

Is this one of the reasons why I'm not getting hounded about PRSA's in the way I was about SSIAs?  Or indeed in the way I was about Personal Pensions.

-Rd


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## Laser (8 Oct 2003)

*Seeds*

Nice to see the debate returning to the issue, even if Rainyday is miffed at my tactics. Sorry Rainy.

I'd be all for no commissions, banish them entirely, get rid of all the conflicts of interest and opaque product design, but the evidence is that most people still won't pay a commercially viable fee for advice and service.

If advisors charged commercially accurate vatable fees, AND insurance companies charged an annual invoice for service, banishing annual management charges and bid offer spreads, people simply wouldn't pay by writing a cheque. I've been driving at this point over and over again.

When you overlay rates per hour for advisors and asset managers, and translate these into fees, nobody would pay, except perhaps for huge US players with such massive economies of scale and tiny unit fixed costs that they can do things we can't in a smaller economy, eg zer entry S&P trackers at 0.16% AMC.

Despite getting up a few noses I've really no objection to skinflints squeezing the most out of their market knowledge, but to expect that this works for everyone else or SHOULD work, is just not feasible.


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## Alan Moore (8 Oct 2003)

*Re: Seeds*

Alan,



> Out of interest, have you noticed any changes in recent years in terms of people asking about commission?



I've always disclosed all commissions/fees and believe or not most people don't dwell on the issue.  
> 5% of what.



> With PRSA's and the ability to switch the adviser is gambling that the contributor won't switch to another PRSA in the near future. What happens IF the Late Late Show or Joe Duffy discusses that fact that you can avoid paying 5% of all your contributions in fees by switching to an execution only PRSA?



The adviser gambling the client won't switch? Yes and no. If the client runs and takes out an execution only PRSA he/she is purchasing something different i.e. the client becomes responsible for his/her decision that they policy they take out best suits their needs and also has to pay for any ongoing advice in the future should they need it.

If my own client takes out a policy through me and subsequently wants to go execution only I will facilitate for a fee with the understanding that each time he/she needs advice I will charge for it.

Again, it all boils down to advice and whether you feel that advice is worthwhile at a cost.

If not - Do execution only basis 
If so - Do on fee or commission basis


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## Laser (8 Oct 2003)

*Execution Only*

The market for self-directed advice is so tiny it hardly warrants the amount of space it gets. Discount brokers get MASSIVE free publicity in the media, especially the Independent, but the acres of coverage translates very poorly into business done. The numbers are really really small.

For the model to work and make a valuable business that can be sold on at a premium, rather than a lifestyle business, one major player has to emerge. The problem is that anybody can cut fees and commissions, its easy, and take a flyer like Belinda in this segment, crowding it, as it is becoming. There is no entry barrier and the sector encourages mavericks, a positive danger to everyone including themselves.

Nobody I'm aware of has committed serious capital other than Solomon.com which failed dreadfully, and blew €1.3m. Quinns spent even more. The rest don't spend Christmas because they simply don't have the bucks. These are idealistic sole traders, but that doesn't translate into clever business people, or a model that will survive long term.

Rest assured that the day a genuine success emerges from the boneyard that already contains Quinn's and Solomon, the big boys will move in and simply grab it.

As a business person I wouldn't invest in this sector, and instead would buy a long established business with strong goodwill operating in the upper end of the market, leaving the lower end to direct sales forces, counter staff, tied agents, and even discount players. In ten years I'd expect the self-directed market to have grown but only by a tiny amount. I'd still go with the equity market view and its not investing in discount players in the personal finance sector. 

Because it doesn't work - sorry folks. You can AAM about it all you like but that's the reality.


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## daltonr (8 Oct 2003)

*Re: Seeds*

Alan,



> the client becomes responsible for his/her decision that they policy they take out best suits their needs and also has to pay for any ongoing advice in the future should they need it.



Let's assume someone comes to you and gets a PRSA.  perhaps following lengthy discussion, perhaps not.  And they agree to pay a 5% contribution fee.

They have now decided through discussion with you that a PRSA is for them.  They've worked out a contribution level that suits them.

They then realise subsequently that if they move to an execution only service, there is no penalty for moving the PRSA and they can avoid the 5% fee.

What further advice specifically related to the PRSA would you expect them to receive in the future that would convince them to stay?

If they came in for other general financial advice, perhaps to buy other products, presumably you'd be charging them separately for that.  So the 5% ongoing charge for ongoing advice would presumably only relate to advice about the PRSA.  Yes?

I'm not saying everyone will do this, I'm just interested that financial advisers would sell PRSA's on this basis, given the risk.  With other products where there are surrender fees etc, I can understand there would be a level of comfort that people aren't going to start switching.  I don't understand this approach with PRSA's though.

-Rd


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## Laser (8 Oct 2003)

*The Light*

Ah Daltonr, you begin to see the light finally, even if by accident. The model doesn't work.

You've correctly exposed the weakness of running execution only and advisory under the one roof, which is a silly strategy. Good shoppers will take "free" adive fro one and use it elsewhere, and why not. If operators are stupid enough to give it away, and then sell below cost, they deserve what's coming.

You might find it ugly, but Dallers we're on the same side. Ugh.


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## Alan Moore (8 Oct 2003)

*5%*

"What further advice specifically related to the PRSA would you expect them to receive in the future that would convince them to stay?"

If I were a client I would expect ongoing advice on 
A) The investments I make e.g. most peoples attitude to risk changes as they get older and their funds build up.
B) Funding advice, on how to achieve the end goal
C) Is the policy I have taken out still the most appropriate.

"I'm just interested that financial advisers would sell PRSA's on this basis, given the risk"

When a client comes to me and he/she says they want advice they rarely turn around and say I'm confident of going it alone. Those that do go alone normally do from the outset.


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## Ralph (8 Oct 2003)

*My Crocodile tears for you Laser*

Laser, 

Congratulations. You're a supreme example of the Irish knocking mentality in action and worth more because you're not at all antiquated. 

You abominate the successful execution only operations, you loath them, you despise them, you detest them... 

Its clear to everyone that you've obviously lost business to the model that doesnt work.  Keep it up you give me so much more energy! Thanks


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## daltonr (8 Oct 2003)

*Re: My Crocodile tears for you Laser*

Ralph,

General remarks like you posted could lead to a personalised squabble between yourself and Laser which would cause this thread to be locked.

Can I suggest that the best approach is to not even engage in discussions like this.  I'd suggest you follow the example of others and simply ignore Lasers posts.  

Just like any community If your first posts on AAM tend to be personalised attacks on others, then you are likely to find your posts ignored by the bulk of AAM members in the long run, even if you begin posting interesting points.  Remember, first impressions last.

If there are specific points in a post that you take issue with, you can quote them, and point out where you disagree.  
I also note the you are an Unregistered Poster, which is in itself not a problem, however Unregistered posters get a little less leeway when it comes to questionable posts.  Registered users have the ability to edit their posts afterwards.  

Regards,

-Rd


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## Alan Moore (8 Oct 2003)

*Opinion*

"Its clear to everyone that you've obviously lost business to the model that doesnt work"

Would be most surprised if this is the case unless his/her office is next door to LABrokers.

In fairness to Laser I actually think the advice given on this thread has been quite accurate and should be heeded by Belinda. The problem everyone seems to have Laser is that there is a strong chance of being chastised for having an opinion thus leading to his/her advice been treated with scepticism and unfortunately also leads to threads sometimes becoming nasty and abusive. I do wish he/she would adopt a less confrontational approach because there is some good stuff in there sometimes. 

Anyhow, my belief, the "execution only" market is very small. This end of the market has established players who have been given fair deal of press. However the model only works if volumes are high and it is difficult for a new player to achieve the critical mass required.


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## POAP (8 Oct 2003)

*5%*

If an "Independant Financial Advisor" was to do his job correctly in relation to PRSA's should he not dispense the best advice for his client as this is his Job.

If this is the case he would have to tell them to go to a discount broker otherwise he is not giving the best advice.

If you asked a car dealer which was the best model of car to buy he will always tell you its the one he is selling. 

Is the term "Independant Financial Advisor" misleading along with the rest of the jargon that goes with the pension industry.


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## daltonr (8 Oct 2003)

*Re: Opinion*



> In fairness to Laser I actually think the advice given on this thread has been quite accurate and should be heeded by Belinda.



The real irony with Laser is that at no point did I or others disagree with the contention that advisers should be paid.  Of course they should.  I said repreadedly that I'd pay quite high fees.

I did (still do) have an issue with the method of payment for advice (flat fee v's percentage of contribution), but I think that could have been talked through in an intelligent way, as I think it just has been with Alan.

Laser seemed to interpret a discussion about Execution Only services as a major attack on financial advisers.  

If his concern is that AAM encourages people to understand their finances and possibly get into a position where they can use Execution Only services like Stockbrokers, or even PRSA brokers, then he may have a point.  I don't think AAM should apologise for that, it's here to assist and educate.  Not everyone will become financially fluent, but those that decide to shouldn't be subjected to abuse by a financial adviser calling them skinflints.

Ironically, anyone who does get financially fluent, and starts accumulating a bit of wealth will soon see the benefit of paying for financial advice, even if they have mastered specific things like share picking.

The tactic of going in feet first and insulting AAM regulars, and then misrepresenting their views over and over, was bound to turn people off, even if some of his other points made sense.  Hence apart from checking his posts to see if they need moderation, they now go unanswered.

First impressions last.  Particularly if no effort is made to correct them.

-Rd


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## daltonr (8 Oct 2003)

*Re: 5%*



> If this is the case he would have to tell them to go to a discount broker otherwise he is not giving the best advice.



I wouldn't agree POAP. Although I see where you are coming from.  If an adviser tells you to go to a discount broker, he has given you advice.  He may have put in a bit of time coming to the assesment.  He may have also told you how much to contribute and how much to expect on retirement etc.

He should get paid for that.  It's just a question of how much.  And how he should be paid if after going to a discount broker, but you go back to the original adviser later for more advice.

I'd prefer to pay the adviser for his time and effort, rather than pay a %.  It sounds like you'd prefer that too.

As Alan pointed out it may be hard to convince people that the advice is worth a couple of hundred euro, although I think if you show them the long term effect of 5%, people would be convinced pretty easily.

Funny how people will shop around for the best rate on a credit card, but seem unconcerned about a couple of percent here and there on a mortgage or a pension.

-Rd


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## Alan Moore (8 Oct 2003)

*Round in Circles.......*

POAP, I'm wondering if you are taking the michael.



> If an "Independant Financial Advisor" was to do his job correctly in relation to PRSA's should he not dispense the best advice for his client as this is his Job.



They should and generally do. 



> "If this is the case he would have to tell them to go to a discount broker otherwise he is not giving the best advice"



Aye carumba. You miss the point. You assume that the off the shelf product the discount broker has on offer on an execution only basis is the best advice. It may be for someone that DOES NOT WANT advice. Do you go to an ADVISOR if you don't want advice?

Again and I feel I am beating my head off a brick wall here, if you DO WANT advice you go to an advisor who you pay for it. How you pay for it? By paying a fee or a commission. Advisors aren't a charity.



> "Is the term "Independant Financial Advisor" misleading along with the rest of the jargon that goes with the pension industry. "



In my view, no. The industry is heavily regulated. IFRSA do file checks on brokers to ensure that (a) the clients circumstances have been documented and that (b) the broker can show that the best advice was given.


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## Laser (9 Oct 2003)

*Missing the Point*

In an effort to freeze out my comments you ignore the central contention continuously. AAM enthusiasts are correct to pressure for reduced fees, but incorrect to assume that this works outside of the tiny community AAM represents. Consequently imposing your philosophy on the market in general is dumb.

Belinda asked if his/her 1 Euro idea was workable. None of you have told Belinda that its off the wall, because to do so would mean admitting that the cosy consensus on AAM since the start that the planet is moving or can move en masse to bypassing advisors is unworkable in reality. And don't think that you haven't said so.

Time and time again you have put forward token fees/commissions to advisors, underplayed the sheer amount of time required to fulfill face to face meetings and regulation, and occassionally commented in a prejudical and intolerant way towards people who make a living, essentially proving why your view of the world is wrong.

You don't tolerate me, not because of the style excuse, but because you can't engage in the debate without losing it, not because I'm in any way smarter, but because your position is daft.


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## Alan Moore (9 Oct 2003)

*Have you read the thread?*

"None of you have told Belinda that its off the wall"

So far, both Observor, myself and your goodself have told Belinda that it is a very difficult business model to make work. 

Off the top of my head, I can't remember anyone on AAM recommend the business model.

"You don't tolerate me, not because of the style excuse, but because you can't engage in the debate without losing it"

You seriously believe that it’s not your style that has alienated some of “the usual windbags with dumb and simplistic answers”?


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## daltonr (9 Oct 2003)

*Re: Have you read the thread?*



> So far, both Observor, myself and your goodself have told Belinda that it is a very difficult business model to make work.



I think I said that if she's going execution only then she should charge a fee for that.  The almost free PRSA might be an interesting publicity stunt but it should be time limited.

It sounds to me like her €250 was not for a detailed financial advice service, it was just for a slightly more hand holding style of execution only service.

I don't know why anyone would expect me or anyone else to tell Belinda whether the business model would work or not, we're not financial advisers.  Alan, if you point out problems with it then Belinda should take that advice seriously.

On the other hand the general reader can only suggest whether a product or service sounds attractive.  That's a valid piece of information for Belinda to try to gather.  It's up to him/her to find a way of delivering it.

I'm still not convinced that on PRSA's the 5% fee is justified.  I understand the arguments for it, but I still have reservations.  I actually think that specifically on PRSA's the 5% fee is bad for both client and adviser.

But we can agree to disagree on that.  At least it's been well and truly thrashed out.  People can make up their own mind, which is what it's all about anyway.

-Rd


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## Laser (10 Oct 2003)

*Not Over yet*

Not a chance that this will go away. The Pension Survey in the Independent today smashes the case being put forward by the skinflints.


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## tedd (10 Oct 2003)

*Re: Not Over yet*

More about [broken link removed]...


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## daltonr (10 Oct 2003)

*Re: Not Over yet*



> according to new research, the rich don't like to be flash with their cash



Good link.  Not sure if it counts as New Research though.

Thomas Stanley wrote about it in 1996 in The Millionaire Next Door.  And again in The Millionaire Mind.

It does tend to apply more to consumption though.  The wealthy have no problem paying for professional services such as accountants, financial advisers etc.  "Some people" don't seem to be getting that message.  But, what can you do?

One of the things Stanley points out is that the wealthy tend to consume at a level equivalent to an average household with as much as a third less income.

High income households that can't accumulate wealth may be consuming at a rate equivalent to an average household with an income more than twice as high as theirs.

If you've got a Merc or a Beemer in the Driveway, and can't figure out why you have very low net worth, check out either book.

-Rd


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