# "Self administered" ARF



## Brendan Burgess (11 May 2011)

A friend of mine has gone to a fee based advisor with an ARF of around €2m. The advisor is setting them up with an Irish Life ARF with annual managment charges of around 0.75% 

That is €15k a year, every year. They would be well able to manage their own money and I think that they should. 

The advisor doesn't seem to have raised the possibility of a bespoke QFM. 

Are there fee based QFMs? How much do they charge? 

Brendan


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## Marc (11 May 2011)

Brendan,

Yes, we have seen a few of these recently. One client paid €40,000 in commission and was locked in to the contract for 5 years for his "self-directed ARF". 

You shouldn't be paying more than €5000pa for an ARF contract with €2m. For very large funds we can usually negotiate a cap of around  €6000pa.

Whilst I accept that many people could be able to manage an investment portfolio, when it comes to managing imputed distributions, plan charges, government tax levies, mortality drag, dealing costs, liquidity issues, rebalancing and getting institutional terms for investment then there is something to be said for getting portfolio advice.


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## Baracuda (12 May 2011)

Hi Brendan

With a 2M fund surely the broker is getting your friend extra allocation for the fund? Brokers are usually able to get extra allocation that will cover the AMC for a number of years (up to 7 years). However when a broker gets a client extra allocation there would encashment charges on the fund for a number of years for withdrawals over 9% p.a.

Barcuda


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## murp (12 May 2011)

There are self directed ARFs available n the market place, as Marc mentioned you can negotiate the fees on a bespoke ARF where as you cant with an insurance company give the mechanism that insurance companies charge via unit deduction.


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## Brendan Burgess (12 May 2011)

Thanks folks

What are the names of the companies which offer these funds? 

Do they display their charges transparently on their websites?


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## boaber (13 May 2011)

Hi Brendan

The following are the ones I know of:

[broken link removed]
http://www.harvest-financial.ie/

http://www.davy.ie/Generic?page=abouttoretire
[broken link removed]
[broken link removed]

Not sure how much they charge though


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## Brendan Burgess (13 May 2011)

Thanks boaber - Harvest was mentioned to me by another person. I emailed them and got this reply, 


_We offer flat fee  structures for both our Self Administered Pension Trusts (SSAPs) and Approved  Retirement Funds (ARFs)._
_The annual fee  varies depending on a) the value of the Pension/ARF and b) the complexity of the  assets contained therein. _

_To explain further:  _

_We have situations  where the client has chosen to leave the entire ARF is sitting in cash in bank  accounts. Because this means a smaller workload for the QFM, we will agree a  lower annual fee than a client who for example, has a whole range of assets such  as an ARF portfolio which holds 3 direct properties, has numerous accounts with  stockbrokers to hold equities and bonds, a few property syndicates with various  providers, some managed funds with various fund managers and several bank  accounts for cash, some perhaps denominated in foreign currencies. For clients  with quite complex portfolios such as this, our annual fee would obviously be  higher. We would be required to revalue all  assets each year and once the  client turns 60, each ARF is subject to a drawdown amount of a minimum of 5% of  the fund per annum. This drawdown is subject to PAYE which we would pay across  to the Revenue on behalf of the client, with the client receiving the net  amount. However, because we structure our fees on a flat fee basis rather than a  percentage of __the  Pension__ or ARF, our fee is  very competitive compared to other providers in the  market._

_Because Harvest is  an independent financial advisor, we have relationships with a broad range of  both domestic and international banks, stockbrokers, fund managers etc. This  allows our clients access the broadest range of investment options available.  This also means our clients are able to access the best provider in each  category with the only investment restrictions being those imposed by the  Revenue for the operation of Pensions and ARFs. Having access to a broad range  of providers allows clients to invest their assets across Irish and  international providers to spread their risk. _


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