# Entry charges for ARF & ARMF



## Veteran (5 May 2016)

I opted to take a lump sum and invest the rest of my pension in an ARF and an ARMF. Neither the financial adviser nor the Irish Life representative with whom I discussed the decision mentioned entry charges. When I received the plans from Irish Life I was surprised to see that there is a 5% entry charge. Before withdrawing from the plans (I'm still in the cooling off period) I wonder if there are other providers who charge less on ARF and ARMF plans?


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## Dan Murray (5 May 2016)

Hi Veteran

This looks like another disappointing example of unethical behaviour within the financial services industry. You are, most likely, paying miles over the odds:

As a first step, can you advise please:
1. The approximate amount of your AMRF/ARF investments
2. What your understanding of charges was (initial and ongoing)?
3. What your understanding of charges is now (initial and ongoing)?
4. Your understanding of the commission / fee arrangements?
5. What you received in writing in relation to fees and charges prior to taking out the policy.


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## Steven Barrett (5 May 2016)

First of all, your adviser should have been up front with you about the charges and not waited for you to get the documents from Irish Life.

There are 20+ different charging structures in the market at the moment. You are being charged the absolute highest one that is out there. The management fee is probably pretty high too. You will then be limited to the level of withdrawals you can make in the first 5 years so Irish Life can recoup some of the money they paid out to your broker.  

There is a lot better out there. 

Steven
www.bluewaterfp.ie


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## GSheehy (5 May 2016)

Hi Veteran,

The disclosure of the entry/exit charge (and any other charges) should have taken place at the point of sale. You've signed a declaration on the proposal that you have received the relevant customer guide (the advisor has signed that he/she has given it to you).  The customer guide will have generic information on how the charges affect the policy and what indicative intermediary remuneration is paid. When the policy documentation is issued, the specific charges/remuneration will be included.

If you receive advice on a product, you have to pay for it. This can be via commission from the product or fee. The levels of these can be negotiated.

If you don't need advice you can set up a product on an 'execution only' basis and the indicative charges on this type of service are 0% entry/exit charge and a 1% annual management charge. 

Typically, it's the difference between the 0% and the 5% that pays for the advice.


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## Steven Barrett (5 May 2016)

Hi GSheehy

Veteran may very well have received all the disclosure documents at the point of sale. The Central Bank compliance requirements mean there's so much paperwork involved, it easy for an advisor to bury the fees and charges in the paperwork. The client gets overwhelmed with brochures and documents and loses interest in the compliance aspect. 

I put all fees and charges in the Statement of Suitability statement, just above where they have to sign their name. People should be made fully aware of the charges they are paying for any product and the advice they are getting. 


Steven
www.bluewaterfp.ie


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## Veteran (5 May 2016)

Hi Dan,

Thanks for the rapid response. Here are the details you requested:

1. The approximate amount of your AMRF/ARF investments
    ARF:    32,500
    ARMF:    63,500
    100% to be invested.

2. What your understanding of charges was (initial and ongoing)?
    There was no mention of entry charges. Ongoing charges were to be 1.25% p.a. for the funds and 0.25% p. a. for the plans. 

3. What your understanding of charges is now (initial and ongoing)?
    There is a 5% entry charge and an ongoing 1.5% p.a. charge.

4. Your understanding of the commission / fee arrangements?
    My financial adviser was made available to me by Ulster Bank, with whom I have had an account for 16 years, 
    as a free service to customers. I assumed that there would be no commission for him. 
    The only fee/charge I was aware of was the 1.5% p.a. 

5. What you received in writing in relation to fees and charges prior to taking out the policy.
    At the meeting with Ulster Bank and Irish Life, I was given Navigator ARF and ARMS booklets. 
    In the Charges section it states that the entry charge for a single contribution is the amount by which 
    the investment is less than 100%. I was told at the meeting that the amount to be invested was 100%.

    Some 8 weeks later I received the welcome packs in which the illustrations show approx. 6% charges in the first year.
    I questioned this with the advisor and 2 weeks later I received plan summaries which show "cash in" charges of 5%.


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## Veteran (5 May 2016)

GSheehy said:


> Hi Veteran,
> 
> The disclosure of the entry/exit charge (and any other charges) should have taken place at the point of sale. You've signed a declaration on the proposal that you have received the relevant customer guide (the advisor has signed that he/she has given it to you).  The customer guide will have generic information on how the charges affect the policy and what indicative intermediary remuneration is paid. When the policy documentation is issued, the specific charges/remuneration will be included.
> 
> ...




Hi GSheehy,

Thanks for your advice. BTW the Ulster Bank person is a "financial planning manager".  I don't know if that includes being a broker.


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## Veteran (5 May 2016)

SBarrett said:


> Hi GSheehy
> 
> Veteran may very well have received all the disclosure documents at the point of sale. The Central Bank compliance requirements mean there's so much paperwork involved, it easy for an advisor to bury the fees and charges in the paperwork. The client gets overwhelmed with brochures and documents and loses interest in the compliance aspect.
> 
> ...


Hi Stephen,

There were indeed a lot of documents. I don't remember seeing a Statement of Suitability and I was not given one.


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## GSheehy (6 May 2016)

Veteran said:


> Hi GSheehy,
> 
> Thanks for your advice. BTW the Ulster Bank person is a "financial planning manager".  I don't know if that includes being a broker.



Ulster Bank are tied agents of Irish Life so they can only advise on products available from Irish Life. The term 'broker' normally refers to an intermediary who can advise on the product ranges from a number of Life & Pension companies.

I'd say you're going to exercise your rights under the cooling off period and if you need a push, I'd do it.

If they try to talk you out of it, and they will, don't relent. 

The charges/commissions on the product you've been sold are just not fair, never mind the lack of disclosure.


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## Steven Barrett (6 May 2016)

Hi Veteran

I agree with what GSheehy says 100%. It's hardly surprising to find out that it a bank that set up your policy. Without knowing what funds you are invested in, I would also question the investment strategy that was recommended to you. They probably just stuck you in the Consensus fund (not that the concensus fund is bad per se).

That 1.5% management charge is going to cost you a lot of money over the years. It is way higher than you should be paying and it is funding the 5% commission that the bank official is being paid. 

Get onto Irish Life immediately and cancel the policy. I wouldn't even engage with the bank on it. If he's losing the business, he'll offer a lower charge but he should have done that in the first place.


Steven
Www.bluewaterfp.ie


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## Gerry Canning (6 May 2016)

Veteran,

After all the PROVEN thievery by Banks and their officials ,it still surprises me that ANYONE should trust them.
Over this past decade it is difficult to see one competent or honest Bank .It is difficult to see one competent Bank Official.

I 100% agree with the posters , sbarrett & gsheehy; in my experience of their posts they give good advice ..


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## 44brendan (6 May 2016)

Gerry Canning said:


> It is difficult to see one competent Bank Official.


I'm gutted Gerry


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## Gerry Canning (10 May 2016)

Sorry Brendan44,

You in your posts come across as the ONE !


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## Veteran (10 May 2016)

Thanks folks for all the good advice. I've pulled out of the plans and am looking around for a better alternative. I wonder where my money will rest in the meantime.


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## Steven Barrett (16 May 2016)

It will remain in the "suspense account" which is a cash account until you tell them what you want to do with it. 


Steven
www.bluewaterfp.ie


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