# 5% contribution charge... why is nobody complaining?



## extopia

Seems like a poor deal to me. It only seems like a good deal because of tax relief. And your PRSA has to make 6%p.a. to break even. If you ask me, it's tax relief subsidising the banks, and as far as I can see, nobody seems to think it's a rip off.

The ONLY prsa I would buy would have 0% contribution rate. Management charges are OK, as long as they are reasonable. 1% seems high enough considering the amount of lousy management out there.

What do you folks think? Is there something wrong with my reasoning?


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## Ceist Beag

I agree extopia. I couldn't believe when I heard that each and every contribution is subject to a 5% charge .. seems like robbery to me. Did you see the myadviser offer that was available up until last week? They were offering a one off 50 euro charge to set up the fund and then just a 1% annual management fee, no contribution charges. Seemed like the best offer around to me.


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## ClubMan

While it is a common misconception, PRSAs are not necessarily low cost pensions. However it is possible (as mentioned above) to get a better deal than the max standard PRSA charges of 1% p.a. and 5% on contributions. Shop around for the best deal. As usual, caveat emptor.


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## extopia

ClubMan, I KNOW it's possible to avoid the 5% charge. However, my point is that the "maximum" 5% rate is being ignored by everyone, as if it's not worth even worrying about.

I'd expect a hell of a performance from any fund that levies such rates, then management fees on top of that!

As usual, the marketing of these products is made easier by the public's general financial naivete -- all to easy to bamboozle the customer with bullsh*t.

Except here at AAM, of course!


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## ClubMan

*However, my point is that the "maximum" 5% rate is being ignored by everyone, as if it's not worth even worrying about.*

Not by me!   I raised the issue of the arguably high standard PRSA charge caps (5%/1%) several times in the past here on _AAM_, particularly when people mistakenly assumed that PRSAs were de facto low charges pension vehicles. I'm not sure what, if anything, can be done about reducing these charge caps.


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## Alan Moore

*In defence of the 5% charge......*

and I'll be shot for my opinion but here goes.

There are three types of individual in the market for a PRSA.

A)  One that doesn't need advice. this person can purchase a PRSA with a 0% up front charge for a minimal fee.

B)  One that needs advice and is prepared to pay an agreed cost for that advice. Again a PRSA is available with a 0% up front charge.

C)  One that needs advice but doesn't want to or can't afford to pay up front for it. Because a pension provider can charge 5% up front they can afford to pay an introducer commission which can be used as an offset against the cost any advice given.


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## ClubMan

*Re: In defence of the 5% charge......*

I won't shoot you but...

*this person can purchase a PRSA with a 0% up front charge for a minimal fee.*

I personally don't consider €100 minimal whatever about others...

I would agree with those who assert that the Standard PRSA charge caps are too high in general.


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## Alan Moore

*Is 100 euro minimal?*

Think we'll agree to disagree.

I personally think that 100 euro is very reasonable. Most people taking out pensions will aspire to having a pension fund in the 100's of thousands. By paying the 100 euro the client saves 5,000 for every 100,000 of a pension fund. A bargain.

I wish other industries were the same. For e.g wouldn't you like to be to buy a new car on an execution only basis. Cut out the middle man and pay someone 100 euro to process the order on a nil commission basis.


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## ClubMan

*Re: Is 100 euro minimal?*

*personally think that 100 euro is very reasonable*

I didn't say that it was unreasonable just that I don't consider it to be minimal!   I agree that it's worth paying €100 to save the 5% "bid-offer" spread but I can't understand why, in the context of any unit linked type vehicle - be it a pension or a regular investment - the annual management fee of c. 1% shouldn't be more than sufficient _on its own_ to remunerate all interested parties (manager/underwriter, intermediary etc.). It's reasonable to expect people to be paid for a service but I just think that charges, while generally lower these days than in the past, are still laid on a bit thick and justified by unreasonable guff (not yours I might add) about "added value", "full service" etc. Maybe I'm just naive...?


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## Alan Moore

*"are still laid on a bit thick"*

Not sure this is the case with PRSAs. Can't see them generate huge profits for the insurance companies. However I do think that costs will come down over the years once the provides have recouped some of their initial set up costs. We'll all switch to these probably when they arrive.


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## POAP

*1% management charge more serious*

From what I can see the 1% Managment charge generates alot more for the insurance companies over the life of the Pension.

Assuming contributions of 10,000 a year rising in accordance with inflation of 3% per year with growth of 5% per year, contribution charges of 5% and a management Charge of 1% over 35 years you end up with the following:

All Net present Values
Total Contributions = 350,000.00
Contribution Charges = 17,500.00
Management Charges = 70,000.00
Fund Value = 405,000.00


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## Alan Moore

*You might want to check those figures.....*

I make the figures out to be a lot different using your assumptions.

Anyhow, I would however agree that if someone were to make contributions to a PRSA over 35 years at a rate of 10K a year that the insurance company will be quids in.

The reality is that your average PRSA policyholder (in my experience) will do 100-200 per month. I also expect the life span of PRSA policies to be a lot shorter than previous pension policies. People will transfer from provider to provider or join companies where the employer already has a scheme.  I reckon the average term could be as low as 10 years.

If you reckon you will be in for longer, it would be worth looking at PRSAs that lower the annual management charge the longer the policy goes on or the larger the fund becomes.


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## Alan Moore

*Think I've figured out where your figures come from.....*

... they are based on a most pessimistic (over 35 years anyhow) net growth of 1%?

Would concur that the insurance company would do well out of this example. But if you take Joe Soap that puts in 50 euro a month over 10 years the upfront charge comes to 300 euro and the management charge collects just over 300 euro.

Not bad if the client has received advice, benefit statements and an investment services for 10 years.


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## ClubMan

*Re: Think I've figured out where your figures come from.....*

*Assuming contributions of 10,000 a year*

€800+ p.m.! Fair play - I just wish I could afford that! :|


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## POAP

*ADVICE*

I have a personal pension for over 5 years and am paying high charges, I have never received any advice since starting this pension. Could you give me an example of the kind of advice I should have received for my money ? 

Whilst my figures maybe pessimistic - actually net growth over inflation of 2% - The larger the growth, the bigger the slice of the cake the insurance company gets.

While your assertion is correct that people will change plans over the years they will however just move the money to a different plan and at the moment the PRSA's seem to be the best deal


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## POAP

*HIGH*

Clubman - 10,000.00 per year is a bit high actually but I was just using that figure for the sake of the calculations surely the principal is the same if it is for 100 euro per year.


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## Ceist Beag

*Management charges*

POAP, sorry if this is a daft question but I'm still getting my head around all these charges, but from your calculations would I be right in thinking that the management charge is 1% of the fund value at the end of each year? Jeez I didn't realise how easy these guys make money out of us!! So even if they don't make any profit for you on your contributions and you pay in 5000 a year, they will still have made 7450 of you after ten years? This would mean on year ten alone they would take in 1000 and it would just get better the longer the it went on! Good God I'm in the wrong business!! I thought the 1% was on your contributions!


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## POAP

*Management Charges*

That is my understanding, in effect if the charges are 1% then your fund needs to growing at inflation +1% for you just to stand still in real terms.


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## ClubMan

*Re: Management Charges*

*So even if they don't make any profit for you on your contributions and you pay in 5000 a year, they will still have made 7450 of you after ten years?*

Yes - but there is an obvious incentive for them to make sure that they generate the best returns possible on your fund. I think that this charge is fair enough. My point above is that I don't really understand why the annual management charge isn't sufficient to cover the full cost of an investment produce - underwriter, manager, intermediary, execution only or maybe even basic advice based service etc.? I guess it's a possible "great debate" rather than something that has any single correct answer.... one for the _Great Debates_ perhaps...


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## Pedant

*Re: Management charges*

Ceist Beag,

I'm not sure where you got the 7450 figure from.  By my calculations it should be 5113.

Is mise le meas.


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## Brendan Burgess

*Get a life*

Ah get a life. This thread is full of the usual windbags with dumb and simplistic answers to a complex market. For God's sake 5% of WHAT?

You keep barking on about 5% being poor value, but not a thought about 5% of WHAT. That's pretty stupid. If it's 5% of 100k to do a job that's one thing, but if it's 5% of €1,000 in a year that's a miserable €50.

And €50 will buy you what? Sod all. So get a life. If it falls to 1% you'd save WHAT? About €40 in a year for the average poor man's pension aka PRSA - and all those acres of room in the media barking up this stupid tree. Honestly, adults should know better. Get a life!!!!


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## Brendan Burgess

I agree with Laser - 5% is very little if the contribution is small. I couldn't find what the minimum monthly contribution is? But it's probably €10 per month. 

I doubt if the pension companies will make any profit at all on PRSAs unless they can attract lots of employees contributing €10k a year. 

In the UK, something like 80% of stakeholder pension schemes have no members. I would guess that 80% of PRSA schemes will have no members either. So the institutions will have lots of costs with no revenue. 

We set up our company scheme with AIB for convenience and to meet the 15 September deadline. If there is a heavy take up and a lot of contributions, we will probably switch to a lower cost provider. 

Brendan


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## ClubMan

*I agree with Laser...*

Yes - and his/her opinions were so well expressed too! :rolleyes  I still don't understand why the annual management fee of c. 1% _on the full value of the fund_ cannot be sufficient to cover the expenses of all of the interested parties involved in setting up and managing a pension fund. Perhaps somebody can explain to a simpleton like me why this is not possible so I can then go off and get a life? 

x% is x% regardless of the amount being contributed. If I can only afford €10 a month then a fixed percentage charge affects me as much as it does the high rollers who can make larger contributions. While I accept that any service costs money and there is some level below which certain activities are simply not commercially/financially viable I don't see what the problem is with pushing for even lower charges and better value.

:\


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## extopia

Well obviously Laser does not understand the principle of compounding. 5% is very little? You can buy thousands of US Mutual Funds for far less than a 6% annual charge on your account. I'd be prepared to pay a fair percentage if I trust the fund manager to get a decent return (ie better than the annual fee plus inflation). The only reason they get away with 6% here is because of the tax relief -- in other words banks being subsidised by the government.

I won't be buying a 6% PRSA. Only in Ireland would the financial services industry get away with such a This post will be deleted if not edited to remove bad language product


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## ClubMan

*I won't be buying a 6% PRSA. Only in Ireland would the financial services industry get away with such a This post will be deleted if not edited to remove bad language product.*

Of course, if you shop around you don't have to buy a such a product and you can relatively easily get one for a fixed up front fee and 1% p.a. only. At least this is better value than 5% up front/1% p.a. but I don't see why some people seem to have such a problem with me suggesting that there may be potential for charges to be even lower... :\


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## Brendan Burgess

Hi ClubMan

I have no problem with anyone trying to get the charges down below 5%. 

5% is very profitable for the supplier if the annual contribution is €10,000.  It would be a big loss maker, if the annual contribution is only €1,000

Likewise, 1% of a €1,000 is only €10 per year, while 1% of a €100,000 is €1,000 per year. 

Brendan


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## ClubMan

Actually it was _Laser's_ arrogant contribution that I had in mind when I posted that last one.

While on the topic of charges, _NewsTalk 106's_ personal finance "doctor" was on this morning and was asked twice about PRSA charges and twice stated that Standard PRSAs levied *only* a 1% annual management charge and nothing else. He even told a caller that there was something wrong if his PRSA was charging 5%/1%. He said that only Non-standard PRSAs could levy more than 1% p.a. And these are the so called experts... :rolleyes


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## Merlin

Yes I think Brendan makes some good points about the charges allowed on standard PRSAs - if we want PRSA providers in Ireland to have such slim margins that they cannot afford to advertise their products (and all those Irish life radio ads and inserst in the Irish times must cost quite a few bob) and pay commission to sales agents and brokers then by all means cap charges at 1% per annum and scrap the 5% charge. Of course the result of that is, as in the UK, only a very small number of people actually bother to take out these cheap products.

I think people on askaboutmoney sometimes make the mistake of thinking that they are typical - it would be nice if everyone were as aware of the need to have a pension as the average askaboutmoney contributor but the reality is that pensions need to be sold - this has been proved time and again here and in the uk - and selling costs money! I'd prefer lots of people to take out ok value pension plans than a handful of financially aware people to take out fantastic value pension plans.

A couple of other points, yes 1% of the fund every year adds up to a lot over 20 years of contributions, more than enough to pay any expenses the PRSA providers incur. However, the sad fact is that each and every year 10% of people fail to keep up their contributions - hardly anyone makes it all the way through to retirement paying regular contributions. So this means that PRSA providers will have lots of small pots of money from lapsed contracts, on which they are earning just 1% but still have to provide annual reports, manage the money, answer queries etc etc. In effect, those people who pay reasonable premiums for many years and build up sizeable funds cross subsidise those who pay small irregular contributions and do not build up funds of much size. 

Finally, a previous poster added the 1% to the 5% to get 6%. This is misleading - the 5% applies to new contributions only whereas the 1% applies to the total fund. In fact, the 1% charge is actually a bigger charge than the 5% charge over e.g. 20 years of contributions. In fact it's about twice as big!
(I've assumed 6% growth on the fund each year and that contributions rise in line with inflation of 3%)


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## extopia

*I've assumed 6% growth on the fund each year and that contributions rise in line with inflation of 3%)*

Interesting... 5% contribution charge + 1% of total fund management charge is greater than 6% p.a., and the experts who sell these products are assuming 6% growth.

This whole thing is a sham, isn't it?

May I say it again? The financial industry subsidised by tax reliefs.

Boo hoo for the poor financial institutions having to manage all those "lapsed contribution" funds, at great expense to themselves. Perhaps they could be more proactive about advising their clients AGAINST buying products they can't keep up the payments on in the first place.

And of course the "smart" people here won't pay the 5%, which means they won't be cross subsidising the people who can't "afford" a pension plan.

And if the 5% is going towards "selling" costs (ads, inserts, etc) well that's a very interesting point. Are PRSA's really such a hard sell? We are talking about 5% of all contributions! Subsidising the banks marketing costs!

I love it.


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## Laser

*Get a life*

Ah c'mon girls, give it a break. The industry has been bashed with handbags for years and quite right too when products were robbery. But even skinflints, present company excluded, can see that at the standard charging structure there's little fat for an industry asked to sell pensions to the poor, with low contribution rates and poor retention.

The skinflints in this thread with their egghead detachment from the real world would like to squeeze out even more juice - and to hell if it doesn't work. No so long as it wins a silly little argument in an irrelevant thread, on a remote, and little used website, that's just fine.

Get a life.


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## Sumatra

*Halcyon days?*

The industry squeezed so much juice out of the proletariat that it got too fat. But now they bite back! 

One such as Laser has put on so much fat that they have become slow and cumbersome.

Let slimer newcomers to the industry, who have no memory of the good old 'juice squeezing days' sell the commodities that you don't want to sell whilst you ride out gracefully into the sunset and flatulate about the 'good old days'.  

Sumatra


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## Alan Moore

*Girly dumb windbags? - Adult behaviour?*

Laser, while I agree with a lot of the content of your opinions on this thread, I'm not sure that offending and insulting other contributors is really necessary. You might take a bit of your own advice "Honestly, adults should know better. Get a life!!!!"

Askaboutmoney is a DISCUSSION forum. And I'm sure that when the thread was started by extopia that he or she believed (a) that PRSAs are overly expensive and (B) wanted to know why other people dont see it the same way. So a thread that might be irrelevant to you may not be irrelavant to the person asking the question.

Suggest you skip over the threads you find irrelevant. and that where you have a difference of opinion that you can be constructive (and be taken more seriously) without the  derogatory remarks.


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## Caius Martius

*Difference of Opinions*

Brendan and Laser understand that PRSAs have to be SOLD.

The rest of you have convinced yourselves that PRSAs will be BOUGHT.

If the Pensions Board thought for a minute that the Stakeholder model would work here then you can be sure that all PRSAs would have been issued on an AMC basis only.

What constructive suggestions do you have for our friends in the UK so as to increase Stakeholder coverage?


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## extopia

*Re: Difference of Opinions*

*>> Brendan and Laser understand that PRSAs have to be SOLD.*

Well, with 6%+ in charges, it won't be easy!  

I certainly won't be buying at these rates... and yes, I know there are cheaper options available (these won't be sold quite so aggressively, I am sure). 

When I was buying my SSIA, the "advisor" down at the bank tried to "sell" the equity version. But she couldn't answer even the most basic question about it, such as what the fund investment philosophy might be. All she could tell me was that the returns could be "higher." How many poor fools were led down that garden path by our hard-pressed friends in the financial institutions? Quite a few, I gather -- not that there's anything wrong with equities, just that the institutions need to be more upfront about the risks if they are pushing them on the "poor."


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## ClubMan

*Re: Difference of Opinions*

For an irrelevant discussion on a remote and little used website I'm finding this quite interesting. I certainly appreciate the arguments about pensions being sold and there being some limit at which charges can no longer be reduced without making things uneconomical. However eggheads like me with no life will definitely strive to obtain the best value possible in terms of PRSAs and any other financial products. I personally will definitely not buy a 5%/1% deal. Especially since nobody (with the possible exception of _Merlin_) has adequately addressed my point about why 1% p.a. alone might not be sufficient to remunerate all interested parties. In the meantime hopefully others who don't find discussions such as this so irrelevant that they resort to puerile name calling will also learn that there is scope for shopping around and will not be passively sold a pension but will shop around and buy the best deal for themselves. It's also good to see that all industry insiders (e.g. _Alan_ and others) aren't as boorish as _Laser_ even if they disagree with some of the counterviews. :\


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## Alan Moore

*Scumbags & maggots......*

In answer to Caius Martius

Would agree that pensions generally have to be sold. I have found in general, people under 30 don't want to know, people 30-40 are interested and know they should be doing something but don't do enough and only those 40+ understand the need to have a pension and to start funding early.

I expect the answer you want to hear is a suggestion to increase the up front charge in order to increase fees to the sales agents. However, they won't backtrack in the UK. Stakeholder has been a flop. 

How would they increase coverage? 

Suggestions :

1)Education: The state should take responsibility for educating people on pension funding. A lot of people believe that they can leave pension funding til later in life and end up leaving it too late and find themselves in a more desperate situation than they would have expected.

2)Compulsory pensions with minimum contribution levels, I think it maybe only a matter of time before these are introduced. 

3)As longevity of life contintues to march upwards I believe it likely that the state will change the OAP age to 70. This will be most unpopular but possibly may be a requirement to keep the state afloat. This will result in people to be encouraged fund for early retirement at 65.

Not saying I necessarily want these measures to be taken but they are steps that could be taken to increase pension coverage.


In answer to Extopia, 
"Well, with 6%+ in charges, it won't be easy!". 
Its not easy and PRSAs aren't selling that well. However I believe that most people don't decide whether or not to take a pension out based on charges. They take out a pension on he principal of having an income in retirement & tax relief on their contributions. Then they look for a pension with competative charges but they've already made their mind up to do a pension of some description.

In answer to Clubman aka egghead
You probably need an actuary to explain why 1% isn't sufficient as it is in the UK. May come down to economies of scale. Couldn't tell you where the breakeven point is for an insurance company. P.S. Me not boorish? You should get me talking about in-laws.


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## Brendan Burgess

*Re: Scumbags & maggots......*

Laser is only winding you up. He takes a contrary opinion in the Media Watch thread. 

Enjoy his colourful language for what it is and don't take offence.

Brendan


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## Laser

*Well Spotted*

I'm outed, oh boo hoo hoo!


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## Caius Martius

Because the 'traditional wisdom' on this site was that the 4.5% initial charge with Equitable Life was AOK.

Although, Clubman seems to be singing a different song these days :lol


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## ClubMan

*Although, Clubman seems to be singing a different song these days*

I don't get it. I did express a preference for _EL_ in the past but not at a rate of 4.5% up front (I certainly never paid that level of charges) and also because they had a 0.5% annual management fee. On the other hand obviously the _EL_ situation is pretty grim since the whole GAR and related debacles but then again but I'm not the only one not to have forseen this. Even the professionals never warned about this issue in advance unless I'm mistaken.


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## Alison

*Charges*

Have just read this thread for the first time and feel there is a mis-conception that has been left alone but requires clarification. 

An entry charge of 5% and annual management charge of 1% does not equte to annual charge of 6%.  Extopia seemd to think that with an assumed growth rate of 6%, you're simply paying in charges what you expect to receive in rertuns.

This is flawed thinking. 

Example:

100 invested per month
1,200 invested in year 1
5% entry cost = 60. 
In addition, 1% of the fund value is deducted daily, or 6 euros.
Lets' assume 6% growth.

So let's assume that there's 1,202 in the fund after 12 months. 

This money has paid its entry charge and now is set to grow by the 6%, or whatever the year two return ends up at. 

How else could an outlay of 36,000 over 30 years (assuming flat 100 per month) end up being worth over 75,000?    

If the charges and growth were the same, you'd just get back the 36,000. 

Expotia seems to base his/her stance on the application of an annual management charge of 6%.

Anyone see what I'm trying to get at? (not very well it must be said)!

Rgds,

Ali


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## Roisin

*5% Entry Charge*

If you pay €100 a month and there is a 5% entry charge then only €95 of your €100 gets invested.

From your point of view €5 goes down the drain every month for nothing.


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## Annabelle

*5% Entry Charge*

Very similar to drinking alcohol !


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## Alan Moore

*Reduction in yield.....*

Allison you are correct in your logic. To illustrate the point. Assume 6% growth and 1000 invested day 1.

Value day 1  -  950
Value end year 1 - 997.50 ( increase of 5% net on last year )
Value end year 2 - 1047.37
Value end year 3 - 1099.74

So as you can see, your fund goes up as time moves on provided the rate of growth is in excess of 1%.

Roisin
"For nothing"?. Well that's the debate.


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## Merlin

Exactly the point I was trying to make earlier

In fact for a person paying contributions for 20 years, increasing the contributions each year by say 3%, the total affect of the 1% management charge and 5% contribution charge is equivalent to a 1.6% management charge and no contribution charge. I think it's funny that extopia is getting all worked up about the 5% charge when the 1% charge is actually bigger!

Note that this answer depends only very slightly on the investment return assumed e.g. for 0% investment return, the answer is 1.58%. for 6% investment return, the answer is 1.56%.


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## Frank

*Good value for money*

What I find amusing in this thread is the fact that there are options out there where there will be no 5% just 1% sliding to 0.85% (see LA Brokers thread) but this is for execution business only. Does one know that this is the right product for them ? Also just because something is cheapest doesn't necessarily mean that it is the best. Brendan I think the Indo is guilty in this department. When SSIA's were been bandied about - Quinn Life & EBS were quoted as "best deals", by virtue of their lower charging structure. (By the way there is a lot of out of date and incorrect figures in the paper quoting rates and premiums as a by the by).The same principle was applied to Equitable Life. Like many industries, there are people who know what they are talking about and those that don't but give the impression that they do. Frequently one sees questions posed about fee based advisors, commission based brokers versus say bank people. My experence is that there is no free lunch. If someone is looking for financial advice, recommendations are good but do the people who recommend know what they are talking about ? I used to be in the financial services industry working as a broker consultant/inspector and I believe they are the people who are in a great position to know if a broker is good or not. I know some very successful brokers (money that is ) who I wouldn't take a heed of advice from !


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## Savy

*Re: Good value for money*

Frank,
I made this point in another forum.
The concensus fund tries to have growth that is about average. Its described as a medium growth/risk fund.
If you have more than 15 years to retirement you may want to be risking your money a little more to try and get that fund as big as possible.
Concenus should be there in the last 10-15 years before retirement to get the money securer.

S


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## rainyday

*Re: Good value for money*

Hi Savy/Frank - Do you have any evidence that shows that active investment management (usually attracting higher charges) beats passive index-tracking (e.g. Quinn Life) consistently, over medium/long term?


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## Sunshine

*Re: Good value for money*

rainyday,

Do you have any evidence that shows that active investment management (usually attracting higher charges) looses out to passive index-tracking (e.g. Quinn Life) consistently, over medium/long term?


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## Savy

*Re: Good value for money*

rainyday,
I never said that active beats a passive tracker-index.
I'm talking about the irish Life concensus product which looks to see where other funds are being invested and reacts to that.

I'd like to know what type of time-delay is there.
Is this done daily.Or does some guy spend one day at the begining of each quarter matching the investment strategy of the concensus fund with some average of the actively managed funds.
Its not much of a comparison but according to the pension performance of the first 6 months of this year, the irish Life Concensus had a return of 3.5%. The average performance(excluding concensus funds) was 3.7%!

S


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## rainyday

*Re: Good value for money*

Hi Sunshine - How about this highly respected financial analyst? But surely the onus should be on those charging higher fees for their 'active' fund management to demonstrate the 'added value' (if any) that comes from this active management.

Hi Savy - You might get some info from ILIM's website. I have a vague memory of hearing an IL rep saying that they rebalanced the fund quarterly, but please don't stake your life on that.


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## Alan Moore

*The solution.....*

Wich way to go Active Managed / Passive Managed / Consensus fund. Get yourself a monkey:

[broken link removed]


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## Savy

*Re: The solution.....*

Rainyday,
I was reading through some information on the ilim web page and the rebalance the fund monthly.They say that others do this quaterly.

Alan, how is the monkeydex index doing these days?
S


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## Alan Moore

*Monkey Fund Managers.......*

The monkey lost in the long run but was it a fair fight? 

For the last 14 years, Wall Street Journal reporters have thrown darts at NASDAQ stock listings, choosing stocks to compete against the picks of professional investors. This experiment was prompted by Professor of Economics Burton Malkiel *64’s book, A Random Walk Down Wall Street, published in 1973. In it, he suggested that a "blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts". The journalist’s nonscientific experiment concluded last month. The experts fared better than the dart-throwing journalists. But Malkiel blames that on publicity — the WSJ advertised the stocks that the experts picked.


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## POAP

*Good Monkey*

I sure the monkey only charged peanuts and not 5% and 1% of the fund.


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## Alan Moore

*Good one......*

Thats brought a smile to my face.


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## extopia

*I think it's funny that extopia is getting all worked up about the 5% charge when the 1% charge is actually bigger!
*

Well that's why I said *6%+*... I think everyone who did those little sums to show growth would have to agree that the returns would be higher *without* the 5% contribution charges.

Frank, we are all aware that there are options out there where you don't have to pay the 5%. I started this thread because I was amazed at how few people out there in the general media seemed to be questioning the 5% front load.

Glad it turned into such a lively discussion!


----------



## Sumatra

*No need for a contribution charge*

Extopia,

You are right to question it. The front loading of 5% is crap and consumers have no real need to pay it.

Most of the replies you are receiving is actually propaganda from members of the 'Preserve our commission movement' take it with a pinch of salt and pay no heed to it!

Sumatra


----------



## Max

*0%*

Extopia,

If you want a 0% charge on contributions and a 0% annual management charge, keep the money in your pocket.


----------



## extopia

*Re: Reduction in yield.....*

Alan said"

* To illustrate the point. Assume 6% growth and 1000 invested day 1.

 Value day 1  -  950
 Value end year 1 - 997.50 ( increase of 5% net on last year )
 Value end year 2 - 1047.37
 Value end year 3 - 1099.70*

I make that to be €99.70 growth on €1000 invested (and no more contributions made) after 3 years. What's your point here, Alan? Should I be excited about making less than €100 on this investment after 3 years, in a market growing at 6% p.a.?

If you want to try to bamboozle the plebswith sums, at least make a compelling argument.


----------



## Alan Moore

*If you actually read the thread ..........*

you would realise that I wasn't trying to make a compelling argument.

Allison was trying to illustrate that you don't have to make 6% annum per annum to achieve growth. She also stated that she had made the point "not very well" and asked if anyone else understood her point. I merely explained her standpoint by way of illustration. 

Sorry the sums have bamboozled you. I thought the maths was staight forward.

You might remember that I am very much in favour of people that know what they are doing taking out policies on a nil commission basis execution only basis thus getting rid of the 5%. 

I would also be in favour of perons giving advice receiving remuneration for their work wither by way of fee or disclosed commission. The only way the commission option works with any prsa provider at present is if there is a front end charge.


----------



## Su

*Who's in charge here?*

Laser pettifies the 5% charge on every contribution for the life of the PRSA for every PRSA that the company sells which comes out of our pockets and goes into the pockets of persons who sit on their butts doing nothing!!!

Who's in charge here?


----------



## Laser

*Ah Su*

Ah Su, that's stereotypical nonesense. Advisors travel, have famillies to support, give service, do the paperwork, hand-hold clients who haven't a clue about financial products, deal with employers- and are supported by teams of other people running financial firms, like administrators, website supporters, IT, finance, reception, management, fund managers etc.

You and your ilk adopt a simplistic and downright facile argument that 5% is wrong, without any understanding of industry intermediation costs, or how people get advice today- and, clearly, without translating charges to actual cash earned. 

Until you use your intellect to think about the issues, rather than your prejudices, you're pronouncements will continue to expose a waek mind.


----------



## SU

*Ah Laser*

OK  charge me 5% year 1 to justify support, service, do the paperwork, hand-hold etc - BUT also 5% in year 2, 3, 4, 5, .....year 30... You haven't explained your rationale behind charging in the following years - Why??

You also get the 1% pa on the fund value irrespective of how you perform (or not perform as the case may be).


----------



## extopia

*Re: Ah Laser*

I agree with Su. My objection to the 5% charge is because the "advice" given by our financial institutions is not worth what they charge for it. Passive investing is better value than the actively managed funds hawked by the institutions, especially when high entry charges are part of the mix.

I'd pay more than 5%  if it was justified by the returns. As for supporting Laser's family, that's his responsibility, not mine.


----------



## ClubMan

Other than _Merlin_ and _Alan Moore_ earlier I think it's interesting to note that most of the industry insiders here seem to be still dodging my question as to why 1% p.a. shouldn't be sufficient to cover most or all of the remuneration of all interested parties in this context... :\


----------



## Alan Moore

*Few points........*

Su & Extopia
"OK charge me 5% year 1 to justify support, service, do the paperwork, hand-hold etc - BUT also 5% in year 2, 3, 4, 5, .....year 30... You haven't explained your rationale behind charging in the following years - Why??"

I think that Laser in fairness possibly has tackled this to some degree when he made the point "5% of what"

Some sums ( sorry Extopia)

Say someone puts in 10 euro month ( extreme I know ). Well 5% on that works out to be only 6 euro a year. 

At the other extreme, say the premium is 2,000 a month. The 5% represents 1,200 per annum (although its unlikely that someone paying 2,000 p.m will pay the 5% charge). But drop the 5% charge after year one? Over 30 years (as used in your example ) the ongoing advice service would work out to be 40 euro per annum?

So the 5% is relatively inexpensive (provided you receive advice) at one end of the scale and progresses to very expensive at the other end.

Again, if you don't like the 5%, sit down with an advisor and tell them what your expectations are and mutually agree a fee. 

Extopia
"because the "advice" given by our financial institutions is not worth what they charge for it"

Very sweeping statement. If it were true most of us would be out of a job as a good chunk of most "advisors" income comes from referrals / repeat business.

Clubman
I think that your question is actually the real issue. Where should the Pensionsboard have drawn the line with charges. I suspect that if it had been 1% amc only that there would be far fewer providers of the PRSA (if any).

Business providers will only offer a product as long as there is some profit to be made. As far as I am aware there isn't a cartel out therefore I assume that the present charging structures are at that point where a justifiable profit can be made.

If a decent profit could be made by offering a contract with a 1% AMC alone I would have imagined that someone ( like Equitable in the past ) could have come in and taken a large chunk of the PRSA market.


----------



## ClubMan

*Re: Few points........*

Thanks _Alan_ - I see my old _EL_ skeleton is being rattled out of the cupboard again there... :\


----------



## Laser

*Money*

Had the PB any understanding of market dynamics, or the vision to shift it to fee based or fee offset advice, it would have allowed a FLAT charge for establishment, ( travel, meetings, compliance, and yes even for advice, because most people unlike the inspired on AAM haven't a clue), and the an AMC.

The flat charge could have been referenced from the professions, even from plumbers or electricians, and the average amount of man hours calculated by industry studies such as from LIMRA, an international research specialist.

But here's the frightening part - any reasonable measure would probably put the cost at between €500 and €800, ie between 3.33 and 5.33 hours per case at €150 per hour. Anyone who believes this is too high has NO understanding of how people like to do business in Ireland, or of compliance which generally requires at least a two meeting sales process.

So give me a break about the 5% in the PB formula. To recover €500 you'd need to acquire €10,000 in year one - from the poor! As for the AMC, yes over time it recovers set up costs, but at high risk of lapsed business, economic downturns etc. As it stands there's little profit in the formula.

But it would have been more honest to create a "Standard" flat fee of €500 to €800, and a lower AMC. Had that been done, no doubt the skinflints would be out in force calling it outrageous?


----------



## ClubMan

*Re: Money*

While my heart bleeds for the the poor intermediaries I personally will be executing a 1% p.a. only PRSA one way or another... :\


----------



## Laser

*We get to the bottom*

Ah so Clubman, we get to the bottom of the argument. As I suspected all the guff on AAM is for the informed skinflints, leveraging their advanced knowledge on the subject and buying at below cost.  That's no different than any other market.

But the problem I have is the lecture from the pulpit from your ilk, based on the false dogma that the skinflint deal you can get should be available to all and sundry.

Your failiure to compartalmentalise the market or understand how it really works renders your POV irrelevant for most people. It's just the elitism, and a really insincere concern about fellow citizens being led up the garden path as you see it.

Best of luck with your 1% deal - you deserve, but stop castigating the sales industry for distributing products set by the Pensions Board, and, in effect, pouring scorn at the great unwashed for following their advice.


----------



## Su

*your 1% deal*

Laser,  don't you recall. 5% was set as the max not min charge. 

As an obvious insider, I'm sure to demonstrate your concern for fellow citizens you will also opt pay full commission on any insurance / pension product you take out on yourself.


----------



## ClubMan

*Re: your 1% deal*

Thanks for the patronising guff there _Laser_ but if you could take off your € tinted specs for a minute I'm sure that even you will recognise how, by discussing such issues here, I am hoping that a wider section of the public will see that there are bargains to be had, haggles to be made and money to be saved rather than assuming that financial products are sold purely on a take it or leave it basis. :rolleyes   

When some (not all by any means!) industry insiders come out with This post will be deleted if not edited to remove bad language like that I really worry that they might also treat their own customers with a similarly arrogant contempt... :|


----------



## Laser

*Su said*

Look pals, t'was you who were taking the cheap shots with talk of salespeople "sitting on their butts". Nobody around here rushes to the defence of industry participants too easily.

As I suspected you can dish it out, but you can't take it back. As for Clubman's fruity comment about educating the public, forget it. Clubman, the public, unlike how you'd like to see them, don't read this stuff, and even if they did, they'll still ask for someone to call and meet face to face.

You can blow your health busting a gut to the contrary for years and years to come, but the notion that the public will be inspired by some faceless comments you and your gang concoct on AAM, is just self fulfilling popycock.


----------



## Su

*the public*

Laser, you and I are starkly divided on this issue, but wouldn't it be easier for you consider a change to your business model than feel so obviously threatened when coming under such fire?  

My guess is that 'public' you so eloquently underestimate and cast aside just there may well become your grim reaper.


----------



## extopia

*Re: the public*

*As for Clubman's fruity comment about educating the public, forget it. Clubman, the public, unlike how you'd like to see them, don't read this stuff...*

I agree with Laser that the general public is less than perfectly well versed on financial issues. Despite the existence of plain talking folks like , for example, Colm Rapple, there seems to be a general lethargy about personal finances out there.

The roots of this ignorance probably lie in our traditional poverty -- if you have nothing to lose, why learn about it? But our recent prosperity will almost certainly lead to change in this area. You only have to look at other more historically prosperous countries (the US, Britain, Germany for example) to see how consumers behave when they have more wealth to protect, and therefore more incentive to protect it.  In Ireland, our tax system and other areas such as our company registration system are shrouded in unnecessary complexity and obfustating language -- which only serves to protect the livelihood of accountants. 

Similarly, our lack of  sophistication around financial advice drives people to tied agents, banks and incumbent "professionals" rather than independent financial advisers. The financial "advice" pages in our newspapers reinforce the the relationship between wealth and elitism by devoting equal amounts of space to, say, the valuation of antiques and the deconstruction of competing PRSA or SSIA products. And you never read anything about these matters until there is a looming deadline -- for SSIA take-up, for preliminary tax, for BES investment, or whatever the flavour of the moment is.

I recently read an in-depth analysis in an established business monthly of a company run by one of Ireland's leading female entrepreneurs. The article listed every item in the balance sheet, but nothing about the company's turnover -- except to say that it had "increased substantially." In other words, the whole thing was a PR exercise. 

Whether this ignorance suits the industry or not is open to debate.  Surely transparency will drive the creation of simpler, more compelling offerings? Surely consumers who are more educated will show more interest in financial products? Surely the benefits (increased sales) outweigh the disadvantages (increased accountability, lower commissions) for the financial "industry."

The notion that informed consumers are "skinflints" is a self-defeating one. The tactic of keeping customers in the dark in the interest of protecting margins has failed time and time again in other industries.

You can dismiss this thread as the rambling musings of cheapskates -- or you can wake up and smell the coffee. All around you are examples of how cutting out the crap creates business opportunities: REA Mortgage services, Quinn Direct, myadviser.ie... Consumers seem to respond to companies who don't treat them like dummies.

The days of high commissions and bad service are numbered. Getting with the programme now will give you an advantage. Wait till it's too late and you will be playing catch-up forever.

My 3 cents.


----------



## Laser

*Actually*

It's always the response when someone mounts an intelligent defence of the real cost of distributing advice, and screws up the consensus here on AAM that you make a host of assumptions which are wrong.

First you assume that the defendant is a high commission hungry, manipulative salesperson. Secondly you assume that the industry, including consumers, are driven by cheapest price. On both counts you're wrong, but I'm not at all surprised, because you simply don't really know what you're talking about. 

If it were only true that cheapest price drove things wouldn't the world be nice and transparent, and understandable, where the "goodies" as you self-project yourselves could expose the "badies". But it isn't, and it will never be.

As for Quinnn's, give me a break - that venture failed. REA is second division in terms of scale, but a useful player I'll admit. Auctioneers with huge conflicts of interest dominate that business. Look at who dominates the broad market- business'es with strong margins, like the high margin BOI, Irish Life with 1.5% trackers, and AIB with pathetic performance.

As for Myadvisor and its ilk, they'll feed off scraps around the edges, so ask yourself why? Because they never get enough capital to seriously grow their businesss, and reach even more punters- and that's the problem with your model, ie CAPITAL investment.

Mavericks like Ferguson, Kiernan, Geraghty, and even Hobbs are amusing distractions that get media amplification, but ultimately they don't count, and nobody invests in them.

The endeless drivel that infests these type of AAM discussions is supported only by a depressing mixture of industry malcontents, the bored, the mischievous, and journalists short on ideas to fill next Sunday's newspaper with even more mindless rubbish nobody really reads, at least not in large numbers.

Say tax, gross roll up, index tracking, active management, etc to the VAST majority of people and they'll switch off like a light. They want their financial advice face to face, plain and simple where they can use their instincts not their intellect.

So pals don't just dismiss the counter argument as just some dinosuar dying from falling remuneration. (In fact its exponentially growing each year at several times the inflation rate, thank you). Consider, if you can see beyond your belief's, that maybe it's you who've got it all terrribly wrong.

But that's real hard because it threatens the very usefulness of websites like this- depressing isn't it?


----------



## Su

*Laser's amusing distractions*

For an excellent example of consumers driven by price examine the effects cheaper distribution channels are starting to have on the once 'king' travel agent industry.

Brokerage margins falling - costs increasing yet the accused appears content?  The sign reads 'Delinquents court next door'.

Laser, personally its not hard for me to envisage the day when the 'industry' will basically fire the vast majority of its appointed insurance intermediaries.

On second thoughts perhaps they have already decided to kill them gently! Just don't tell anyone. Keep it hush hush.


----------



## rainyday

*Re: Laser's amusing distractions*

Methinks he doth protest too much.


----------



## Laser

*Here we go again.*

I suppose it was expecting too much that you might actually pause to consider just HOW WRONG you are, and too much to expect you NOT to make the pretty dumb mistake of equating buying an airline ticket which a child can do, with distributing financial advice.

As I wrote the last post I thought, you know some stupid eejit is going to quote Michael O'Leary as the panacea for all our problems in another armchair, simplistic, and weak effort to avoid accepting that the market is different than you want to envisage.

That's just what we need RyanAir heart surgery, Ryan Air tax advice, Ryanair Education, and of course Ryanair financial advice. Why don't we just Ryanair everything? Let's ditch Guinness and replace it with Beamish, bring back Lada's for Merc's, and what about Ryanairing the Government and Financial Regulator, we'll just hire people on the basis of cheapest price. 

What a stupid way of problem solving, but I suppose I shouldn't expect too much else, at least not here on this site where the skinflint dogmists rule.


----------



## ClubMan

*Re: Here we go again.*

*As I wrote the last post I thought, you know some stupid eejit is going to quote Michael O'Leary...*

Good man _Laser_ - now *there's* a self fulfilling prophesy! :lol


----------



## daltonr

*Re: Here we go again.*

Laser do you work in the industry?  Are you one of the Authorised Advisers that the Central bank regulates?  if so my faith in the profession has gone way down.

It's fair enough for you to argue that 5% of all contributions represents good value.  I happen to disagree.  I don't know of anyone who has ever gotten any advice AFTER they signed the dotted line, so an ongoing charge makes no sense to me.
But you're more than welcome to try to convince me.

But when you personalise things the way you have you lose any chance you might have had of convincing anyone.  I sure as hell woudn't like to be giving YOU 5% of my contributions if that's the approach you take.



> Ah so Clubman, we get to the bottom of the argument. As I suspected all the guff on AAM is for the informed skinflints, leveraging their advanced knowledge on the subject and buying at below cost. That's no different than any other market.



First of all, you might want to rethink calling execution only PRSA's "Below Cost".  I don't think that's the case.

Secondly, It doesn't take much advanced knowledge to decide between one PRSA that takes 5% of everything you contribute and another that doesn't.  It's unfortunate that knowing about 0% PRSA's is considered advanced knowledge.  That's why AAM exists.  This kind of stuff should be COMMON KNOWLEDGE.  You seem to be implying that Clubman is trying to secretly profit from some inside knowledge.  The reverse is true.

I get the feeling that you'd prefer people not know about these 0% PRSAs.  I wonder why that might be the case!?!

The simple fact is that small percentages matter MOST on long term investments or debts, such as pensions, or mortgages.  A 5% loss on every contribution makes a HUGE difference over the life of a pension.

I hope my figures are right here, but if we take a person contributing €300 p/m, for simplicity forget about increases, and forget about the 1% management fee.  The difference in the final balance assuming just 7% growth is €17,000.

It gets worse,  if the pension grows at 12%, the difference is a whopping €43,500.  In other words the better the fund performs the more you pay for the advice, even though the adviser has no way of affecting the performance of the fund, and will make a point of telling you that he can't predict it.

I have never received any advice of any kind from anyone that was worth €17,000.  Certainly none worth €43,500.  And if you don't mind I'll stay a skinflint and keep that money in my fund.  It'll help overcome inflation.

Also it's fine to say that people can switch after year one, and then average the 5% of year one over the life of the pension.  But how about this!  Average 0% over the live of the pension.  It works out even better!

-Rd


----------



## extopia

*Re: Actually*

Laser said:

*you assume that the industry, including consumers, are driven by cheapest price. *

No, my friend, I never made that assumption at all. However, I DO think that consumers are driven by VALUE. Although perhaps not yet in the choosing of financial products, due to the lethargy, confusion and general lack of sophistication to which I referred.

That, of course, will change.

If 5% is good value, I will happily pay it, and so will countless others. Show me what it's worth, and I'll happily make the decision. As I said, I have been disappointed in the past by the "advice" proferred by financial professionals, both of the tied and independent variety. A large part of my point is that the supposed advice given is often stuff that even the most casually informed consumer should know already, though admittedly often does not.

You know, you can tell the minute you walk in the advisor's door whether you're dealing with a bored and burned out "lifer" or someone with a genuine interest in trying to understand your needs and offering you the appropriate solution. It's just not that hard to figure out.


----------



## None

*Do it all for 1%*

I think some of the contributors are losing touch with reality here.

Lets look at the market the PRSA is designed to meet - those not covered who are probably smaller contributors.

Lets say they put in 1200 a year
So the Company gets 12,24,36,48 euro etc from the 1%

And from this comes
    Product Development
    Sales Advice + Planning
    Pension Board Fees
    Investment Management Fees
    Cost of Compliance
    Quarterly Statements
    Policy Document + Brochures
    Cost of Unit Allocation System
    Cost of Claims on termination


Get real guys

Put your car in for a 2 hour service and the cost of labour will be €180


----------



## ClubMan

*Re: Do it all for 1%*

*Lets say they put in 1200 a year
So the Company gets 12,24,36,48 euro etc from the 1%*

Obviously a single PRSA sale will never be commercially viable. :rolleyes    However you seem to be saying that for a single PRSA a 1% p.a. management charge yielding €660 over 10 years (assuming fixed ongoing contributions and no growth for simplicity) is not viable but somehow an additional €600 (i.e. 5% on €100 p.m. for 10 years) is? How do you reckon that then? Why is c. €1,200 some sort of magic figure? Why not €660? 

Earlier on _Alan Moore_ responded to my query as to why 1% p.a. on it's own might not be sufficient to remunerate all interested parties with:

_"You probably need an actuary to explain why 1% isn't sufficient as it is in the UK. May come down to economies of scale. Couldn't tell you where the breakeven point is for an insurance company."_

so perhaps you've done just that and can enlighten us poor plebs?


----------



## daltonr

*Re: Do it all for 1%*



> Lets say they put in 1200 a year
> So the Company gets 12,24,36,48 euro etc from the 1%



I didn't notice anyone complaining too strongly about the 1% annual charge.  It's the fact that 5% of your money never sees the inside of the fund that prompted the original post.

So, let's say we take the 1200 per year example.  over 30 years €1800 of that persons contributions would never get into the fund.  We're told this upfront charge is for advice etc.
now, if it was just a cost of €1800 over the lifetime of the pension to a person contributing only €1200 a year I'd still maintain that was a bit steep.

But as I said it's much worse than that.  You also loose the growth that that extra 5% would have generated.  over 30 years assuming 7% growth, our €1200 per year contributor would lose out on almost €6000.  Assuming 12% that rises to a cost of almost €15000.  That's real money that the investor is losing.  And In my opinion financial advice for a small time investor is not worth that much.  

Remember at least with the 1% charge based on the value of the fund, there's an incentive to increase the value of the fund.  By taking 5% of everything you put in, there's only an incentive to get you to put in more.  What happens after they get it is incidental.

The bottom line is this.  Is any broker/financial adviser/bank/insurance company rep ever going to give you any advice that will earn you back the money you lose in up front charges of 5% on every contribution.  I don't think so.

If they can't turn a profit on less than 5% then we have a problem.  PRSA's and Pensions will have to be looked at again and a new solution found.  But of course there are PRSA's with just the 1% annual fee, so obviously it IS possible to turn a profit on this.  So the 5%ers are just profiteering, or running very innefficient businesses.

As a consumer the choice is simple.  Pay 5% or don't.

-Rd


----------



## ClubMan

*Re: Do it all for 1%*

*Ah so Clubman, we get to the bottom of the argument. As I suspected all the guff on AAM is for the informed skinflints, leveraging their advanced knowledge on the subject and buying at below cost.*

I missed out on that barb directed at me by _Laser_ earlier and had it come from an otherwise _reasonable_ contributor I would have found it slightly offensive but as it is I simply find it laughable.


----------



## Laser

*Hiya Dalton*

Dalton, stick to the day job- your maths is hopeless. did you ever hear of discounting to present values, inflation or that kind of thing, or have you spent too much of your time attending Clubman meetings - in Telephone Boxes!


----------



## ClubMan

*Re: Hiya Dalton*

Well why not elucidate us then rather than resorting to petty insults? :rolleyes


----------



## Laser

*What's the point*

What's the point. So long as you are both wedded to your belief that advisors are only dummies that should be paid silly money, no matter what effort I'd make to present NPV's on Standard PRSA's, you won't change.

Until you can accept that most people want face to face encounters to deal with important financial purchases, you can't be expected to alter your thinking.


----------



## daltonr

*Re: What's the point*

Laser, 


I specifically said I was simplifying the calculations, cutting out increases for inflation and the effects of inflation.  
But since you've decided to call me on it....
If you include Inflation the figures work out even worse.
On top of the 5% fee for all contributions, inflation knocks another 5% off the total value of the fund.  The absolute value in the find isn't affected by inflation, only it's buying power, so the figures I gave are still acceptable to illustrate the point.  Not have the 5% contribution fee goes some small way towards negating inflation.

There is only one rule with paying for financial advice.  If it costs more than it saves or earns, then it's not worth the price.  A financial genius like youself should have figured that out by now.  Or perhaps you disagree with this???

Can you show how that 5% will pay for itself and make me a profit over and above an execution only PRSA (which requires no special knowledge to set up).  If you can't then I suggest you stop attacking people that put perfectly rational points in a perfectly reasonably manner.

By the way, and no offence intended here, but you have serious interpersonal issues that I think you need to address.  I'm just offering that as a bit of "free" advice.

I think I prefered dealing with the pyramid scammers.  They were misguided, but at least some of them were polite.

-Rd


----------



## Traumas

*the point*

"face to face encounters" 

From your communication thus far, I assume the outcome is normally fatal?

Lets dump the recommendation that IFSRA will supply a list of financial advisers to consumers - at least for a few years....


----------



## extopia

*Re: Hiya Dalton*

Laser says:
*your maths is hopeless. did you ever hear of discounting to present values, inflation or that kind of thing*

Do you really undersand NPVs, Laser? Clutching at straws, mate, clutching at straws. Much more interested in the future value of a wasted 5% per contribution, compounded over twenty, thirty, or forty years.


----------



## tom

*prsas, fees etc*

guys, guys!!!

It never ceases to amaze me how penny-pinching people get over fees on financial advice.  It shouldn't be any surprise - it's the way we are. Humans!  If we walked into Spar in the morning, and were told at the door that the price of everything we bought would be simply loaded by 50%-100% because of the convenience of the shop location and opening times, we would be indignant... how dare they... and would probably walk out to save face.  Simple fact is that every price in Spar is loaded by 50%-100% and we pay it.  We might know it, but because no-one is telling us directly that they're taking it off us, we are saving face and hence can deal with it.  

Finanical services, unfortunately, falls into a category where all consumers are told exactly how much is being taken off them.  Shocked!!  Of course we are.  Horrified!! Of course we are.  But what eejits and innocents we are to be shocked or horrified.  Every service is loaded above the cost.  The average, or even better than average financial advice, can be quickly worth more than the hidden profit in your Saturday shop, or the washing machine you just bought, or that dvd you can't work......  God, it pains me to listen to any moaners reluctant to let a cent out of their hands, when they do it every day with every euro they spend.  God knows, if you got a receipt from dunnes outlining the profit they made - you'd be up in arms... how dare they tell you how much profit they're making from you!!  can't they be a bit more discreet.  Oh, humans, when they get some sense, can someone let me know.


----------



## tom

*prsa and fees*

...and daltonr, if I can add an analogy.  why do you insist on projecting out the 'horrific' fees the companies might be making out of you over the next 30 years.  Can you do the same sum on dunnes, superquinn, quinnsworth, your favourite restaurant, your dry cleaners, your child minder, the cost of servicing your car, your travel agent........ etc. etc.   To compare expenditure over such a term of 30 years, and come up with a big figure and be shocked by it doesn't make any sense - do you have any idea how much your local shop has made out of you in the last year even, not to mind how much it is going to make over the next 30 years?  Can we get some sense of balance into this?


----------



## daltonr

*Re: prsa and fees*

Tom 

thanks for posting a reasonable point.  Something that's been lacking lately.


A loaf of bread is a consumable item,  it's useful life is about 2 days, so it makes no sense to asses it's cost over anything longer than that.  I need bread, here's some bread, price seems reasonable.  Secondly purchasing a loaf of bread our goal is to feed ourselves, not to get rich, or save money, so simply comparing the price of a loaf of bread might not be the best solution.  E.g.  I'm sure I could pick up a stale loaf for much less, but that's not the goal.

Financial Advice serves no other purpose other than to save money or earn money.  Some forms serve other purposes like legal compliance etc, but when you buy retirement planning advice you want advice that will maximise your wealth on retirement.  It therefore makes sense to consider the COST of the advice, as well as the BENEFIT, and assess both over the full lifetime of the product.  i.e. until you retire (and possibly after if you consider annuities and other options.

The point I made was that over the long term the difference between buying an execution only PRSA and a PRSA with a 5% contribution charge, is far more than just the 5% of contributions, it is also the lost growth on those contributions.



> ...... God, it pains me to listen to any moaners reluctant to let a cent out of their hands, when they do it every day with every euro they spend.



Just as a matter of interest, do you think people are wrong to chose execution only PRSA's rather than one which charges 5% of all contributions?  If so why?


-Rd


----------



## ClubMan

*Re: prsa and fees*

*What's the point. So long as you are both wedded to your belief that advisors are only dummies that should be paid silly money, no matter what effort I'd make to present NPV's on Standard PRSA's, you won't change.*

No - I'm open to discussion on this but nobody has yet explained wh 1% p.a. cannot be sufficient to remunerate all interest parties. In the absence of any convincing argument of why this is not so I'll continue to believe that it is. 

*...... God, it pains me to listen to any moaners reluctant to let a cent out of their hands, when they do it every day with every euro they spend*

_Tom_ - same point. I have already agreed that service providers need to be paid for the service they provide but nobody can seem to explain where the breakeven point is and persist merely in name calling and tarring people like me as penny pinching simpletons with ulterior selfish motives because we question why 1% p.a. is not viable while 1% p.a. plus 5% on contributions some how is.


----------



## extopia

*Re: Fees for Financial "Advice"*

*It never ceases to amaze me how penny-pinching people get over fees on financial advice.*
_____________________________

Nothing wrong with the fee if it is justified, i.e. it has a reasonable chance of resulting in gains equal to or higher than would otherwise be the case, adjusted for the cost of the advice, of course.

I once went to an independent advisor who advised me to invest in a film project, for the tax break that would result. Naturally, he would receive a commission on my investment. Only problem was I was investing post-tax money, and at the time had no income to which the tax break could be applied. I can only assume he thought I was an idiot. The feeling, as you can imagine, was mutual.


----------



## HarryTheEar

*1% Not Sufficent ?*

Clubman,

The 1% on Stakeholder has a break-even of 8/9 years. This assumes that the the punter stays with the same provider for that period and contributes the same amount every month. It's a year or two since I read this and can't remember where but I assume that they took some sort of 'average' premium.

Bearing in mind that the minimum PRSA contribution is €10 per month, can someone do the math on that? 

What is the average contribution in euro terms to company pension schemes in Ireland?


----------



## HarryTheEar

*1% Not Sufficent ?*

.....and how often does the average employee change jobs?


----------



## ClubMan

*Re: 1% Not Sufficent ?*

Thanks _HarryTheEar_ - another rare constructive contribution to this discussion. I don't know what the relevant figures/criteria are, that's why I asked. I'm just wondering where the "breakeven" point might be.

Can't blame punters for being slightly cynical about charges given that it's not too long ago that more than 50% of the first year's contributions and initial units etc. were justified as necessary for commercial viability by some industry insiders. 

While exhorbitant charges in the past is obviously no reason to throw the baby (in the form of commercial viability) out with the bathwater (in the form of exhorbitatant or higher than necessary charges) I don't see the problem with people looking for justification for remaining charges and value for money and can't understand the arguably irrational and defensive response by some industry insiders to this.


----------



## Laser

*Calling the bluff*

Calling all AAM skinflints - this site is full of armchair remedies that just don't work in the real world, a theme studiously avoided by the skinflints after my previous posts. So, lets forget product pricing for a moment - here's the question for the skinflints. ( I just want to see how mean you are, and how low the esteem with which you hold industry)

1. What Per Hour rate is reasonable for advice?

2. How much time does it take on average to deliver financial advice from start to finish.

3. How much time each year should be allocated from both the advisor and product provider?

There you go Skinflints, get your short hands out of your long pockets and answer that. When your done lets design a product that fits your answers for the average saver.


----------



## daltonr

*Re: Calling the bluff*

You might get resonable responses, if you tried posting reasonable posts.

>1. What Per Hour rate is reasonable for advice?

Any amount LESS THAN the advice will earn or save the client.  I've answered this at least twice.  have you got it now?  Good!


>2. How much time does it take on average to deliver >financial advice from start to finish.

I've spoken to three different financial advisers not including advice I get from my accountant.  Each of the 3 meetings lasted no more than 45 minutes to an hour.  On ALL THREE occasions I went to them rather than they coming to me.

>3. How much time each year should be allocated from both >the advisor and product provider?

I don't know of ANYONE who has a pension who has ever heard from the person who advised them about the pension. I know a few people who got follow up calls from their bank asking them to buy other products, if that counts.

Laser, if you have any points to make relevant to the discussion, then feel free to make them.  You seem to be on the adviser side of the fence so I'm sure there's pleanty of info you can provide, I'd certainly like to hear YOUR answers to your own questions above.

But this approach of insulting anyone and everyone for the sake of it really wears pretty thin.  It doesn't "liven up" the board, it just makes you look like an ass.  

I hope this is a side of you that only comes out when you hide behind an anonymous login.  If you're like this in your day to day life you must be nightmare to live/work with.

So, how about it?  One more go, at a sensible, non insulting post.  You can do it!!! 

-Rd


----------



## ClubMan

*Re: Calling the bluff*

Mexican standoff - I asked first that somebody explain why 1% p.a. wasn't sufficient and for some insight into the breakeven figures but that was never adequately addressed.


----------



## HarryTheEar

*1% ?*

I must be wasting my time?


----------



## ClubMan

*Re: 1% ?*

Sorry! I see that you did just that earlier. So based on that post 1% may well be sufficient depending on the "longevity" (for want of a better word) of the average pension?


----------



## HarryTheEar

*1% ?*

I am wasting my time!


----------



## Su

*Time wasters*

Iguess either Laser used to work in the insurance industry or will shortly not be working in the industry.


----------



## tom

*1%, 5% ...*

Clubman,

1% is not enough to remunerate all participants.  
Take a €100 a month premium (and that's what a lot of them will be).  €1200 in a year.  1% gets you €12.  Maybe the contract will last 5 years on average - all the 1%s would add up to about €180 (a bit more with fund growth).  

€180 paid in 5 years, to cover all the costs of

- fund management
- marketing/brochures
- advice
- compliance/regulation (i.e. peace of mind for you that regulators are keeping an eye on your money and the company accounts for itself and remains solvent)
- reporting to pensions board
- annual benefit statements
- ad hoc queries answered
- fund switches
- letters/phone calls
- transfer values/claims
etc
etc

All of the above provided for 5 full years for €180, and you expect there to be profit left over for all the participants!!  Would you set up a company with that sort of fee income?

Say a company got 100000 of these contracts.  That's €18m in fee income over the 5 years.  That's about €3.5m per annum.  A company that is running 100000 contracts would quickly go to the wall if they only had €3.5m in income to cover all their costs and still hope to make profit.

Don't be fooled into 30 year averages - most prsa will stop payments after a year or two - some will go on... very few will make it to 30 years payments... take all of this and the average won't be much beyond 5-10 years.


----------



## ClubMan

*Re: 1%, 5% ...*

You seem to be implying that all those companies offering 1% p.a. only deals for an up front payment of c. €50-€100 to an intermediary are doomed so?


----------



## Merlin

*Re: 1%, 5% ...*

In the UK, there are only 2 or 3 companies still actively participating in the Stakeholder pension market (max charge of 1% per annum). One would imagine that economies of scale in the UK would be much better than here so on that basis, yes maybe they are doomed.


----------



## extopia

*Re: Calling the bluff*

* 1. What Per Hour rate is reasonable for advice?*

Well, I've answered that too, in much the same way as daltonr above.

As for your other questions, you tell me? How long does it take you to figure out your customer and tailor a suitable plan? 5 minutes? 5 years?


----------



## daltonr

*Re: 1%, 5% ...*

>Take a €100 a month premium (and that's what a lot of >them will be). €1200 in a year. 1% gets you €12. Maybe the >contract will last 5 years on average - all the 1%s would >add up to about €180 (a bit more with fund growth). 


Hang on just a second, let's not skip over those figures so quickly and assume that 1% isn't enough.

> (and that's what a lot of them will be).

It may be what alot of them will be, but it won't be the average.  There will be many putting in more, and increasing their payments annualy.  But, let's put this aside for a second.  Let's assume the average is only 1200 per year.

> Maybe the contract will last 5 years on average 

Maybe they will, but what happens to the contracts.  They don't dissapear into this air.  Some of Fund A's Customers move to Fund B and some of Fund B's customers move to fund A.  At the end of the day with swings and roundabouts, the idea that a provider stops getting paid because his customers leave is wrong,  others will join, complete with multi year PRSA's already up and running.

Even those who just stop contributing leave a pool of money that the provider can continue to collect 1% on.

So, if there are X PRSAs and Fund A has a certain percentage of the market, it really doesn't matter if contracts change hands, they still pull in 1% of their share on the pool.

Now, taking your example of a 100 per month contribution.  I'm leaving out the 5% charge here.  Going purely on 1% of fund value each year, and taking no account of the cost of lost growth (since for some reason that kind of talk upsets people), the fees paid over 30 years will be roughly €11,500.
That assumes growth of 7%, bump up the growth to 12% and you get almost €24,000 in fees.

Now, I don't know if that will cover your expenses, but it sounds like a decent fee to me.  Just how much exactly do people think it costs to run a PRSA.

Yes I accept that it's spread over 30 years, but that's the nature of financial businesses.

-Rd


----------



## daltonr

*Re: 1%, 5% ...*

>In the UK, there are only 2 or 3 companies still actively 
>participating in the Stakeholder pension market 


Merlin, 

A quick search shows that most if not all the UK banks provide stakeholder pensions.  Including, Abbey National, Barclays, Bradford & Bingley, Halifax, HSBC, & Norwich Union to name a few.

Also, one of the effects of the 1% cap on stakeholders, and no up front fees is that to make a profit the banks have had to set them up around index trackers.  Which means that they'll probably have a resonable shot at beating the actively managed funds.

-Rd


----------



## Caius Martius

*This Topic*

I've read enough. The divide between 'eggheads' and 'dummy advisors' is so great that the quality of posts are infected and written in anger.

Anyone who posts here and that has ever worked for themselves will understand that 1%  margin on any product or service is not sufficient to make the whole thing viable.

So, let the 'eggheads' and 'skinflints' carry on campaigning for better deals for those that have a little knowledge and let the 'dummy advisors' provide remunerable advice/direction to those that think a Hancock Annuity is some sort of pornographic terminology.


----------



## Laser

*Daltonr*

Ah c'mon Dallers, your skipping past uncomfortable realities. I told you, the skinflints don't understand the market, and your answer proves it.

You say three meetings each at 45 mins and you travelled. How much do you think any type of advisory firm would need to recover to give you this time?

Actuaries @ €250 to €350, Accountants probably €200, and others as recommended by the IBA @€150 to €200. Then did you get a written report later, because that's now a mandatory requirement, say taking up 30 mins to an hour? What about follow up telephone discusssions? If you transacted then theres the paperwork process, liasing with the product provider, checking allocations are right etc. All told 2 to 3 man hours wouldn't be uncommon. 

The skinflints want to pay €50 to €100 for this - and that's not counting the time cost of travel which acccounts for the great majority of business transactions, adding several hours to the above.

Daltonr also ignored the fact that he personally burned up 2.25 man hours of industry time without charge. His "free" time has to be paid for, recovered in business transacted.

Skinflints won't pay more than €100, but want €800 worth of time.,


----------



## Mithrandir

*Interesting debate*

Loathe though I am to admit it, Laser is correct. If anything he may be understating the cost, except for the simple market. But in many cases for the mass affluent market, and bearing in mind that the Regulator imposes a duty to first complete an analysis ( fact-find), the time factor is substantially higher.

Uk studies on public perception versus market costs have thrown up a huge gap between what consumers want to pay and what it actually costs to deliver advice and service. There the consumer ready-reckoner was Stg £80, and industry average costs were at £600 to £800 if I recall.

In practice only the strongly mass affluent or high net worth are prepared to pay fees at market rates. (Consider financial divisions in Accountancy firms here charge €2000 to €4000 for a full client review).

In the Mass Market of moderate incomes and uncluttered balance sheets there isn't a willingness to pay any type of fee. This isn't just the Irish experience- its universal, and so the market segments into, commission only, fee-based, fee offset against commissions, and pure fee only.

Commission only is self descriptive, and thankfully we now have transparency, and benchmarks like the "standard" prsa, coupled to a vigilant and vocal media. Fee-based generally refers to modest upfront fees typically at cost or below followed by heavily discounted products. Fee-offset is where the true cost is debited against commissions earned, and rebates paid, or more fees charged. Pure fee only is a per hour rate.

It is encouraging that there is growth in pure fee only, but still todday, most consumers - that are given these choices- choose fee-based, at least step up from commission only which I think is a pretty ugly method, although it remains firmly the common currency through which advice is delivered to the low to middle-paid - and will always remain so I guess.

Hope sharing this experience helps frame thinking. delighted to answer any questions about the experience on the ground.


----------



## daltonr

*Re: Daltonr*

Laser,

at least your posts are calming down a bit.  Good to see.

Where in ANY of my posts have I said I'm ONLY prepared to pay €100?

I'm quite happy to pay €800, €1000, or €10,000 for financial advice that saves or earnes me more that that much.  I've said it so many times I'm getting sick of typing it.

The 3 meetings I had with "advisers" were more like meetings with Sales people.  I gave them 45 minutes of my undivided attention, they gave me a 45 minute ad.  the major banks charge 5% on contributions, but if you go to them for advice you get a sales pitch.  in effect if you go to AIB you are getting an Execution only service, because they don't discuss options and give advice on which is best.

I have said I'm willing to pay an up front lump sum for financial advice, and a percentage of the fund each year to fund the ongoing costs. 

This is not about whether someone is a skinflint or whether funds can break even.  from the start you have ignored the simple question:

given a choice between a 0% contribution 1% management fee, and a 5% contribution 1% management fee.  why should anyone invest in the 5% product?  both are freely available.

If you can explain to me why the 5% is worth the extra expense (and by worth I mean will make me richer than the 0% fund) then I'll buy it.  but nobody has answered this question yet.


-Rd


----------



## Laser

*Daltonr*

I've been on my prozac, and I'll need more of it, now that the Great Mith has blessed us with his presence. You're right that the 1% deal is best, simple enough maths, but your wrong to accept the skinflint dogma that this can be applied to all and sundry, and keep the market profitable and competitive. Its more complex.

Away you go now Dallers and shovel your few schillings into a 1% deal like Quinns, but don't expect your reflective of the market.


----------



## ClubMan

*Re: Daltonr*

*shovel your few schillings into a 1% deal like Quinns*

Er, _Quinn Life_ are not an [broken link removed]. :rolleyes


----------



## Laser

*I Know*

Hiya Clubbie, how's the Telephone box! I know that. I said like Quinns who've proved that 1% and buckets of publicity can't sell ordinary non-PRSA investment, like SSIA's, Personal Pensions, and Investment. 

No wonder they didn't bother with the PRSA debacle. They are now in discussions with the broker organisations which should tell you more about why your telephone box mass distribution idea is pie in the sky. Even Mith, I think agrees.


----------



## ClubMan

*Re: I Know*

Yawn.....ZZZZzzzzz....... |I


----------



## Summer

*Professional advice*

"Actuaries @ €250 to €350, Accountants probably €200, and others as recommended by the IBA @€150 to €200. Then did you get a written report later, because that's now a mandatory requirement, say taking up 30 mins to an hour? What about follow up telephone discusssions? If you transacted then theres the paperwork process, liasing with the product provider, checking allocations are right etc. All told 2 to 3 man hours wouldn't be uncommon."

Laser a very good point, all financial advisors should have a professional qualification and thus be held responsible for advice given. Otherwise the anology with Superquinn et al should apply €8 to €10 per hour as a sales person.


----------



## daltonr

*Re: Daltonr*

>I've been on my prozac, 

Understood.  

> but your wrong to accept the skinflint dogma 

I think this is the knub of our disagreement.  If product A is better than product B, and product A is also cheaper than product B, then people who buy product A are not skinflints, they are simply wise.

I hope you can see why some might take offence and being characterised as skinflints, particularly on a board which strives to spread the word about value for money.

Now, I'll agree that there is a need for people that we can all go to to get advise on financial matters, and help chosing the best products.  BUT... I want to pay them for their time and work, and I want to walk away owning them nothing (like I do with my accountant).  

>Away you go now Dallers 

From insults to buddy names.  That prozak really does cause extreme mood swings doesn't it!  I trust Laser isn't a shortened version of LazyBoy.   

>but don't expect your reflective of the market. 

I never though I was.  But you know it's a funny thing.  When you mention to people about execution only PRSA's, they seem to grasp the idea in about 30 seconds.  if the industry is relying on people simply not knowing that there are alternatives to the 5% charge, then it's in real trouble, because that kind of info has a habbit of getting out.

As a matter of interest, could you give us an idea of the beginning to end process for a client coming in to you to get advice on Pensions, where the client ends up with a 5% PRSA.
I'm curious about the added value that you'd provide over and above the execution only services.

This is not a Jibe, I'm genuinely interested in finding out what people get for that 5%.

Also, if you advise on a PRSA with a 5% fee knowing that 0% options exist, does that not breech the rules of giving customers all the options, and not giving advice based on your commission.

Could you not explain the difference between the 5% and the 0% help them set up the 0%, and charge them €800 for the advice.

Just curious.

-Rd


----------



## Laser

*To all*

Clubie asleep in his telephone box. Summer doesn't seem to understand that a lot of advisors are qualified at degree level. Daltonr, assumes that because I've attacked the skinflints assessment of the market I'd sell anything to a client with a 5% take on contributions, because I wouldn't. I try to get this as close to zero as possible, a much easier task when the contributions are higher. 

As for PRSA's I have yet sold one, but I have advised people what to do for nothing over the phone, including going to a discount broker like LA Brokers, because I couldn't be bothered dealing with low contribution customers, but that doesn't mean I won't defend good professional colleagues who deliver good service and value within the PRSA market if they are subject to abuse of the type Summer uses, and which trips off the tongue unchallenged too easliy on AAM.


----------



## daltonr

*Re: To all*

Answer the question.

What do people get for 5%?

Stop trying to deflect attention from it by insulting the other posters.

-Rd


----------



## extopia

*Re: To all*

In my opinion you get, for your 5%, a standard sales pitch that's handed down to the front line from the marketing and financial generals. The sales pitch undoubtedly involves a quick run through of the options available to the PRSA purchaser, with a definite bias towards hawking the version that is most profitable for the institution.

In other words a standard sales pitch, which if you were buying  a used car, you would expect.

The fact is that the general public, i.e. the hordes of employees whose employers have nominated a provider and who will now be bombarded with sales guff from the institutions, don't view buying a pension in the same way as they view buying a car. So they are probably less suspicious, especially if they don't understand the complicated jargon emananating from the esteemed advisors, who have been educated, as Laser informed us, to degree level!

(Nice one Laser. One assumes that the buyers of the 5% snake oil only have a Leaving Cert, at best).

And that's their problem of course. They'll sign up for their €50 per month pension, apparently, and will lose interest in the (annual) statements after a few years. The banks will continue to accept the 5%, which from what we're hearing here is not enough to cover their costs.

Boo friggin' hoo!

My personal experience of in-house advisors is that they are, despite that degree, unsophisticated in their understanding of the products they sell. Perhaps I was unlucky. And I assure you I was offering to invest a lot more than a couple of euros, in case you have the wrong idea.

What has come up here is that the 5% contribution fee is the Institutions' bounty for being forced to sell pensions to the poor and the desolate. If you're forced to sell unprofitable products by the government, well you might as well maximise your commision. If this is really the case, I don't have a problem with it. 

Somehow I just don't believe that the fee won't be applied to unsuspecting innocents who could otherwise get a better deal.


----------



## Laser

*Double Standards*

Daltonr complains of insulting posters, but you and your ilk bash away, unchallenged at ALL advisors. You display very narrow thinking, little knowlegde of the marketplace, and base your argument quite clearly on a stereotype salesperson. Not only is that over-simplistic, its weak thinking, and its unfair.

Funny how you can dish it out, but when your exposed, as I've done, you can't take it back - classic bully behaviour. You still can't deal with the idea that advisors and face to face meetings costs a lot more than skinflints are prepared to pay.


----------



## Darkside

*Scary*

Laser,

You scare me... this thread is quite revealing in that regard. You make me want to run to buy shares in the long run, diversifying along the way and pay them with an execution deal with ShareWatch, hold them for 30 years and gradually sell them towards retirement...

Perhaps hold a index managed fund? Seems managed fund managers don't seem to benefit clients with their supposely better value charges in the long run. Now if they did beat index funds over the long run (and 8/10 don't) then the charge would be justified but they are not. I also believe it is my right to disagree with your points of views. I have been actively investing for the last 5 years and what I have learnt has been invaluable since then and this site has been a great help in that regard!

I also try to alert my friends and colleagues to sites like this to avoid pitfalls and traps besides high charges which this site also helps in. I believe AAM is stronger today that it ever has been and the last 3 years are a testament to that. Great lessons have been learnt by all since then and will be used to great effect in the years to come. We are right to ask for fair value and not accept such barriers as 1% annual fields. We are right to ask WHY these charges are there! Go states side and see the rates there! Transparency has some way to go yet but you would agree that more of this would reduce the natural suspicion towards people such as yourself?


----------



## Laser

*Scare You?*

Its not my intention to scare anybody. I've no difficulty with AAM setting measurements for the online and informed community on it, even its its so so tiny, and unrepresentative of the public in general. 

I wqill concede that you and your ilk come to the market already fairly knowledgeable, and require less help than most others, but I object to this casting a halo over the vast bulk, ie millions of people out there who are not in the same position. I have fought on this thread for the recognition that face to face meetings remains the dominant channel, and regulation requires a reasonably lengthy advisory process.

Your side still doesn't get it, and hence in an attempt to shake you up, I've attacked AAM and your core philiosophy. Evidently that works a bit better.


----------



## extopia

*Re: Scare You?*

So... say you're a painter and your rates are twice as high one of your fellow tradesmen. You're both asked to quote for the same job. The customer asks you why your rates are higher. You tell him about your higher overheads and marketing costs, and the fact that you have to spend a lot of time meeting with him to figure out which colour paint would be best for his lifestyle. You can't convince him that you provide a better service, or that this consultation process will really benefit him in the long run. Naturally, he goes with the better value option, as he has nothing to lose by doing so.

So you tell him you don't like where he lives. And while you're at it, you don't like his neighbours either.

And you continue to sell your services in other areas, where they are less likely to question your rates, because they don't know or don't care that there are other options available.

Fair enough.


----------



## rainyday

*Re: Scare You?*



> Your side still doesn't get it, and hence in an attempt to shake you up, I've attacked AAM and your core philiosophy. Evidently that works a bit better.


Actually, attacking AAM really didn't work that well. A bit of rational debate with clearly argued points would be far more effective.


----------



## Laser

*Rainday's Post*

C'mon Rainyday, just read Dalatonr's last effort.

He compares a person hiring a painter to getting financial advice. He just completely skips over the knowlewdge gap, ie that people know precisely what they want before hiring a painter, and know what painting is, and that most people haven't a clue about personal finance.

So long as there is an AAM consensus that supports this kind of crass nonesense, and comes to an entrely faulty conclusion based upon it, your fair game. If Daltonr is representative of the "deep" thinking that respresents the AAM philosophy, I'm right to attack it with satire, because nothing else will work to shake you out of this stupidity.


----------



## rainyday

*Re: Rainday's Post*

Hi Laser - Isn't satire supposed to be amusing? None of your venomous attacks so far have raised a titter for me? Your posts remind me of a mangy old mongrel dog that has been backed into a corner, is afraid of everybody. The dog's only course of action is to snarl & bite at all around him, regardless of whether they are friend or foe. He doesn't have to brains to see that that there are many ways out of his quandry that don't involve attacks at all.

I'm just hoping that your online persona does not reflect your real-life persona, i.e. that you are one of those who gets mighty brave when at the end of a keyboard but isn't quite so brave in real life. If I'm wrong, I pray for the good health of your spouse/kids/work colleagues.

I have no problem with any logical, reasoned arguements which challenge any possible consensus. 

PS I'd like to apologise to mangy ould mongrel dogs for denigrating their reputations by comparing them to Laser.


----------



## Laser

*Reason Lost*

In every post where I've got a bit cutting I always made a point of argument. Not all satire is amusing to those satired I agree. Your post made no point at all. 

Faced with an argument you can't deal with, ie that face to face advice for personal finance costs money, what have we now got? Daltonr is out with his paint brushes, and you've denigrated me to a life form lower than a dog. I guess that just about sums up the contempt that your ilk approach your view of those who advise for a living. Both these posts expose precisely what I've been driving at for several days now- despite occassional deletion by your editors.

I'd fairly say, you've blown your cover.


----------



## rainyday

*Re: Reason Lost*



> I guess that just about sums up the contempt that your ilk approach your view of those who advise for a living.


Rubbish-some of my best friends are those who advise for a living. You will notice that I have expressed no view, positive or negative on the main topic of  this thread. 

Only personally offensive posts were deleted. With every other poster in the history of AAM, it was possible to delete the offensive stuff and leave the content. With your posts, once we removed the offensive stuff, there was nothing left. My contempt arises from your inability to make your points without getting into personal attacks.


----------



## Summer

*Good Morning All*



> Summer doesn't seem to understand that a lot of advisors are qualified at degree level.



What I suggested in my original post was "Advisors" should have a professional qualification and be accountable to a professional body. The standard of the individuals education is not important if they do not belong to a professional body.  Lets call a spade a spade if you are selling pensions on behalf of a bank etc., you are a salesman and commission driven and the job title should not reflect the cost of the advice. A rose by any other name is still a .........


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## Laser

*Let the facts show*

Rainyday, read the posts, including your last one as an Editor. You're just making your bigotry worse. The facts are that many AAM addicts are unreflective of the general market and presume that advisors are grossly overpaid for the work they do. But when challenged you have FAILED abysmally to support your position with any knowledge of the real marketplace.

That is not a problem since, once information is introduced, you'd expect people to at least read the other sides view. But you don't, you reduce it to painters and dogs. You just can't accept the fact that the AAM skinflint philosophy fails when it meets market reality. As I've posted ad nauseum, there proof is all around if your prepared to look at it, but you're not.

Quinns didn't work. LA, Myadvisor, etc are so tiny that they hardly count. Solomon.com spent over €1million trying to prove your theory, and also failed. It just doesn't work, except for a tweeney number of people. The problem with you on AAM is that you lack the ability to accept that all the huff and puff you've expended here actually counts for a lot less than you're prepared to admit. People just ignore you.

Depite what you think people continue to get their advice from Irish Life, Bank of Ireland and AIB, despite paying full commissions for it. During your Tenure here Rainyday, these business'es have grown even stronger, with the deal-direct brigade despite massive free PR are still lifestyle business'es. No serious investor is following these models -BECAUSE THEY DON'T WORK.

Woof woof.


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## daltonr

*Re: Rainday's Post*



> read Dalatonr's last effort.
> 
> He compares a person hiring a painter to getting financial advice.



See that thing up there Laser?  That's called a quote.  Now would you care to produce one where I compared financial advisers to painters.

You've repeatedly insulted the posters on this board and misrepresented what they've said, but you've NEVER ONCE actually quoted them.

You've repeatedly put forward the notion (on more than one thread) that regular posters on AAM think about €100 is fair payment for a financial adviser, even though you have been repeadedly corrected on this.

You've also repeadedly broken AAM posting guidelines which are fairly simple to follow, namely attack the opinion not the person.

You have been given every opportunity to put forward an advisers opinion, but you have continued on an Anti-AAM tirade.  You are clearly incapable of engaging in rational intelligent discussion, or even polite discussion for that matter.

If you can't obey a few simple rules and be polite then your posts will be removed.  All posts which contain insults directed at any individual will be deleted.  If you have specific concerns about AAM, and you have quotes to back up your concerns then post them in a polite manner and they will be dealt with. 

-Rd


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## tedd

*Post deleted*

Post deleted

tedd


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## tedd

We have removed a number of posts and threads recently which do not comply with the posting guidelines of Askaboutmoney. 

In the past, the moderators have spent a lot of our time explaining why such posts were removed. We have decided that we can use our time better dealing with the development of Askaboutmoney and so we are no longer entering into discussions/reviews of moderators' decisions.

If long term contributors to Askaboutmoney would like to comment on such decisions, they can send a Private Message to one of the moderators.


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