# Advisability on investing in BOI 2 in 1 Saving and Investment



## olivia (27 May 2008)

Met a BOI advisor recently who was selling the BOI product 2 in 1 Saving and Investment - Guaranteed Evergreen Fund and Option Plus deposit account.  Has any one any views on this product or the evergreen fund generally?


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## ClubMan (27 May 2008)

_Evergreen _is discussed already in a few threads. Remember that a _BoI _"advisor" is just a tied agent sales person and will not necessarily (or ever?) give you independent, professional advice in your best interests.


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## The5acre (28 May 2008)

Hi Clubman,

I take issue with your reply to Olivia.

I am guessing that I was the Advisor who met with Olivia recently.

I will start by saying that Olivia did not ask your forum for advice on tied agents v's MAI or AA's, she asked a specific question on feedback on a particular product.

However, the primary issue I have is of your choice of words in your reply. You seem to indicate that an individual who is a tied agent is unlikely/incapable of providing 'professional' advice which is in a clients best interest.  I am a QFA, required to provide best advice to all clients who I meet with, I work hard at each meeting to do this and to ensure every piece of business I do is compliant with all FR requirements.  While I am a tied agent of BOI Life, this does not preclude me from offering what I feel is best advice, based upon the information a client provides me, as your reply seems to suggest.

I will finish by saying that I enjoy reading the many interesting threads on your forum and appreciate the work which goes into administering the site on an ongoing basis.


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## ClubMan (28 May 2008)

The5acre said:


> You seem to indicate that an individual who is a tied agent is unlikely/incapable of providing 'professional' advice which is in a clients best interest.


Yes - that is what I believe alright. I doubt that too many people would recommend that punters go to tied agents for independent, professional advice in their best interests. Tied agents have a de facto conflict of interests which militates against them dispensing this sort of advice.


> While I am a tied agent of BOI Life, this does not preclude me from offering what I feel is best advice, based upon the information a client provides me, as your reply seems to suggest.


Do do you ever recommend products from competitors of _BOI Life _to your clients? Do _BOI Life _encourage this?

I stand by what I have posted here and many times before - if somebody wants comprehensive, independent, professional savings/investments advice in their best interest taking into their overall personal/financial circumstances then they should seek out recommendations for a good multi-agency intermediary (with as wide a range of agencies as possible) or an authorised advisor and not a tied agent.


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## lawdie (29 May 2008)

ClubMan said:


> Do do you ever recommend products from competitors of _BOI Life _to your clients? Do _BOI Life _encourage this?



This kind of question supports what the earlier poster was trying to state.  You already know this answer Clubman. However, your asking this question to appear righteous.

So heres a little home truth.  I've worked in independent brokers up to recently.  I've colleagues and friends in this trade.  The fact is most will recommend the optimal product with the optimal commission, the latter being priority. Some of your rhetoric on 'independents' is flattering but misguided.  I've placed people in new Ireland evergreen as easily as any other fund.

To answer the original poster, the offer seems good in todays market.  Once your prepared to wait 6 years to have the guarantee matured.
Theres no crystal ball on what the return is going to be for evergreen or any other fund.

Going back to this point on selecting someone to manage.  Theres some cracking investment managers in tied agents (albeit to tied products) and multi agents that actually give solid advice.  They also pickup the phone and follow up with clients a true sign of professionalism.  Don't always buy the independent line as correct.  Theres no magic solution. 

Find out who you like and if possible ask for a referral(s) from the agent.  Spreading your investment selection between suppliers is another option.


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## ClubMan (29 May 2008)

lawdie said:


> This kind of question supports what the earlier poster was trying to state.  You already know this answer Clubman. However, your asking this question to appear righteous.


Huh!!?? 


> So heres a little home truth.  I've worked in independent brokers up to recently.  I've colleagues and friends in this trade.  The fact is most will recommend the optimal product with the optimal commission, the latter being priority.


Any multi-agency intermediary or _AA _contributors care to comment on this?


> Some of your rhetoric on 'independents' is flattering but misguided.  I've placed people in new Ireland evergreen as easily as any other fund.


Even when it was not the most suitable product for them?


> I've placed people in new Ireland evergreen as easily as any other fund.
> 
> To answer the original poster, the offer seems good in todays market. Once your prepared to wait 6 years to have the guarantee matured.
> Theres no crystal ball on what the return is going to be for evergreen or any other fund.


Do you have any vested interest in _Evergreen/BOI_? How can you imply that the product might be suitable for the original poster without much more detailed background information on their overall personal/financial circumstances.


> Don't always buy the independent line as correct.  Theres no magic solution.


I never claimed it to be a magic solution. But it's almost certainly (especially if you get a well regarded/recommended _AA/MAI_) a much better bet than going to a tied agent unless you already know that you want the latter's products.


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## gebbel (29 May 2008)

The5acre said:


> While I am a tied agent of BOI Life, this does not preclude me from offering what I feel is best advice....


 
.......concerning BOI products exclusively I imagine!


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## The5acre (29 May 2008)

Hi Clubman,

In response and I then will then leave it there .....

If a client comes to me looking for advice on any of our products, and based upon my factfinding process they are obviously not suitable or there are other needs that are more important to be addressed initially, then I will advise the client of such.

I have on many occasions advised clients that taking out any of our products would be unsuitable as they are unwilling to take the risk, have unrealistic expectations on returns, have little or no experience in investing or are unwilling to wait for the opportunity to achieve a decent return over the longer term.

Again my issue is with your use of the word 'professional', we are required in Bank of Ireland Life to go through a detailed factfinding process with each client prior to making any recommendation.  A copy of this factfind document is then given to the client to allow them to take away to review prior to making any decision.

I would have to agree with lawdie in relation to the fact that there are many, many MAI's scattered throughout this country that provide advice to their clients which is driven primarily by the level of commission they will receive rather than providing true 'independent' advice.

To completely discount the service provided by all tied agent's to thousand's of customers each week is, I feel, a little smug and condescending.  Tied agents can and do provide an excellent level of service and professionalism, to simply suggest that by going to an MAI they will automatically received true 'independent' advice is a tad naive.  'All that glistens is not gold '........

Of course I do not recommend that clients invest in any of our competitor products, neither would a MAI advise a client to invest in a company they do not have an agency for and even then commission paid can be a more important driver for these MAI's.  All clients who meet with me understand that I am a tied agent, as I am required to advise them of such.


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## ClubMan (29 May 2008)

The5acre said:


> Again my issue is with your use of the word 'professional'


Fair enough - perhaps in future I should say _"if you want independent professional advice ..." _rather than _"if you want independent, professional advice ..."_ when distinguishing between tied agents and _MAI/AAs_?


> I would have to agree with lawdie in relation to the fact that there are many, many MAI's scattered throughout this country that provide advice to their clients which is driven primarily by the level of commission they will receive rather than providing true 'independent' advice.


I'm sure that there are. And as far as I know an _MAI _(or _AA_?)could actually just have a single agency. That is why I always say to find a *good one *based on trustworthy recommendations. Same as any service provider.


> To completely discount the service provided by all tied agent's to thousand's of customers each week is, I feel, a little smug and condescending.


I didn't. I have often said people should feel free to go to a tied agent if they already know what they want their products. But I stand by my comments that they should not go to them for truly independent advice.


> Tied agents can and do provide an excellent level of service and professionalism, to simply suggest that by going to an MAI they will automatically received true 'independent' advice is a tad naive.  'All that glistens is not gold '........


Once again I never said that this would "automatically" happen. The least that people who disagree with my comments could do is to read them carefully and desist from attributing to me comments that I have never made! 


> All clients who meet with me understand that I am a tied agent, as I am required to advise them of such.


Some people don't understand the difference between a "broker", financial advisor, tied agent, _MAI, AA _etc. This is evidenced by many posts on _AAM _and comments elsewhere. I certainly don't plan to change my tune in outlining to people the differences and the caveats involved in choosing one over the other as I see them. No matter what vested interest feathers it might ruffle.


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## LDFerguson (29 May 2008)

lawdie said:


> So heres a little home truth. I've worked in independent brokers up to recently. I've colleagues and friends in this trade. The fact is most will recommend the optimal product with the optimal commission, the latter being priority.


 
This is the trouble with anecdotal evidence.  Just because most of your acquaintances will act in this unethical and selfish manner doesn't mean that most advisers in the entire industry will.  I also have friends in this business and most will strive to offer the best advice for the client.


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## Dave Vanian (29 May 2008)

> But it's almost certainly (especially if you get a well regarded/recommended _AA/MAI_) a much better bet than going to a tied agent unless you already know that you want the latter's products.


 
I'd have to disagree with you on this score, ClubMan.  If you already know the products you want, you still shouldn't go to a tied agent.  I've never heard of a tied agent who will offer discounted charges for execution-only deals.  You're better off in this instance going to a discount broker like www.labrokers.ie


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## lawdie (31 May 2008)

ClubMan said:


> Huh!!??



You understand, dont post a childish response.



ClubMan said:


> Do you have any vested interest in _Evergreen/BOI_? How can you imply that the product might be suitable for the original poster without much more detailed background information on their overall personal/financial circumstances.



Is this site setup to provide full financial reviews and professional wealth planning which would uphold a rigorous investigation by the financial regulator.  Should we conduct public online needs analysis before we make a comment. If were unable to make a comment without being subjected to the above statement I recommend that this URL and forum should lead to a blank page with the statement "ring an independent non agency financial adviser, good day."

The op wanted opinions, I gave an opinion.  They can choose to take this on board or discard it. Are you stating before I offer an opinion I should go through levels on OP interviewing?  Sorry mate I have a life.


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## ClubMan (31 May 2008)

lawdie said:


> You understand, dont post a childish response.


Thanks for telling me what I am supposed to know... 


> Is this site setup to provide full financial reviews and professional wealth planning which would uphold a rigorous investigation by the financial regulator.


No - read the disclaimer(s) linked from various places on the site.


> Should we conduct public online needs analysis before we make a comment. If were unable to make a comment without being subjected to the above statement I recommend that this URL and forum should lead to a blank page with the statement "ring an independent non agency financial adviser, good day."


It's not that hard to do what is effectively a very basic fact find online in order to give a poster more comprehensive suggestions and feedback than just pointing at a specific product something which is particularly questionable when the respondant has a vested interest in the same product.


> The op wanted opinions, I gave an opinion.  They can choose to take this on board or discard it. Are you stating before I offer an opinion I should go through levels on OP interviewing?  Sorry mate I have a life.


No problem "mate".


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## Duke of Marmalade (1 Jun 2008)

Now girls, put down the handbags.

Funny how mention a bank product and we instantly get diverted into that old chestnut about tied/independent.

The real world was laid bare on Prime Time the other night.  Three honest men (or women) out of 11 stood up to recommend a product which was categorically in their view in the client's best interest and held no financial interest for them.

The two cases highlighted represented the opposite ends of Clubbie's virtuous spectrum from tied to independent.  I have my own views on which came out the worst.


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## ClubMan (1 Jun 2008)

I never said that there were no well intentioned tied agents who would like to do right by their clients (but are most likely largely hamstrung by only being able to recommend their own products). Or that there were no dodgy _MAIs _or _AAs_. As I keep saying I would am pretty sure that going to a good, well recommended, trustworthy _MAI _or _AA _(with as wide a range of agencies as possible) rather than a tied agent (with, by definition, a single agency) is not a better course of action for most people most of the time. I didn't see the programme in question but would imagine that it might be dangerous to extrapolate from a sample size of 11 (?) financial intermediaries.


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## Duke of Marmalade (2 Jun 2008)

To answer OP. Don't know about the Option Plus Deposit Account. But the Guaranteed Evergreen Fund is one of a genre of such products under the CPPI umbrella. Irish Life's Protected Consensus Fund (which was the product in the Prime Time programme) is almost identical to the GEF.

The way it works is you start off with 80% exposure to a managed fund (Evergreen in BoI's case) and 20% in fixed interest. 

The product is guaranteed to return capital in 6 years. The guarantee is paid in two ways. Firstly there is an extra management charge of 0.75% added to normal management charges of 1%.

The second drag on performance to pay for the guarantee is having less than 100% exposure to the managed fund and more importantly that this exposure is dynamically reduced if the guarantee looks like biting. BoI shows two scenarios, one where the exposure stays around 80% and the other where it falls to the minimum 15% exposure. Somewhere in between is probably right i.e. this product on average offers about 50% exposure to a managed fund.

So, in summary, 0.75% *extra* annual charge together with only 50% exposure are the costs of the guarantee of capital at 6 years. IMHO not a very good trade off.


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## lawdie (3 Jun 2008)

Harchibald said:


> The product is guaranteed to return capital in 6 years. The guarantee is paid in two ways. Firstly there is an extra management charge of 0.75% added to normal management charges of 1%.
> 
> So, in summary, 0.75% *extra* annual charge together with only 50% exposure are the costs of the guarantee of capital at 6 years. IMHO not a very good trade off.



I'd like The5acre to confirm, but when I sold this product it was 0.25% higher than the standard fund charge at 1.5%.  And I'm not following the 50% exposure calculation, is this a guess or whats model is this based on?  I'm aware that the gty product faired lower than the same product on straight unit purchase.


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## Duke of Marmalade (3 Jun 2008)

_Iawdie_, I am presuming standard fund charges of 1% whenever exit penalties apply. I'm not sure about normal Evergreen but if it is 1.5% plus exit charges it is way out of line with market norms.

The 50% is not a guess. The d*mn problem with these CPPI things is the complete lack of transparency (not necessarily implying misrepresentation) but I am aware of much modelling work which suggests that on average a much lower exposure is to be expected than the initial eye catcher. To be fair to BoI they show 2 scenarios, one with c.80% throughout and one falling to 15% which on averaging the two is fairly consistent with the models I have seen.


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## lawdie (7 Jun 2008)

Harchibald said:


> I am presuming standard fund charges of 1% whenever exit penalties apply. I'm not sure about normal Evergreen but if it is 1.5% plus exit charges it is way out of line with market norms.



I dont think there are any entry or exit charges on the standard funds.  But again 5acre could confirm this.


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## Iceman732 (8 Jun 2008)

Harchibald will you ever have a decent run again?!!!

I completely agree with Clubman, I don't know of anyone who has gone into a meeting with a tied agent (Say BOI) and come out saying..... 'Well I got some great advice about product that First Active are offering' or 'Well the BOI adviser tells me that there's a great product Irish Life have that is right down ur alley'!!!!


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## lawdie (12 Jun 2008)

Iceman732 said:


> I don't know of anyone who has gone into a meeting with a tied agent (Say BOI) and come out saying..... 'Well I got some great advice about product that First Active are offering' or 'Well the BOI adviser tells me that there's a great product Irish Life have that is right down ur alley'!!!!



If you have a basic qualification in finance such as the QFA - Investments, you  should know that "tied agents" cannot give advice on products outside of their agency.  

So how many people go into a Mercedes dealership to get advised that they should also consider a BMW 3 series or why not try a Lexus there fantastic (and the list could go on...).

Do we have to keep thrashing this point or is it finally clear.


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