# Which pension fund



## cremeegg (18 Aug 2019)

I am transferring a UK pension fund to Ireland and a buy out bond has been advised.

The investment advised is in the Standard Life Myfolio Active IV fund. 100% allocation, 1.5% AMC and a monthly policy fee of €5.42. With the pensions adviser "remunerated by SL from within the AMC"

I am looking for a 15 year minimum investment in equities, hoping to achieve market return with low fees.

Does this meet the bill ?

Any comments or advice most welcome


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## noproblem (18 Aug 2019)

Just wondering was it Cornmarket that advised you on the Standard Life Myfolio fund? Curious.


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## Oisin19 (18 Aug 2019)

Is there commission due as well?


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## Oisin19 (18 Aug 2019)

monthly policy fee of 5euro. What a joke? over 15 years that's 900! for what? Whats the AMC for?

MyFolio Active IV has a high equity allocation so should return the market. However the most important thing is to get the contract pricing first as this will be the biggest drag on performance. 1.5% AMC is base cost of this contract. There is also the monthly fee. Then there is portfolio and transaction costs for the fund itself. You are probably all in for more than 2% per annum. Its for you to decide if that's worth it?


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## cremeegg (18 Aug 2019)

Fergal19 said:


> MyFolio Active IV has a high equity allocation so should return the market.



Ok that sounds good.




Fergal19 said:


> Its for you to decide if that's worth it?



Worth is doesn't really come into it. I effectively have to buy this product or something similar. My question is, do people think I can get similar for a lower cost.


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## cremeegg (18 Aug 2019)

noproblem said:


> Just wondering was it Cornmarket that advised you on the Standard Life Myfolio fund? Curious.



No, not corn market. A local pension advice firm.


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## cremeegg (18 Aug 2019)

Fergal19 said:


> Is there commission due as well?



I am paying the broker a direct fee for their work in transferring the pension from the UK to an Irish buy out bond.


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## Oisin19 (18 Aug 2019)

Is there exit penalties? i.e do you have to keep the funds with them for a 5/6 years?


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## Sarenco (18 Aug 2019)

Looks very expensive to me @cremeegg.

I bought a BOB a few years ago (Zurich) - 0.75% AMC, 100% allocation, no policy fees.

I personally wouldn't be wild about the MyFolio funds.  If your goal is to simply achieve market returns, why not opt for the Standard Life Vanguard Global Index Fund?


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## Oisin19 (18 Aug 2019)

but your 0.75% has no advisor trail as presumably you didn't want that service? If the original poster wants that service it will be dearer which is fine so we have to factor that in when comparing your policy to the one proposed.

I like you believe the AMC is on the high side. I think he shouldn't be paying more than 1.25% as a base AMC if he wants an advisor on board. (Advisor fee would generally be 0.5% so would tally with your policy AMC.) 

I have a hunch that there is commission payable as well which is why its up around the 1.5% and not around the 1.25%. 

Myfolio is active while vanguard is passive. This is a choice of styles for the investor and some people do value the active management. Again this depends on what service the investor wants.


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## Sarenco (18 Aug 2019)

A trail commission is paid out of the 0.75% AMC.  

Cremeegg said he wanted to achieve market returns.  The best way to archive that is to invest in a simple index fund - not a fund of active funds.


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## Conan (18 Aug 2019)

Questions:
1. Do you want continuing advice from the Broker? If so, presumably that’s included in the 1.5% AMC (typically 0.5%)?
 2.If not then 1.5 % is very expensive for a type of Managed Fund. There are Managed Funds available for circa 0.75%. 

If you want the Broker to provide an ongoing service then you must pay for it. If however you are paying a fee for the transfer/ establishing the BOB, then you need to question what ongoing service will be provided if no further funds are being invested on an ongoing basis.
Minimizing the AMC is the best way to maximize returns. Saving 0.75% or 0.50% pa is very significant.


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## Oisin19 (18 Aug 2019)

you've a good contract there!


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## Sunny (18 Aug 2019)

Sarenco said:


> Looks very expensive to me @cremeegg.
> 
> I bought a BOB a few years ago (Zurich) - 0.75% AMC, 100% allocation, no policy fees.
> 
> I personally wouldn't be wild about the MyFolio funds.  If your goal is to simply achieve market returns, why not opt for the Standard Life Vanguard Global Index Fund?



I did the same with Zurich. And have no reason to regret it since.


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## Zenith63 (19 Aug 2019)

Fergal19 said:


> but your 0.75% has no advisor trail as presumably you didn't want that service? If the original poster wants that service it will be dearer which is fine so we have to factor that in when comparing your policy to the one proposed.


I think it’s well worth calling it out any time this conversation comes up on AAM though, it took me a long time when looking for a pension to discover that you can get them “direct” without the advisor fee, pension advisors are not exactly incentivised to tell you this.

Not sure what cremeegg’s pension pot is like here, but if it’s €100k then going from 1.5% to 0.75% AMC would be a saving of €750 every year for 15 years, more as it grows in-fact.  They could buy a lot of pension advisory services for that! If it’s €200k or €500k then that extra 0.75% fee is just insane IMHO.


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## Steven Barrett (19 Aug 2019)

cremeegg said:


> I am transferring a UK pension fund to Ireland and a buy out bond has been advised.
> 
> The investment advised is in the Standard Life Myfolio Active IV fund. 100% allocation, 1.5% AMC and a monthly policy fee of €5.42. With the pensions adviser "remunerated by SL from within the AMC"
> 
> ...



If you have a 15 year investment period, the gross allocation for this policy is either 102% or 103%. The advisor is taking the 2% or 3% (I suspect it's the 3%). If you are paying a direct fee on top of this, he is charging you twice. You are also paying the standard Standard Life amc on this contract with an additional 0.5% broker fee added to the amc. Standard Life have lots other contracts that have no monthly policy fees either. It appears you are paying the most expensive contract they have. 

If you want the market, invest in the Vanguard Global Equity Index. You'll also get a 0.1% rebate on the amc from investing in the low cost fund. 


Steven
www.bluewaterfp.ie


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## Steven Barrett (19 Aug 2019)

Zenith63 said:


> I think it’s well worth calling it out any time this conversation comes up on AAM though, it took me a long time when looking for a pension to discover that y*ou can get them “direct” without the advisor fee*, pension advisors are not exactly incentivised to tell you this.
> 
> Not sure what cremeegg’s pension pot is like here, but if it’s €100k then going from 1.5% to 0.75% AMC would be a saving of €750 every year for 15 years, more as it grows in-fact.  They could buy a lot of pension advisory services for that! If it’s €200k or €500k then that extra 0.75% fee is just insane IMHO.



You will deal with a tied agent who works for the life company. They will charge you instead of an advisor who can offer any contract on the market. Life companies rely on the broker market for their business. They are not going to undercut the broker market by offering cheaper contracts directly (although I work on the assumption that this will change at some point in the future). 


Steven
www.bluewaterfp.ie


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## Zenith63 (19 Aug 2019)

SBarrett said:


> You will deal with a tied agent who works for the life company. They will charge you instead of an advisor who can offer any contract on the market. Life companies rely on the broker market for their business. They are not going to undercut the broker market by offering cheaper contracts directly (although I work on the assumption that this will change at some point in the future).


All I can say is that while looking around for pensions, 1.25% AMC was common enough.  I contacted the pension provider directly and now have the exact same pension setup at 0.75% AMC.

I do fully accept that the advisory services with this direct approach are much more limited than going through a broker and this is a call people need to make themselves.  I also understand that brokers have to wait a long time to actually make money at 0.5% when pensions start from.

However looking at a 25 year build up towards a €1m pension that extra 0.5% AMC represented €60k in advisory fees; I personally felt more comfortable buying advisory services myself as required, doubting I will get anywhere near €60k.


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## Oisin19 (19 Aug 2019)

However that's all good if you know what your doing. most people don't and an advisor is essential and worth the 0.5%. I just hate when they don't disclose their fees and commissions!


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## Zenith63 (19 Aug 2019)

Fergal19 said:


> However that's all good if you know what your doing. most people don't and an advisor is essential and worth the 0.5%. I just hate when they don't disclose their fees and commissions!


It’s definitely personal choice and pensions are complex and big financial decisions.

I’m just calling out that 0.5% becomes a very big number over 20-30 years and as a pension pot grows. You can still consult and pay for an advisor separately and people should ask themselves whether they think they’ll need more than €60k+ of those services over the lifetime of a pension.


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## Oisin19 (19 Aug 2019)

Its relative to the service provided. if your advisor is putting the work in and adding value the fee is worth it. If your advisor is only executing for you then there should be no trail fee.

Say you have a client that is 70 with an ARF worth 1.5m. The fee would be 7,500.

Service could involve the following:

4X Meetings a year,
Managing the investment strategy,
Managing client anxiety especially with markets being volatile,
Providing Financial Modelling,
Providing estate planning services
Contantly reviewing the plan.
Managing admin of policies 
etc.
Then there is all the compliance regulations that they have to comply it.

For all the above 7,500 is cheap! The fee is worth it for good advisors.


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## Steven Barrett (19 Aug 2019)

Zenith63 said:


> All I can say is that while looking around for pensions, 1.25% AMC was common enough.  I contacted the pension provider directly and now have the exact same pension setup at 0.75% AMC.
> 
> I do fully accept that the advisory services with this direct approach are much more limited than going through a broker and this is a call people need to make themselves.  I also understand that brokers have to wait a long time to actually make money at 0.5% when pensions start from.
> 
> However looking at a 25 year build up towards a €1m pension that extra 0.5% AMC represented €60k in advisory fees; I personally felt more comfortable buying advisory services myself as required, doubting I will get anywhere near €60k.



The same charging structures are available to direct sales team and independent advisors. There is an advisor fee in both instances that you mentioned. The direct sales teams tend to be on commission only, so they eat what they kill. They don't however, have to pay rent, software, admin etc that an independent has to pay. A lot give no follow up service either.  

The 0.75% suits you fine. Not everyone needs an ongoing service from an advisor but it is important to be aware that going direct doesn't mean you avoid an advisor fee, you are paying a commission.

Steven
www.bluewaterfp.ie


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## Zenith63 (19 Aug 2019)

Fergal19 said:


> Its relative to the service provided. if your advisor is putting the work in and adding value the fee is worth it. If your advisor is only executing for you then there should be no trail fee.
> 
> Say you have a client that is 70 with an ARF worth 1.5m. The fee would be 7,500.
> 
> ...


The fee is €7500 for that year only, they also paid €7450 the year before that, and €7400 the year before that etc since the policy started. The total fees for the 20-25 years they’ve built up that pension would be closer to €75,000. That’s the figure people need to consider when deciding if it is worth it.


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## Homelandfan (19 Aug 2019)

going back to cremeegg's original point about moving a UK pension back to Ireland; is the buy out bond the preferred option? Would a QROP to Malta be another/better option? QROP or another name for them is  (European Union Retirement Benefits Scheme).  I am no expert, just something I have come across online so its a genuine question. 
Some background info here   
note I have no connection with and am not endorsing this company - just curious if anyone here has gone down this route and would like to share their experiences, benefits, snags etc


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## Gordon Gekko (20 Aug 2019)

So what is the total annual cost of the cheapest passive Buy Out Bond and who’s it through?


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## Steven Barrett (20 Aug 2019)

Gordon Gekko said:


> So what is the total annual cost of the cheapest passive Buy Out Bond and who’s it through?



I deal with Zurich, Standard and ITC for QROPS. Zurich and Standard have 0.5% as their lowest AMC. Standard have a few Vanguard funds with a .1% rebate on them. ITC have a 0.4% amc with access to a fund platform where you can chose any fund/ ETF

I believe Davy have a QROPS approved product too but I don't use them.


Steven
www.bluewaterfp.ie


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## GSheehy (20 Aug 2019)

Gordon Gekko said:


> So what is the total annual cost of the cheapest passive Buy Out Bond and who’s it through?



It depends.

You're going to get a better AMC from the discount broker/provider if you have €750,000 as opposed to €7,500 to invest.


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## Sarenco (20 Aug 2019)

SBarrett said:


> Zurich and Standard have 0.5% as their lowest AMC. Standard have a few Vanguard funds with a .1% rebate on them.


Hi Steven

An effective AMC of 0.4% looks very competitive in the current market.  

Would it be possible to get an allocation rate (less any commission) of 100% on a single premium of, say, €100k?  Any policy fees applicable to that contract?


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## Steven Barrett (20 Aug 2019)

the base allocation is 100% (see the correlation between allocation rates and management fees   ).No policy fee. Early exit penalties apply for the first 5 years. If you want no exit penalties, the AMC is 0.5%. That only applies to a selected amount of Vanguard funds which attract an additional .1% discount.



Steven
www.bluewaterfp.ie


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## Sarenco (20 Aug 2019)

Thanks Steven but could you clarify what you mean by the "base" allocation?  Does that mean the insured only receives a 98% allocation if the broker takes a 2% commission?  

What is the lowest AMC with a 100% allocation?


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## Qwerty22 (20 Aug 2019)

Can I ask why you need to transfer your pension at all?

I know there's all this messy Brexit stuff coming up, but would it be possible to keep it in the UK where there is much more choice? Is the fund being wound-up, or are there other legal restrictions forcing you to move?

Or if you feel you have to move it out of the UK, keep it there until the Pan-European Pension Products become available in a couple of years time, and move to a much lower-cost German or Dutch provider who'll have larger economies of scale, won't have such high charges, or compel you to go through an artificially restrictive broker network.


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## Steven Barrett (20 Aug 2019)

Sarenco said:


> Thanks Steven but could you clarify what you mean by the "base" allocation?  Does that mean the insured only receives a 98% allocation if the broker takes a 2% commission?
> 
> What is the lowest AMC with a 100% allocation?



The starting allocation is 100%. If an advisor charges you 2%, you will get 98% of your contribution invested. Or you can pay them a fee so nothing is deducted. 

Some providers offer an allocation of 105%. An advisor may take 2% and you get 103% or they may take the entire 5% and you get your €100k invested. But the management fee on this type of contract will be 1% as the life company needs to recoup that extra 5% through higher ongoing fees.

There are loads of different options in between. And that's just single premium contracts. The monthly premium contracts have even more options 

It's as clear as mud. 


Steven
www.bluewaterfp.ie


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## Sarenco (20 Aug 2019)

SBarrett said:


> It's as clear as mud.


Well, it certainly lacks transparency.

I don't really have an issue with the complexity of the charging structures (they're really not that complicated) - I just wish pension providers would publish their pricing options so consumers could check whether or not they are being ripped off by intermediaries.  

It's amazing to me that the Central Bank allows this lack of transparency to continue.


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## Qwerty22 (20 Aug 2019)

Sarenco said:


> It's amazing to me that the Central Bank allows this lack of transparency to continue.


The Central Bank's website has a complaints email - enquiries@centralbank.ie - although with a name like "enquiries" I wouldn't hold my breath.

They also link to their Code of Conduct, page 32 of which mentions that all regulated entities should have their charges "easily accessible to consumers". However, I'm sure they'd all claim they were clearly marked in the Douglas Adam's sense: _"It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying ‘Beware of the Leopard.'"_

If someone came up with some good wording to send to the Central Bank's complaints address, then maybe some contributors on this site (without a vested interest in maintaining the status quo) could be persuaded to write to them...


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## Steven Barrett (20 Aug 2019)

Sarenco said:


> Well, it certainly lacks transparency.
> 
> I don't really have an issue with the complexity of the charging structures (they're really not that complicated) - I just wish pension providers would publish their pricing options so consumers could check whether or not they are being ripped off by intermediaries.
> 
> It's amazing to me that the Central Bank allows this lack of transparency to continue.



The Pensions Authority has a list of all authorised PRSA and the approved charging structures. How many people look at that? Most people aren't aware its there. 




Steven
www.bluewaterfp.ie


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## Sarenco (20 Aug 2019)

SBarrett said:


> The Pensions Authority has a list of all authorised PRSA and the approved charging structures. How many people look at that? Most people aren't aware its there.


Well, I certainly didn't know that – here's a link for anybody that's interested:
https://www.pensionsauthority.ie/en/PRSA_Providers/PRSAs/

Not sure where the execution-only PRSAs that are available through discount brokers fit into that list.


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## Steven Barrett (20 Aug 2019)

Sarenco said:


> Well, I certainly didn't know that – here's a link for anybody that's interested:
> https://www.pensionsauthority.ie/en/PRSA_Providers/PRSAs/
> 
> Not sure where the execution-only PRSAs that are available through discount brokers fit into that list.



Discount brokers aren't PRSA providers. They use Zurich Life or Irish Life who offer the PRSA at 100% allocation, 0.75% amc. They add 0.25% amc onto it which is their margin. Those contracts are available to all advisors. Discount brokers need to generate numbers for it to pay for itself. Wouldn't be my target market. 

Did you read the fees? 
€20,000 to apply for a PRSA and €5,000 for each additional product. Then €2,000 a year for each PRSA product and 0.05% of the amc as at 31 December of that year. Not much margin for a life company.


Steven
www.bluewaterfp.ie


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## Oisin19 (20 Aug 2019)

Sarenco said:


> Well, it certainly lacks transparency.
> 
> I don't really have an issue with the complexity of the charging structures (they're really not that complicated) - I just wish pension providers would publish their pricing options so consumers could check whether or not they are being ripped off by intermediaries.
> 
> It's amazing to me that the Central Bank allows this lack of transparency to continue.



They should have to send a statement to the policy holder each year showing all the fees deducted and commissions paid and to whom they were paid. The MIFID firms have to do it for some of their products but I don't know why the insurance industry get away it. Great lobbying id imagine


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## Sarenco (20 Aug 2019)

SBarrett said:


> Discount brokers aren't PRSA providers. They use Zurich Life or Irish Life who offer the PRSA at 100% allocation, 0.75% amc. They add 0.25% amc onto it which is their margin


That's interesting.  So do the life companies retrocede the additional 25bps to the discount broker on an annual basis?

It seems weird to me that anybody would get paid anything material (particulatly on an ongoing basis) for effectively just passing on a blank form.

I'm obviously in the wrong business...


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## Conan (20 Aug 2019)

I 


Sarenco said:


> That's interesting.  So do the life companies retrocede the additional 25bps to the discount broker on an annual basis?
> 
> It seems weird to me that anybody would get paid anything material (particulatly on an ongoing basis) for effectively just passing on a blank form.
> 
> I'm obviously in the wrong business...


To be fair, Brokers do more than just passing on a blank form. If clients want advice about establishing a PRSA, which provider, what fund(s) etc, then it must be paid for. And if the client wants ongoing advice that also must be paid for. Brokers are not charities. You are paying for advice, experience etc.
Similarly if you go to a Solicitor to complete a Will, they could give you a pro-forma document and you fill in the blanks. But again you are paying for advice and experience. 
If you don’t want any advice, you know exactly what you are doing etc, then don’t use a Broker.


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## Sarenco (20 Aug 2019)

Conan said:


> To be fair, Brokers do more than just passing on a blank form.


Execution-only brokers (what we're talking about) do nothing more then pass on a blank form Conan - they don't offer any advice.

So what do they get paid?  Steven seems to be suggesting that they get paid 25bps on an annual basis.  Surely that can't be right - can it?


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## Steven Barrett (21 Aug 2019)

Sarenco said:


> That's interesting.  So do the life companies retrocede the additional 25bps to the discount broker on an annual basis?
> 
> It seems weird to me that anybody would get paid anything material (particulatly on an ongoing basis) for effectively just passing on a blank form.
> 
> I'm obviously in the wrong business...




Why is it weird? They are a business and are providing a service that people want. They are not a charity and are fully entitled to make an income from a good idea.  

If someone contributes €100 a month to a PRSA, they get €3 in year one. It would take a while to make any money on such a client as insurance, levy's, Central Bank fees, website maintenance has to be paid for each of these €3 a year paying clients. They may get bigger cases too but as I said, it is a numbers game, they need volume. 

Given a lot of people contribute to PRSA's and have 95% of their money invested with a 1% amc, the online brokers giving 100% allocation with the same 1% seems a pretty good deal.

Steven
www.bluewaterfp.ie


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## Qwerty22 (21 Aug 2019)

SBarrett said:


> Why is it weird? They are a business and are providing a service that people want. They are not a charity and are fully entitled to make an income from a good idea.



I'm all for someone making money from a good idea. In this case however, this "good idea" seems to be that this execution-only broker makes 25bps forever simply by acting as a gatekeeper. 

Not only is he not adding value, he's destroyed your ability to use that money productively in the future. He's passing on a form when you could just as easily post it yourself for the price of a stamp. Zenith63 mentioned saving something in the order of 60k by cutting out the middleman to get exactly the same product.

I don't want to use a broker if I know exactly what I want, but there's no way for me to open a PRSA directly without going through this unnecessary (and unwanted!) intermediary. And when even the pension companies themselves won't give a discount for going direct, then you know something's up. The whole thing really sounds like a classic Adam Smith style stitch-up among traders...


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## Zenith63 (21 Aug 2019)

SBarrett said:


> If someone contributes €100 a month to a PRSA, they get €3 in year one. It would take a while to make any money on such a client as insurance, levy's, Central Bank fees, website maintenance has to be paid for each of these €3 a year paying clients. They may get bigger cases too but as I said, it is a numbers game, they need volume.


With respect Steven I think it's doing a disservice to people to use small numbers like this to make it seem like brokers are making peanuts.

If that person putting €100 a month into their pension eventually builds up a €1m pension pot over 30-40 years (I'd guess this is not uncommon), that 0.25% per annum would work out to a minimum of €30k over the lifetime of the pension.  €3 sounds like peanuts, €30k is not peanuts.

It is TOTALLY fair to say that brokers offer a valuable service, that they make big losses in the first few years, that it's a business with overheads and that if somebody has a good idea to offer a discount service at 0.25% markup and people pay for it why should they not make money at it.  But I feel AAM should be about educating people in money matters with cold hard facts, and I think throwing out number like €3 glosses over the reality somewhat.


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## GSheehy (21 Aug 2019)

Zenith63 said:


> If that person putting €100 a month into their pension eventually builds up a €1m pension pot over 30-40 years (I'd guess this is not uncommon), that 0.25% per annum would work out to a minimum of €30k over the lifetime of the pension.  €3 sounds like peanuts, €30k is not peanuts.



Hi Zenith63,

The illustrative fund value, on a standard PRSA, where the client contributes €100pm (flat) over 35 years is €62,000 approx.

The average maturity value of a pension in Ireland is (still) less that €120,000


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## Sarenco (21 Aug 2019)

SBarrett said:


> Why is it weird? They are a business and are providing a service that people want. They are not a charity and are fully entitled to make an income from a good idea.


In fairness Steven, you are looking at this from the broker's perspective, which is entirely understandable. But look at it from the customer's perspective.

The customer simply receives the insurer's pre-printed form in the post. There's no fact find. No suitability assessment. No investment advice. No follow up. There isn't even any assistance provided to complete the form. Literally all the broker does is pop a blank form in the post. That's it.

For this, they get paid 0.25% of the fund balance every year for the life of the policy.

That could end up costing the customer tens of thousands of euro.

Assume a monthly contribution of €1,000 over 35 years and a 6% annualised return. That seemingly small 0.25% trail commission will end up costing the customer *€76,414*!

Is that cost to the customer even remotely commensurate with the "service" provided?

Why can't a customer simply print off the form from the insurer's website? Or better still complete an on-line form?

A customer may well conclude that using an execution-only broker is better than the alternative. But that hardly means that they are receiving good value for the "service" provided.


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## Zenith63 (21 Aug 2019)

GSheehy said:


> The average maturity value of a pension in Ireland is (still) less that €120,000


In whichcase the 0.5% broker fee will be about €10k over a 35 year build-up and all I'm saying is that this is the figure that should be made clear to people, so they can make an informed decision - the raison d'etre for AskAboutMoney at the end of the day.


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## Steven Barrett (21 Aug 2019)

Sarenco said:


> In fairness Steven, you are looking at this from the broker's perspective, which is entirely understandable. But look at it from the customer's perspective.
> 
> The customer simply receives the insurer's pre-printed form in the post. There's no fact find. No suitability assessment. No investment advice. No follow up. There isn't even any assistance provided to complete the form. Literally all the broker does is pop a blank form in the post. That's it.
> 
> ...



I'm looking at it from a business owner point of view. If someone comes up with a good idea that people like, they shouldn't have to limit the profit they make, especially if people are happy with the product. They also run the risk of people putting in small amounts for a short period of time and not making any money on a policy. Risk and return. I don't see Apple reducing the margin on their products because they have billions sitting in the bank or Dunnes Stores cutting their margin because they have enough money.

Had a quick look on labrokers website and they are very clear on their charges, right there when you click on the details page of the PRSA




Steven
www.bluewaterfp.ie


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## Sunny (21 Aug 2019)

To be honest, I never really understand the model. It is ridiculous to pay 0.25% trailer fee to an execution only broker. What ongoing costs to the broker are there to justify it? 

LA Brokers are very clear about their charges but I can guarantee you people that people don't do the same maths that Sarenco did above to show the true cost of the so called execution only service. And I also guarantee you that people have the same inertia about moving pensions as they do with switching bank accounts.


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## Zenith63 (21 Aug 2019)

Sunny said:


> To be honest, I never really understand the model. It is ridiculous to pay 0.25% trailer fee to an execution only broker. What ongoing costs to the broker are there to justify it?
> 
> LA Brokers are very clear about their charges but I can guarantee you people that people don't do the same maths that Sarenco did above to show the true cost of the so called execution only service. And I also guarantee you that people have the same inertia about moving pensions as they do with switching bank accounts.


I gave LABrokers serious consideration, 1% is still better than 1.25% if you're not interested in the advisory services.  As I say I only discovered that you can go direct to some of the pension providers because somebody from AAM PM'd me to let me know about it - the fact they even felt the need to PM that instead of post it in the open forum tells you something


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## Alkers86 (21 Aug 2019)

Zenith63 said:


> I gave LABrokers serious consideration, 1% is still better than 1.25% if you're not interested in the advisory services.  As I say I only discovered that you can go direct to some of the pension providers because somebody from AAM PM'd me to let me know about it - the fact they even felt the need to PM that instead of post it in the open forum tells you something


Please share?


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## Sarenco (21 Aug 2019)

SBarrett said:


> I'm looking at it from a business owner point of view.


But Steven this business shouldn't exist!

It's gratuitously unnecessary financial intermediation that adds zero value to the customer.  Zero.

And yet it will potentially cost a customer tens of thousands of euro!

Why don't insurers simply allow customers to print forms off their website?  Why does the Central Bank allow this to continue?

The fact that customers avail of this "service" (through gritted teeth) is simply because they view the alternative (a full service broker) as representing even poorer value.


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## Zenith63 (21 Aug 2019)

Alkers86 said:


> Please share?


I’ve removed the winky face as that came across far more conspiratorial than intended . However the perception was that the pension provider might be annoyed that the existence of this ‘direct’ model was being advertised.


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## Gordon Gekko (21 Aug 2019)

Just to go back to that Standard Life/Vanguard contract...does that mean you can get a Buy Out Bond invested in the MCSI World Index for 0.4% per annum with 100% allocation and 5 years of exit penalties?

Is there potentially a higher allocation available (if, for example, it’s for the broker’s friend)?

Thanks.


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## Sarenco (21 Aug 2019)

Gordon Gekko said:


> Just to go back to that Standard Life/Vanguard contract...does that mean you can get a Buy Out Bond invested in the MCSI World Index for 0.4% per annum with 100% allocation and 5 years of exit penalties?


I asked that exact question and the answer seems to be "no" (assuming you mean an allocation net of commissions).

But a contract along those lines may be available elsewhere...


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## Steven Barrett (21 Aug 2019)

Sarenco said:


> But Steven this business shouldn't exist!
> 
> It's gratuitously unnecessary financial intermediation that adds zero value to the customer.  Zero.
> 
> ...



I'm not going to defend another broker, especially when they have a much different business model to me. It's not how I operate.


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## Sarenco (21 Aug 2019)

SBarrett said:


> I'm not going to defend another broker, especially when they have a much different business model to me. It's not how I operate.


Fair enough Steven - and my apologies if my posts seemed unduly argumentative.


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## Oisin19 (21 Aug 2019)

Gordon Gekko said:


> Just to go back to that Standard Life/Vanguard contract...does that mean you can get a Buy Out Bond invested in the MCSI World Index for 0.4% per annum with 100% allocation and 5 years of exit penalties?
> 
> Is there potentially a higher allocation available (if, for example, it’s for the broker’s friend)?
> 
> Thanks.



I think you can get a Cantor execution account for 25bps. Then buy the MCSI from there. If not you can defo get access to a platform in a number of companies for 40bps.


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## Gordon Gekko (21 Aug 2019)

Fergal19 said:


> I think you can get a Cantor execution account for 25bps. Then buy the MCSI from there. If not you can defo get access to a platform in a number of companies for 40bps.



But is that through a pension structure? I’m not aware of any 25bps pension structure. My understanding is that Cantor do their pension stuff through Friends First at 0.4% plus the trading and investment costs.


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## Oisin19 (21 Aug 2019)

Im not sure to be honest. its been a while since I worked in that space! Investing indirectly through a life co is madness. You defo can invest in a number of companies for 40bps platform fee. The only other fee would then be the ETF cost. Thats surely a better way?


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## Sarenco (21 Aug 2019)

Fergal19 said:


> You defo can invest in Davy or ITC/Conexim for 40bps platform fee. The only other fee would then be the ETF cost. Thats surely a better way?


Are you sure?  40bps without any advisor fees? 

How would Joe Public access that deal?

Davy charge 75bps for their PRSA wrapper - before fund costs.


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## Gordon Gekko (21 Aug 2019)

It’s just me, but I would not give my money to a smaller privately owned counterparty.


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## Oisin19 (21 Aug 2019)

Sarenco said:


> Are you sure?  40bps without any advisor fees?
> 
> How would Joe Public access that deal?



talk to an advisor on an execution basis and he should be able to get it done. It would involve a transaction fee but they would have no justification for the on going fee. Therefore you should get the platform for 40bps


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## Sarenco (21 Aug 2019)

Fergal19 said:


> talk to an advisor on an execution basis and he should be able to get it done.


How do I talk to an advisor on an execution only basis?  Surely that's an oxymoron?

With respect, you have now moved from "deffo" to "should be able to".  I'm not having a go but I'm not that interested in what I should be able to do - I'm interested in what is actually possible.


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## SPC100 (21 Aug 2019)

SBarrett said:


> The Pensions Authority has a list of all authorised PRSA and the approved charging structures. How many people look at that? Most people aren't aware its there.





Sarenco said:


> Well, I certainly didn't know that – here's a link for anybody that's interested:
> https://www.pensionsauthority.ie/en/PRSA_Providers/PRSAs/
> 
> Not sure where the execution-only PRSAs that are available through discount brokers fit into that list.





Fergal19 said:


> Im not sure to be honest. its been a while since I worked in that space! Investing indirectly through a life co is madness. You defo can invest in Davy or ITC/Conexim for 40bps platform fee. The only other fee would then be the ETF cost. Thats surely a better way?



That's the information source I ending up using a long time ago. Maybe a decade ago, to get the cheapest available prsa that could passively track indexes.

The davy tab shows a .5% amc (+Vat) 0% contribution product exists for 'affinity' for funds >0 and  'direct' for funds >1m. (they also have direct at .25% if your fund >3m)

ITC seem to have a .4% for >1m

But you have to figure out how to access the product.

It also doesn't detail directly how much a broker would get from the AMC.

In theory, a discount broker for an appropriate setup fee, could agree to refund you their comission every year for the life of the policy.


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## SPC100 (21 Aug 2019)

FYI - 6 year old information implied that davy .75% product was including .5% commission (although this was a 'special offer')


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## SPC100 (22 Aug 2019)

The [broken link removed] file also has some other interesting bits and pieces.

Some things that stood out while I reviewed it

Custom house capital - CHC Select II PRSA (SUS/P/943/NS) 0% contribution, 0% AMC, >500k fund . <==Anyone know anything about this one?

Irish life - Company Standard PRSA (0% contribution, 0.50% amc) (APP/K/119/S) - Irish life have maybe 100 products listed!!!! this is the cheapest one.

Several providers drop their AMCs as fund size increases - there are several that now go to about .4% or .5%
Most providers are not explicit if the AMC includes vat or not
This file does not tell if you they have 'a platform' from which you can buy what you want, or if you must use their own funds.
Being a staff member at a stockbroker is the best way to a very low AMC e.g. 0.001% with goodbody, and 0.000001% with davy!


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## Gordon Gekko (22 Aug 2019)

Google CHC or Custom House Capital and then have a drink after you’ve read what pops up...

The fact that the main protagonists are not in jail is truly remarkable.


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## Steven Barrett (22 Aug 2019)

Sarenco said:


> Fair enough Steven - and my apologies if my posts seemed unduly argumentative.



It's no problem Serenco.  Arguments on pension charges tend to escalate so I'm going to stop now as they are another broker's charging structure and not mine.


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## Steven Barrett (22 Aug 2019)

Gordon Gekko said:


> Just to go back to that Standard Life/Vanguard contract...does that mean you can get a Buy Out Bond invested in the MCSI World Index for 0.4% per annum with 100% allocation and 5 years of exit penalties?
> 
> Is there potentially a higher allocation available (if, for example, it’s for the broker’s friend)?
> 
> Thanks.



Nope. Not even a higher rate for the broker, never mind his friend. 

If you want a higher allocation rate, you pay a higher annual management fee. It's as if the two have some sort of connection 

Steven
www.bluewaterfp.ie


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## Steven Barrett (22 Aug 2019)

Sarenco said:


> Are you sure?  40bps without any advisor fees?
> 
> How would Joe Public access that deal?
> 
> Davy charge 75bps for their PRSA wrapper - before fund costs.



ITC/ Conexim offer that for Buy Out Bonds, self admin pensions subject to a minimum annual fee of €300. Advisor fees is in addition as are the fund management fee of whatever ETF/ fund you pick. No such thing as allocation rates in the self directed arena.

ITC/ Conexim offer that for Buy Out Bonds


Gordon Gekko said:


> It’s just me, but I would not give my money to a smaller privately owned counterparty.



Conexim use Pershing Securities as their custodian, so the money sits with them. So your money is with a very large, publicly owned counterparty.  



Steven
www.bluewaterfp.ie


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## no username (18 Jan 2021)

Zenith63 said:


> All I can say is that while looking around for pensions, 1.25% AMC was common enough.  I contacted the pension provider directly and now have the exact same pension setup at 0.75% AMC.
> 
> I do fully accept that the advisory services with this direct approach are much more limited than going through a broker and this is a call people need to make themselves.  I also understand that brokers have to wait a long time to actually make money at 0.5% when pensions start from.
> 
> However looking at a 25 year build up towards a €1m pension that extra 0.5% AMC represented €60k in advisory fees; I personally felt more comfortable buying advisory services myself as required, doubting I will get anywhere near €60k.



Hi Zenith63,

Would you mind saying who you got the 0.75% AMC with? Thank you.


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## Zenith63 (18 Jan 2021)

no username said:


> Would you mind saying who you got the 0.75% AMC with? Thank you.


Executive PP with Zurich


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## no username (18 Jan 2021)

Zenith63 said:


> Executive PP with Zurich


Thank you *Zenith63*


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