# Open Question to RaboDirect



## F. Kruger (5 Feb 2008)

One of your investment tools, ‘How fast can my money grow?’ allows potential investors/savers to get an indication of what their fund might be worth after a specific period.

If I choose a ‘Neutral’ profile, the aimed return is 6%. This generates an investment mix of 45% Equities, 40% Bonds and 15% Cash.

If I select an investment period of 15 years on an investment of €25,000, your indicative quote at the end of this period is €59,913.95.

I may be missing something here but, why does your estimated fund not take the effect of management charges or taxation into consideration?


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## RaboDirect (7 Feb 2008)

F. Kruger,
The calculator is indicative only but it does not take into account taxation or the entry and exit fees. 

RaboDirect


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## LDFerguson (7 Feb 2008)

Is that not a bit misleading?  

As a broker, any projection on an investment that I give to a client must include details of the effects of charges and taxes.

Rabo - do you not think that it would be more in keeping with your policy of straight talking to include details of charges and taxes on your projections?


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## F. Kruger (7 Feb 2008)

RaboDirect said:


> The calculator is indicative only but it does not take into account taxation or the entry and exit fees.RaboDirect


 
My question was *why *it does not factor in charges and taxation.? All quotes for these types of products are indicative, but as LDF has pointed out, the ones available to him must include charges and tax.


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## Budgie (8 Feb 2008)

Aaah, the beauty of not having a life assurance disclosure regime....


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## kobam (9 Feb 2008)

RaboDirect watch

I am sceptical investing in deposit with Rabo has in case of eventuality like NorthernRock Bank you can only collect 100% of your 20000 Euro other fund will be rationalise in payment. That is a bad signal to depositors. We need to beware and have second thought over investment with high interest investment.


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## Brendan Burgess (9 Feb 2008)

kobam

With respect, you should not post so confidently if you are not familiar with the issues involved. 

Rabobank has a higher [broken link removed]than any Irish bank 

Brendan


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## LDFerguson (14 Feb 2008)

I think this is an important thread, as it highlights an important point for consumers: - 

Indicative illustrations you receive from a life assurance company take into account charges and taxes but indicative illustrations you receive from Rabo take no account of charges and taxes.  

I'd still be interested to hear from Rabo why they don't include any allowance for charges and taxes on their illustrations, as I think such a practice doesn't sit well with their usual standards of straight talking.


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## ashambles (14 Feb 2008)

I see the point that taxes and charges aren't included but I think the only solution is a big disclaimer saying they're not included.

It's a simple compound interest style calculator, I don't think it pretends to be anything but that. The only thing extra it does is show how to split money between funds, bonds and cash depending on how tolerant to risk the investor is.

If someone is investing in a single Hibernian fund they sure you can easily show the charges and taxes. But in Rabo's case if they wanted an accurate calculation of return they'd need to take account of multiple individual funds charges, 8 year anniversary taxes, final taxes, entry charges, exit charges, DIRT charges if applicable on the cash portion and probably more. 

If they claimed to produce an accurate calculation of tax they'd be in bigger trouble when customers start complaining the tax figure was incorrect which it almost certainly will be for an individual.

And if they did all this it'd still be incorrect since the biggest flaw with all these calculators is they assume an even annual return percentage of say 7% which is impossible to achieve.


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## ClubMan (14 Feb 2008)

Maybe somebody should complain to _IFSRA _about this? Although it's a pointless exercise in my experience...


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## F. Kruger (15 Feb 2008)

Budgie,

Is the disclosure regime specific to financial institutions regulated by IFSRA only? 

Would Rabo or their regulatory masters not have some obligations under the Consumer Protection Code?


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## ClubMan (15 Feb 2008)

Is the _Consumer Protection Code _not an _IFSRA _gig? Either way reporting things like this to _IFSRA _is a waste of time in my experience. This is all that you will get back:


> Dear ...
> 
> Thank you  for your email.
> 
> ...


If you then ask them what is happening with the complaint then they will quote you some legalese to the effect  that they can't tell you.

Waste of time.


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## maxwl (20 Feb 2008)

Rabo's silence is deafening!!


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## RaboDirect (21 Feb 2008)

I think the post from 'Ashambles' explains why the simulator does not include taxation and charges. We don't know who Ashambles is by the way - he/she is not an employee of RaboDirect. 

The simulator does not  try to simulate potential profits from investing in specific funds - it simulates potential returns of investing regularly over time based on a general asset allocation of bonds, equities and cash linked to an investor risk-based profile. For example, if I am an aggressive investor my model portfolio would be 70% equities, 20% bonds and 10% cash. Annual average returns are projected at 7% based on an aggressive profile. It would be difficult to include charges as the annual management fees of individual funds vary. Entry and exit charges will also vary over a future time period. From a taxation perspective, it would be even more complicated. For example, over a period of time you could rebalance your portfolio which could trigger a tax liability. 

If the simulator just focussed on one particular fund then it would be a lot easier to incorporate fees. This is not the objective of the 'How Fast Can My Money Grow" calculator.

Certainly we are happy to review the wording that pertains to the calculators to clarify the position re fees and tax.  Current wording: "The returns indicated may not be interpreted as the expected result of the associated model portfolio. The percentages are provided for indication purposes only". 

Kobam likened RaboDirect to Northern Rock. Safety of financial institutions including RaboDirect has been discussed at length on AAM. RaboDirect is the only AAA rated deposit taker in Ireland and we have maintained these ratings for over 25 years. 

RaboDirect


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## F. Kruger (24 Feb 2008)

Hi RaboDirect,

Do you not think that it would be possible to have some form of 'generic' simulator/quotation that would take account of median charges etc. and let the illustration show how these charges reduce the yield on the investment?

As it stands at the moment, the simulator/quotation is grossly over-inflated when compared to the market norm for unit linked products.

Are you exempt from ROI Disclosure on quotations/simulators?


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