# Wealth Options my pension trustee. Is my pension safe?



## Lifeinthesun (25 Apr 2021)

Maybe this is a silly question!! I have been reading a lot lately about Wealth Options and Dolphins collapse and investigations into the selling of the product. I have an SSAP with Wealth Options with 2 properties and over 200,000 in cash in it and hoping to retire in next few years. My question - Is it safe!!


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## Brendan Burgess (25 Apr 2021)

I assume that Wealth Options are still regulated by the Central Bank and by the Revenue as pensions trustees? 

If it is set up correctly, there are two trustees - you and Wealth Options. 

So Wealth Options can't run away with your  money unless they forge your signatures. 

But if you are worried at all, then you should switch to another trustee.

Brendan


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## Marc (25 Apr 2021)

It’s not a silly question at all.









						How Safe is My Pension? - Everlake
					

An 'unbundled' platform-based pension structure is our preference, due to the greater transparency and wider investment choices if offers.




					globalwealth.ie
				




A pension trustee is appointed by Revenue not the Central Bank so although Wealth Options is regulated by the CBI the pension isn’t and rental properties are also not regulated investments. These structures have gone wrong in the past for example during the Custom House Capital scandal









						Custom House Capital - Everlake
					

Conflicts of interest in Financial Services




					globalwealth.ie
				




As Brendan notes there are two trustees to the pension one of which being the member trustee.

To provide additional security you need to move your investments into a regulated investment structure and invest in regulated investment funds. You can do that with Wealth Options or you could appoint another trustee.

But I think you are looking at the wrong risks. Your biggest risk here is the investment strategy. You need to sell the properties and move to a much more diversified approach in order to make post retirement work for you.









						Pensions & Rental Property - Everlake
					

At odds with much online financial advice, here are our reasons why we don’t recommend holding residential property in your pension.




					globalwealth.ie


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## Brendan Burgess (25 Apr 2021)

Marc said:


> But I think you are looking at the wrong risks. Your biggest risk here is the investment strategy.



A very good point. 

I answered the question asked, but this is a much more serious issue. 

@Marc 

I had this discussion about the safety of Wealth Options with a broker recently who has a number of clients with Self Administered Pension Schemes. I asked the question - could Wealth Options sell his shares without his knowledge?  The broker told me that none of his clients had shares - they are all in property. 

Brendan


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## Marc (25 Apr 2021)

Brendan Burgess said:


> A very good point.
> 
> I answered the question asked, but this is a much more serious issue.
> 
> ...



Brendan it’s our old friend commission again.

Those who support it will always condemn criticism of it. As Upton Sinclair said;”it’s difficult for a man to understand something, when his salary depends on his not understanding “

A broker is paid a commission for *facilitating* a property purchase within a pension (I’m not suggesting that they get paid a commission for advising on the purchase of a property) and they can be paid the same for giving really competent financial advice but that requires more paperwork, research, etc and requires a long conversation with the client about why a few rental properties don’t represent a prudent retirement strategy.

It’s just easier to be a facilitator than to be a good adviser.

You also see this on ask about money with execution only business.

To meet the regulatory definition of execution only is a very high bar beyond the reach of most consumers.

You need to be able to specify all aspects of a contract provider fund etc.

Few consumers are able to do this without advice and therefore a financial adviser is required to conduct a detailed and time consuming (and very valuable) fact find and suitability assessment and recommend the most suitable contract.

It’s not acceptable in my view to give “advice” on AAM with no regulatory protection and no PI cover.

Lead the client to a conclusion and then agree to execute the purchase on an execution only basis claiming that the client knew what the wanted.


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## Lifeinthesun (25 Apr 2021)

Brendan Burgess said:


> A very good point.
> 
> I answered the question asked, but this is a much more serious issue.
> 
> ...


Thank you for replies. The reason I have property was solely my decision. The 2 properties were good value, local to me, I have good tenants, 750 euro each per month going directly into my pension. I have invested in bonds for the last 15-20 years NOT all with wealth options but different brokers and Financial companies. Maybe I was one of the unlucky ones!!! BUT I never made 1 euro from any of these schemes. I lost interest paid on an original scheme where the main money invested was guaranteed by the bank. I know this is deviating from the topic but that is my reason for property. I know what it’s worth now and because it’s not Dublin prices I know hopefully that it should be worth the same or at least 10/20 per cent more in 15 years time. I could look up my list of bonds from filing cabinet but the No Brainers that I / we were sold won’t help me on a sunny day


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## Marc (25 Apr 2021)

Lifeinthesun said:


> Thank you for replies. The reason I have property was solely my decision. The 2 properties were good value, local to me, I have good tenants, 750 euro each per month going directly into my pension. I have invested in bonds for the last 15-20 years NOT all with wealth options but different brokers and Financial companies. Maybe I was one of the unlucky ones!!! BUT I never made 1 euro from any of these schemes. I lost interest paid on an original scheme where the main money invested was guaranteed by the bank. I know this is deviating from the topic but that is my reason for property. I know what it’s worth now and because it’s not Dublin prices I know hopefully that it should be worth the same or at least 10/20 per cent more in 15 years time. I could look up my list of bonds from filing cabinet but the No Brainers that I / we were sold won’t help me on a sunny day



hi lifeinthesun

You were most likely sold tracker bonds which have virtually no chance of making money for anyone except the distributor.

You need advice not product sales but the system is set up to flog products to you.

I understand your reasoning for going alone but it doesn’t make the underlying argument that you need to be better diversified  less valid, you need some objective advice on what is in your best interest.

This would be like me going to my doctor with a 40 a day cigarette habit and saying it’s my choice and I’m still alive. The doctor would still recommend that I get help to quit because, objectively, that’s the right thing to do.

In this 50 year study I look at the average Irish residential property vs equity markets internationally 









						Investing in Property Investing in Property  in the UK and Ireland
					

Investing in Property is a topic that is frequently under consideration in Ireland and the UK and the intention with this guide is to conduct an objective, empirical comparative study to assess the relative risk, return and correlations across these investments with a view to informing Portfolio...




					viewer.joomag.com


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## Lifeinthesun (25 Apr 2021)

Marc said:


> hi lifeinthesun
> 
> You were most likely sold tracker bonds which have virtually no chance of making money for anyone except the distributor.
> 
> ...


Thank you, I must look more into my investments. Bonds going back to 2011 acc solid world bond 5, IIB property company bond, IIB  diversified portfolio bond, alternative fund bond 4 secure version, alternative fund bond 5. All no brainers from different advisers. Now I must go for a spin on my bicycle to relieve those pains. Thank you again for advice. I only joined this group in the last few months. It is a wealth of very important information. Well done to those who contribute and facilitate it


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## Marc (25 Apr 2021)

Weren’t the ACC solid world bonds the ones that ended up in court because they were so dreadful?

You have had a particularly painful experience of product sales by the looks of it, and going back over the past isn’t the way forward. Lots of people who would benefit from good advice don’t seek it out simply because they have received poor advice in the past.

Compare with the experience of one of our clients over the last 9 years, there is a better way









						In Search of the Perfect Investment Portfolio - Everlake
					

Many investors find it difficult to achieve returns offered by the markets due to a misunderstanding of investment risk, costs and taxes.




					globalwealth.ie


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## cremeegg (25 Apr 2021)

Lifeinthesun said:


> Thank you for replies. The reason I have property was solely my decision. The 2 properties were good value, local to me, I have good tenants, 750 euro each per month going directly into my pension. I have invested in bonds for the last 15-20 years NOT all with wealth options but different brokers and Financial companies. Maybe I was one of the unlucky ones!!! BUT I never made 1 euro from any of these schemes.


To quote John Bruton, 'that's all very well in practice, but how does it work in theory?'

There are posters on here who believe in the efficient market and the free lunch of diversification. Well if there was an efficient market maybe.

Property certainly is not an efficient market and there are opportunities to have reasonable capital security with excellent yield.

I could perhaps develop a theory to explain why this is so, but the lack of a theory does not negate the observable facts.


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## Marc (28 Apr 2021)

Quick update to this thread

This week Minister for Social Protection, Heather Humphreys, published regulations to transpose the EU IORP II Directive into Irish legislation. These regulations introduce higher standards for pension scheme governance. *The regulations will apply to all company pension schemes, but there are different timelines depending on the size of a scheme*.

Some immediate changes will apply to one-member schemes including


New investment selections - no more than 50% may be in property
Although the Pensions Authority have already said that existing investments may continue this certainly points to a marked change in the perception of the suitability of property for Irish pensions.


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## Steven Barrett (28 Apr 2021)

Marc said:


> It’s not a silly question at all.
> 
> A pension trustee is appointed by Revenue not the Central Bank so although Wealth Options is regulated by the CBI the pension isn’t and rental properties are also not regulated investments. These structures have gone wrong in the past for example d*uring the Custom House Capital scandal*


The main issue with Custom House Capital is they claimed to be discretionary fund managers for clients. So when they were unable to find investors for their property deals, they diverted other clients cash into these deals without their knowledge. The Central Bank had inspected them previously and gave out to them for not having the correct paperwork filled in but not for the actual practice!!

I used ITC for any self admin pensions and they don't produce their own products.



Marc said:


> Brendan it’s our old friend commission again.
> 
> A broker is paid a commission for facilitating a property purchase in a pension and they can be paid the same for giving really competent financial advice but that requires more paperwork, research, etc and requires a long conversation with the client about why a few rental properties don’t represent a prudent retirement strategy.



That's not correct Marc. Commission isn't paid when a client purchases a property through a pension. Who would pay it? 

There is certainly commission paid through the syndicated property funds that are available through both insured and self admin products but not if a client buys a house. 


Steven
www.bluewaterfp.ie


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## Marc (28 Apr 2021)

Two small points

"I used ITC for any self admin pensions and they don't produce their own products."

ITC do actively promote their propertyline service which is an unregulated activity






						Invest in Property through a Pension  Pension Property
					

Powered by ITC Group, PensionProperty.ie is an Irish-owned professional pension trustee company, delivering flexible and transparent pensions for our clients.




					www.pensionproperty.ie
				




"Commission isn't paid when a client purchases a property through a pension."

No, but my point is that it is paid when they purchase the pension so it amounts to the same thing

I want to buy a housee says client
OK I'll move your pension over here says broker and get paid for doing it
client buys the housee

Its the _*facilitation*_ aspect that's the issue. The commission is the same if the client receives competent portfolio advice or simply arranged a pension with no advice so that they get to buy a housee


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## Steven Barrett (28 Apr 2021)

Marc said:


> Two small points
> 
> "I used ITC for any self admin pensions and they don't produce their own products."
> 
> ...


That's nothing more than their marketing of how to buy a property through a pension. They are in the business of setting up and running pensions. They do not sell the investments that are contained within the pension wrapper. 



Marc said:


> "Commission isn't paid when a client purchases a property through a pension."
> 
> No, but my point is that it is paid when they purchase the pension so it amounts to the same thing
> 
> ...


It's not the same thing Marc. You said:


Marc said:


> A broker is paid a commission for facilitating a property purchase in a pension


When they are not paid a commission. They charge a fee. Just like you charge a fee for setting up an investment portfolio. It's a different asset class, one that plenty of people like to invest in and there is a big demand for. It's not something that the vast majority of my clients invest in but advisors aren't paid commissions. 


Steven
www.bluewaterfp.ie


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## Dave Vanian (28 Apr 2021)

Marc said:


> Brendan it’s our old friend commission again.



Steven has already corrected your error in suggesting that a broker gets paid commission for advising a client to invest in property.  A broker will get paid for setting up a self-administered pension.  Just as you'll get paid for setting up a self-administered pension to invest in whatever investments that you're selling.  I doubt if you work for free.


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## bappelbe (30 Apr 2021)

As a subject, property in a pension comes up here every now and again and a lot of posters seem against it, I am curious as to why.
@Marc  posted a link to a Global Wealth link which I would like to take issue with the main points from, my comments are in blue


Rental income may be less than you expected and is not guaranteed. There will also be times when the property has no tenant -True but OP has 2 properties and it is a risk but not a huge one over a long term IMO (not as much as risks in other asset classes - stocks and bonds)
Increased mortgage repayments if you borrow money to buy the property and interest rates rise - OP did not mention borrowing - (I have property in my pension and I did not borrow) Also OP says he/she has 200K cash as well
Falling property values, which could lead to negative equity Again if you did not borrow - can't have negative equity
Immediate access to your money may be difficult (liquidity) It is a pension and I cannot touch it for over a decade anyway
Selling the property may be difficult, time consuming and incur additional expense Perhaps, but why would I (or OP) sell if we can't access the money?
You may lose money if you are forced to sell the property quickly Again why would we be forced to sell quickly? - OP has 200K cash as well
Difficulties in managing your investment property This can be an issue, but if you are willing to put some work in it is doable - particularly if you live in the vicinity of the property
How do you pay Death Benefits to your Spouse or Civil Partner? This is an area I probably don't understand properly I thought that the entire pension passed to my wife on my death - maybe there are complications I am unaware of.

With any investment there are calculations one must make, I worked out that I was going to get a 12-15% return on my property investment when I went into it, and I am getting that now. There also seems to be a thinking that we want the price of the property to go up, but as long as I am receiving my rental return why would I want to sell?
Investing in property randomly, may produce a poorer return but not if you are careful and willing to wait for the right property. This is the same with stocks, if you invest in an index fund you get the average rate but if you carefully choose you can get much better (ask Warren Buffett)
There is also mention of Bonds in this thread, I have to ask why anyone would invest in them? returns below inflation and pay fees for the privilege?
While I do believe diversification of assets is good, remember in 2008 the safe bank stocks (and indeed almost all stocks) went the same direction as property.
(edit: note also in 2008 government and corporate bonds collapsed in price)


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## Marc (30 Apr 2021)

“As a subject, property in a pension comes up here every now and again and a lot of posters seem against it, I *am curious as to why.”*

There are several errors in your comments above  but I don’t have time to debate each one in turn.

For example it’s simply not the case that high quality sovereign bonds declined in 2008. Quite the opposite, prudent diversification worked exactly as expected in 2008.






Source FE

Just a point of order, but these posts are read by more than just the OP. Many people do have very high levels of borrowing with residential property. I frequently make broad comments around a subject raised by an OP (as is the case in this thread) but I never allow the OPs exact circumstances to dictate an answer. Otherwise the answer is only any use to one person which isn’t a good use of my time frankly.

So why the anti residential property in a pension position?

An EU directive has literally just been signed into Irish law effectively prohibiting further investments in residential property because, in a Judicial sense, it is considered imprudent.

Those of us acting in a Fiduciary capacity cannot in all good conscience condone a course of action which flies in the face of international standards of prudent investing. Even if you personally might have been lucky. We don’t make rules to cover lucky investors.

It’s like going to your doctor and saying “hey I smoke 40 a day and I’m still alive, what are you going to do?”

Advise you to stop


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## bappelbe (30 Apr 2021)

I find the logic behind this very poor, I understand it is law now so it does not make any difference.
If a person finds an investment with a decent return it should not matter whether it is in property, stocks or bonds (if you find an adequate safe return)
How many pension funds are invested in Tesla? is that good value at the moment?

The cynic in me suggests that the politicians with state guaranteed pension might not know what is most prudent, and rely on people who earn commissions (which you reference above) to advise them.

As to your analogy, owning a property with no debt that is generating income (yes that may go down but unlikely to stop long term) will not kill you (or bankrupt you) but 50% of smokers die of it.


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## bappelbe (30 Apr 2021)

"For example it’s simply not the case that high quality sovereign bonds declined in 2008. Quite the opposite, prudent diversification worked exactly as expected in 2008."
In what way? I can't post a link but if you look up the Irish government bond yield for the last 20 years shows a clear and dramatic rise in yields in 2008 which translates to a corresponding drop in the asset price (am I understanding bonds correctly?)
so if you had to sell then you would have had capital loss (as in the property example). how can you say they worked exactly as expected?

"Even if you personally might have been lucky. We don’t make rules to cover lucky investors"
google: "superinvestors of graham and doddsville" for my opinions on this.


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## Brendan Burgess (20 Jun 2021)

Mark has made a very good point that people should look at the risk of investing so much in property.  But please discuss that issue in a separate thread. 

This is about Wealth Options.


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## Brendan Burgess (20 Jun 2021)

Some legal action against Wealth Options by the Pensions Authority.









						Pensions Authority takes action against Naas firm amid Dolphin property fallout
					

Watchdog lodges papers with High Court against Wealth Options Trustees Limited




					www.irishtimes.com


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## Marc (20 Jun 2021)

I’ve written this analysis on the foot of this ongoing scandal









						How Safe is My Pension? - Everlake
					

An 'unbundled' platform-based pension structure is our preference, due to the greater transparency and wider investment choices if offers.




					globalwealth.ie


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## 1eyeonthefuture (21 Jul 2022)

@Brendan Burgess I see the two owners / directors are jumping & riding off into the sunset wef 01/09

Quest Capital taking over I believe.


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## Steven Barrett (21 Jul 2022)

1eyeonthefuture said:


> @Brendan Burgess I see the two owners / directors are jumping & riding off into the sunset wef 01/09
> 
> Quest Capital taking over I believe.


That is correct. Quest are taking over Wealth Options Ltd. They are not taking over any of the other companies run by Mssrs Flynn and McCloskey.


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## 50thbirthday (25 Jul 2022)

Hi all, got a letter from WO in June stating that they are going to *add on a cost of 1k+vat to manage my pension*. Can they just do that? I thought I had an agreed AMC to deal with my yearly pension administration. any advice please.


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