# Cheapest Self-Directed PRSA Pension for ETF / ETFs (and ideally property!)



## SPC100

I am considering switching to a self directed PRSA with a view to reducing (or at the very least confirming) the costs on my pension.

I imagine that nil commission / execution only will be the cheapest way to go.

I am aware that the headline AMC + an ETF's TER may initially look higher vs a traditional PRSA, but as Irish companies are not required to publish TERs for the funds we cant do an exact comparison, the self directed route might actually be cheaper. (better the devil you can see..)

I think these are the only guys offering a self directed PRSA which supports buying ETFs;

Davy
Standard Life
Zurich
Irish Life

Which guys am I missing?


----------



## Marc

This is a very good question and well timed as I have just agreed terms for a new PRSA contract.

The base cost is 0.5%pa for the PRSA based on a minimum fund size of €100,000. This is payable to a revenue appointed independent trustee.
There is a separate cost of 0.05%pa payable to an FSA regulated Stockbroker in London. The stockbrocker acts as independent custodian and charges all trades at a flat rate of €30 each excluding incidental costs like stamp duty on UK and Irish stocks.

The benefit of splitting out the trustee, custodian, fund management and advisory services into separate companies can be explained in three words: Custom House Capital.

So for example if I put in a global equity fund I can have over 10,000 stocks including emerging markets for a TER of 0.62%. Giving a total cost for the contract of 1.17%pa on an audited TER basis before advisory costs. On a like for like basis, the annual management charge of this fund is 0.42%pa and therefore total disclosed charge is actually only 0.97%pa. Note that this is one of the more expensive funds I use and typically bond funds are around 0.15% to 0.25%pa which would substantially reduce the cost of a balanced portfolio to more like 0.9%pa.

Of course this is something that doesn't happen in an off the shelf PRSA where you typically pay 1%pa for equity funds but also 1%pa for cash and bond funds.

This contract is only available for core pension investments and is comprised of institutional class index funds from Vanguard, Blackrock and Dimensional who between them manage over 5 trillion US$. This part is not self directed.

However we can also add on a self directed element for anyone wanting to run a Las Vegas account as part of their pension. This has a higher annual management charge of 1.25%pa on investments under €100,000 but again transactions are charged at a flat rate. 

This part of the PRSA can include property,hedge funds,private equity, ETFs and individual securities.

So, a typical client might have a total pension pot of say €200,000 of which say €30k is in some illiquid product that they can't get out of even if they wanted to.

We can take in the whole lot, put €170k into a globally diversified portfolio of low cost funds appropriate to their willingness, ability and need to take investment risk and we can carve out the €30k into a separate plan. 

Overall based on the earlier example of a 0.9%amc for 170k and 1.25% for the other part this would result in an overall plan charge of 0.9525%pa before advisory and trading costs.

So for anyone stuck owning illiquid assets they wish they had never purchased (custom house clients for example) this could be a good solution.

Equally anyone who wants to take a punt with a couple of grand of their pension fund can open a separate account specifically for that purpose and not have to expose their whole pension to the additional costs associated with full self-directed functionality. The minimum investment here would be €2000 when linked to a pension portfolio.

Finally I should mention that this contract is only available through my network of approved professional advisers and advisory fees are payable in all instances.


----------



## SPC100

Hi Marc,

Thanks for all the info. Keeping on the ETF track, If someone organised an execution only self directed PRSA contract for buying and selling ETFs they select themselves, are these your costs for the consumer?

-Contribution Charge  0%
-buying/selling ETF charges  30Euro per trade plus stamp duty if appropriate
-Annual Mgmt charge .5%+.05%+1.25%  or is 1.25% in total? (for funds <100k)
-Maybe you have a  price for AMC if fund is > 100k also?


----------



## SPC100

STANDARD LIFE
===========
1% AMC
Contribution charge can be 0 for a nil comission product, depends on the channel you buy it through
PRSA can only do shares, deposits, and synergy fund - NO ETFS  (note - Other pension structures support ETFs and direct property)

Stockbroker - execution only via Stocktrade, a division of Brewin Dolphin Limited. 

Nice guarantee - "As Standard Life in Ireland operates as a branch of our UK parent company, policies taken 
out since 1 December 2001 are covered by the UK's Financial Services Compensation 
Scheme (FSCS) in the event that Standard Life is in default. This means that if you invest in 
a Standard Life pension or investment policy in Ireland, your policy is covered by the FSCS, 
which covers 90% of the claim, without any upper limit. For more information visit the 
FSCS website, www.fscs.org.uk"

[broken link removed]


----------



## LDFerguson

Independent Trustee Company also have a self-directed PRSA product.  

100% allocation.  AMC 1.25% <€100,000, 1% >€100,000 and 0.75% >€1,000,000.


----------



## Marc

SPC100 said:


> Hi Marc,
> 
> Thanks for all the info. Keeping on the ETF track, If someone organised an execution only self directed PRSA contract for buying and selling ETFs they select themselves, are these your costs for the consumer?
> 
> -Contribution Charge  0%
> -buying/selling ETF charges  30Euro per trade plus stamp duty if appropriate
> -Annual Mgmt charge .5%+.05%+1.25%  or is 1.25% in total? (for funds <100k)
> -Maybe you have a  price for AMC if fund is > 100k also?



Hi Spc

No, an execution only contract would have an AMC starting at 1.25% pa for funds under 100k plus fund management charges on top of that.

Above 100k you would pay 1%pa plus fund management costs on top.

So execution only really isn't the way to go here.


----------



## Dave Vanian

Marc said:


> Finally I should mention that this contract is only available through my network of approved professional advisers and advisory fees are payable in all instances.


 
If someone has, say €100,000, how much is the advice?


----------



## SPC100

Thanks for all the feedback so far. If you have pricing details on any of these or similar products please let me know.

Davy Self-Directed PRSA
===================
AMC .75%  (levied in may and nov based on a valuation taken on a given day in may and nov)
Contribution Charge 0%

Commission is based on doing your trades online.
Standard Minimum commission 25 euro or .75% on first 25k and .5% on balance
Frequent Trader (after 20 trades a year) minimum commission 15 euro or .5% on first 25k and .25% on balance

Foreign transaction custody charge(for each trade outside Ireland & UK) 25 euro
Exchange fees (applied to share purchase and sales) over 12.5k 1.25 euro
overseas brokers fees varies - typically .15%


http://www.davy.ie/Generic?page=selfdirectedcommissionsandcharges
http://www.davy.ie/TopLevel?page=commissionsandchargesroi
http://www.davy.ie/content/pubarticles/OnlinePRSABrochure.pdf


----------



## SPC100

To update this thread, I understand that Davy's are about to make their Self Directed PRSA (detailed above) significantly more competitive. I believe they will become the market leader for self directed PRSAs, especially  for someone who wants to passively buy and hold ETF's in a pension product.

I understand it will be announced publicly over the next few weeks, but as the information I have was given to me privately I don't want to put it in public domain without permission.


----------



## 3CC

Hi SPC100,

Did Davy ever launch this product and is it the current market leader for self directed PRSA.

Also, do you know how dividends are handled. I presume they are paid into you trading account within your PRSA and you use that cash to reinvest, paying commissions on the transaction.

Thanks,

3CC


----------



## SPC100

Their PRSA fees still stand as per post #8 in this thread.

I was told that they were unable as of yet to launch a better value product, but that they still want to do so, and plan to do so.

I understand that dividends work as you described, some could also be kept in cash to pay for the levy and the .75% AMC.

I think there is .5% commission built into the .75% AMC, so it might be possible to get the product at an AMC of .25% via a discount execution only broker? If you do further research and confirm this please update the thread!

It is the best value transparent PRSA product that I know of for a long term buy and hold investor.

My biggest CON with this PRSA is security of funds. If Davy and/or their nominee company were to go bust, you loose more or less everything. In theory there are safeguards ensuring your asserts are held separately, but if someone behaved fraudulently etc., your pension could go to nearly 0.
The standard life guarantee from the UK government is a lot stronger.


----------



## dub_nerd

Are there similar self-directed pension products for people taking money out of a previous company pension via buyout bond etc.?


----------



## 3CC

@SPC100



SPC100 said:


> I think there is .5% commission built into the .75% AMC, so it might be possible to get the product at an AMC of .25% via a discount execution only broker? If you do further research and confirm this please update the thread!



I did not realise that it was possible to get this product via an execution only broker; I thought it was only available through Davy's directly. I'll look into this and revert if I learn anything further.



SPC100 said:


> My biggest CON with this PRSA is security of funds. If Davy and/or their nominee company were to go bust, you loose more or less everything. In theory there are safeguards ensuring your asserts are held separately, but if someone behaved fraudulently etc., your pension could go to nearly 0.
> The standard life guarantee from the UK government is a lot stronger.



I presume you are referring to the Morrough case regarding the security of nominee accounts. Mind you, I presume that the same risk is present with any 'normal' pension provider in that the underlying investments are not in the name of the investor. Would you agree?

Are there any pensions available to Irish residents that are covered by the standard life guarantee from the UK government?

Thanks,

3CC.


----------



## LDFerguson

3CC said:


> Are there any pensions available to Irish residents that are covered by the standard life guarantee from the UK government?


 
Not sure if I'm interpreting your question correctly. Any Standard Life policy taken out in Ireland is automatically part of the UK compensation scheme, as Standard Life Ireland operates as a branch of the UK parent. 

If your question is whether or not any other pension companies operating in Ireland also avail of the UK compensation scheme _aside from_ Standard Life, the answer is no.


----------



## SPC100

3CC said:


> @SPC100
> I presume you are referring to the Morrough case regarding the security of nominee accounts. Mind you, I presume that the same risk is present with any 'normal' pension provider in that the underlying investments are not in the name of the investor. Would you agree?



I don't have enough knowledge to answer this expertly or definitively. My layman understanding is that there are different regulatory requirement for Life insurance companies and stockbrokers, but in both cases, if the company went bust, given the precedent of the Morrough case, you could lose everything, and there are no government guarantees or insurance funds which will return your money.

As mentioned Standard Life is the only one I know of that has a strong guarantee via the UK government. 

Maybe one should be operate a PRSA with two different companies to protect against this doomsday scenario....


----------



## SPC100

Not strictly on topic, but a note for anyone searching for this type of pension. Irish life offer this type of pension, but not in the PRSA wrapper (as far as I can see). They call it self-invested fund.

They use TD waterhouse for trading. Flat fee of 15 euro a trade. .75%AMC

[broken link removed]
[broken link removed]
http://www.bline.ie/uploadedFiles/bline/Revamp_2012/Pensions/sif_guide.pdf?ts=1365420843820
http://www.askaboutmoney.com/showpost.php?p=1092039


----------



## SPC100

@dub_nerd http://www.askaboutmoney.com/showthread.php?t=173748


----------



## dub_nerd

SPC100 said:


> @dub_nerd http://www.askaboutmoney.com/showthread.php?t=173748


 
Ta very much, SPC100.


----------



## morganf16

Marc said:


> This is a very good question and well timed as I have just agreed terms for a new PRSA contract.
> 
> The base cost is 0.5%pa for the PRSA based on a minimum fund size of €100,000. This is payable to a revenue appointed independent trustee.
> There is a separate cost of 0.05%pa payable to an FSA regulated Stockbroker in London. The stockbrocker acts as independent custodian and charges all trades at a flat rate of €30 each excluding incidental costs like stamp duty on UK and Irish stocks.
> 
> The benefit of splitting out the trustee, custodian, fund management and advisory services into separate companies can be explained in three words: Custom House Capital.
> 
> So for example if I put in a global equity fund I can have over 10,000 stocks including emerging markets for a TER of 0.62%. Giving a total cost for the contract of 1.17%pa on an audited TER basis before advisory costs. On a like for like basis, the annual management charge of this fund is 0.42%pa and therefore total disclosed charge is actually only 0.97%pa. Note that this is one of the more expensive funds I use and typically bond funds are around 0.15% to 0.25%pa which would substantially reduce the cost of a balanced portfolio to more like 0.9%pa.
> 
> Of course this is something that doesn't happen in an off the shelf PRSA where you typically pay 1%pa for equity funds but also 1%pa for cash and bond funds.
> 
> This contract is only available for core pension investments and is comprised of institutional class index funds from Vanguard, Blackrock and Dimensional who between them manage over 5 trillion US$. This part is not self directed.
> 
> However we can also add on a self directed element for anyone wanting to run a Las Vegas account as part of their pension. This has a higher annual management charge of 1.25%pa on investments under €100,000 but again transactions are charged at a flat rate.
> 
> This part of the PRSA can include property,hedge funds,private equity, ETFs and individual securities.
> 
> So, a typical client might have a total pension pot of say €200,000 of which say €30k is in some illiquid product that they can't get out of even if they wanted to.
> 
> We can take in the whole lot, put €170k into a globally diversified portfolio of low cost funds appropriate to their willingness, ability and need to take investment risk and we can carve out the €30k into a separate plan.
> 
> Overall based on the earlier example of a 0.9%amc for 170k and 1.25% for the other part this would result in an overall plan charge of 0.9525%pa before advisory and trading costs.
> 
> So for anyone stuck owning illiquid assets they wish they had never purchased (custom house clients for example) this could be a good solution.
> 
> Equally anyone who wants to take a punt with a couple of grand of their pension fund can open a separate account specifically for that purpose and not have to expose their whole pension to the additional costs associated with full self-directed functionality. The minimum investment here would be €2000 when linked to a pension portfolio.
> 
> Finally I should mention that this contract is only available through my network of approved professional advisers and advisory fees are payable in all instances.




Hi Marc,

I see your reply here is based back in 2012 .. Do you have a list of fees for 2016? 

Hi,

I had a self directed PRSA with Custom House Capital... Funds are with Interactive Brokers in the UK... I need to transfer to a new trustee ...

Is there a list somewhere here of the list of the competitive providers for self directed PRSAs ? 

Thanks 
Morgan


----------



## martin

Davy Select charges 0.75% AMC for their execution-only PRSA. Funds (e.g. ETFs) that you invest in will charge their own AMCs on top of that, and their charges will vary. ETFs are not expensive though - the last one I looked at, a big S&P 500 tracker, charges 0.07% (for a total of 0.82% AMC for that investment). That particular account does not have a minimum amount of money that you need to invest.

There may be better options out there of course, though.


----------



## Ministry Fox

martin said:


> Davy Select charges 0.75% AMC for their execution-only PRSA. Funds (e.g. ETFs) that you invest in will charge their own AMCs on top of that, and their charges will vary. ETFs are not expensive though - the last one I looked at, a big S&P 500 tracker, charges 0.07% (for a total of 0.82% AMC for that investment). That particular account does not have a minimum amount of money that you need to invest.
> 
> There may be better options out there of course, though.



The research I've been doing online seems to point to the same conclusion -- a Davy Select execution-only PRSA appears to be the cheapest option. However, when you start looking at the small print, there are all kinds of other fees listed on their website. Most of them left me scratching my head, to be honest, and I'm not at all clear which of them I would have to pay and how much they would amount to. 
What I'd like to know is if the headline rate of 0.75% management fees + minimal charges from ETF's are the only significant charges. Or are there other charges that are hidden. 
If it's relevant, I'll probably be investing about 1000 euro four times a year, after an initial 10,000 investment.
Thanks in advance for all replies. By the way, I'm a newbie here, so apologies if I'm asking a stupid question.


----------



## Merowig

Ministry Fox said:


> The research I've been doing online seems to point to the same conclusion -- a Davy Select execution-only PRSA appears to be the cheapest option. However, when you start looking at the small print, there are all kinds of other fees listed on their website. Most of them left me scratching my head, to be honest, and I'm not at all clear which of them I would have to pay and how much they would amount to.
> What I'd like to know is if the headline rate of 0.75% management fees + minimal charges from ETF's are the only significant charges. Or are there other charges that are hidden.
> If it's relevant, I'll probably be investing about 1000 euro four times a year, after an initial 10,000 investment.
> Thanks in advance for all replies. By the way, I'm a newbie here, so apologies if I'm asking a stupid question.



My understanding is that the additional charges are depending what type of ETF you are buying and where the ETF is traded - for ETFs traded outside of the UK and Ireland there is a custody fee/ other fees. In the end you have to check with Davy directly as it is not very transparent in my opinion which is a pitty.


----------



## Ministry Fox

Thanks Merowig
I've checked with Davy. The charges are 0.1% (overseas charge) plus €25 which applies per transaction (I think that's the 'custody charge'). ETF charges are quite low (around 0.2%) on passive indexed funds line with fund managers like iShares and Vanguard. So, if I invest every quarter or every half year, to minimise the impact of the custody charge, Davy would seem to be have the cheapest charges around -- excluding online brokers that fall outside of the PRSA umbrella.
LA brokers don't have a custody charge but their management fee is 1% rather than 0.75%. Their website is also rather short on details, wherein the devil is said to lie. From what I can make out, you have to use Irish Life funds. Even though indexed funds are available, it is unclear what management charges are involved in these funds. I mean, is that included in the 1% I pay LA Brokers or is than additional hidden charge?
Moreover, LA Brokers also set alarm bells ringing in my head when they claim to be doing this for free, or as their website puts it: "There is NO charge to the client for this execution only service. Irish Life may pay LA Brokers a fee from their profits based on the total volume and persistency of all our PRSA business placed with them and that's how we earn on the transaction." In my experience, any broker that claims to be acting on a fee-free basis is hiding its charges.


----------



## Merowig

You don't have the 25 Euro charge for ETFs traded in the UK or Ireland afaik.
If you go that route - an ETF based in UKI - Davy seems so far to be the cheapest.


LA Brokers is just reselling PRSAs from Zurich and Irish Life - so you can chose between one of the two providers - 1% flat. PRSAs are highly regulated and I received and checked the paperwork I have got for the Zurich PRSA through LA Brokers - no hidden fees - it does what it says on the tin - a Zurich PRSA with 1% AMC and not any other additional charges.
It is good to be careful - but not to be paranoid 
You have your PRSA with Zurich or Irish Life and pay them the 1% - out of this percentage LA Brokers is getting their comissions from Irish Life/Zurich. In case you don't want to go the self directed one a PRSA through LA Brokers seems to be the only other reasonable alternative so far.
LA Brokers is doing this kind of reselling for a long time if you check the other thread here. Nothing fishy here.


----------



## Steven Barrett

Merowig said:


> You don't have the 25 Euro charge for ETFs traded in the UK or Ireland afaik.
> If you go that route - an ETF based in UKI - Davy seems so far to be the cheapest.
> 
> 
> LA Brokers is just reselling PRSAs from Zurich and Irish Life - so you can chose between one of the two providers - 1% flat. PRSAs are highly regulated and I received and checked the paperwork I have got for the Zurich PRSA through LA Brokers - no hidden fees - it does what it says on the tin - a Zurich PRSA with 1% AMC and* not any other additional charges*.
> It is good to be careful - but not to be paranoid
> You have your PRSA with Zurich or Irish Life and pay them the 1% - out of this percentage LA Brokers is getting their comissions from Irish Life/Zurich. In case you don't want to go the self directed one a PRSA through LA Brokers seems to be the only other reasonable alternative so far.
> LA Brokers is doing this kind of reselling for a long time if you check the other thread here. Nothing fishy here.



Except you have no idea how much the trading costs are because they are factored into the unit prices. The Davy PRSA is more transparent as you know how much the fund manager charges, how much Davy charges etc. I don't believe that the trading costs that the insurance companies don't disclose are that high, but the lack of transparency leaves people guessing. 


Steven
www.bluewaterfp.ie


----------



## Merowig

In regards to ETFs via Davy I was told by them that there "may be additional charges deducted at source by the ETF provider. Unfortunately we wouldn’t have visibility over these charges, if applicable."
So really it depends on the kind of ETFs you are going to buy if Davy is going to be cheaper or not. It is easy to reach the 1% with all the other charges.
They don't publish a list of their available ETFs and the associated costs online - you can only see this after having an account with them - I don't find this transparent as well.
 0.75% +x (and possible + y + z...) - which reminds me a bit of Ryanair  - you can pick extra services but pay for this. This is absolutely fine and a Self Directed PRSA is definitely not for everyone and I still feel this can be a great alternative to a 1% PRSA through LA Brokers. Though I still feel to be left guessing.


----------



## Sarenco

SBarrett said:


> Except you have no idea how much the trading costs are because they are factored into the unit prices. The Davy PRSA is more transparent as you know how much the fund manager charges, how much Davy charges etc. I don't believe that the trading costs that the insurance companies don't disclose are that high, but the lack of transparency leaves people guessing.
> 
> 
> Steven
> www.bluewaterfp.ie



Hi Steven

It's amazing to me that the Central Bank still tolerates such a lack of transparency in terms of the costs associated with unit-linked funds offered by Irish life companies.

I was once told (by somebody who was in a good position to know) that you can generally add around 20% to a disclosed AMC to arrive at the total expense ratio (TER) of a typical actively-managed balanced fund.  As you know, a fund's TER includes all costs associated with the management and operation of a fund (including custody expenses) but does not include portfolio trading costs.

To be fair, it's not really possible to disclose portfolio trading costs in advance as they depend on the level of turnover within a fund, the particular securities traded, etc.  Obviously a passively managed fund will typically have a much lower turnover of securities than an actively managed fund and therefore will generally have lower trading costs.

It would be nice to think that life companies would agree collectively to disclose TERs for their funds on a voluntary basis.  It's really the bare minimum that policyholders should expect.


----------



## Steven Barrett

Hi Sarenco 

I have heard the EU regulation will force all fund managers to disclose their total fees. You are right though, the Central Bank should be looking to lead the way, but they have very little power and just as little will to do so.

People are generally not aware of the additional costs and presume that the management fee covers all costs. That is why you get people complaining that a cash fund has the same AMC as other funds. The AMC is running costs of the company and profit. Property funds also having a lot of non disclosed funds. Think of the cost of buying a property for tens of millions yet the AMC is the same as the cash fund? 

Pick a diversified portfolio of indexed funds/ ETFs and just leave them there.


Steven
www.bluewaterfp.ie


----------

