ARF charges

By the way, £155 is not a silly number. Interactive Investor are a very profitable business, making a lot of money, whilst charging this.

It seems a silly number to us Irish because we're used to seeing AMC's in the thousands.

We're a smaller economy so our fee should be higher - but not by the margin it is.
 
I have read this thread numerous times and even though I would consider myself quite financially savvy, I'm a bit confused.

I recognise that charges are only a part of the issue and asset allocation is important, but if I could just stick to the charges.

The AMC , split between the two elements that make that up, seems straight forward, but I'm confused about the set up charge.

I have got a quote with an AMC and no set up charge at all. I have queried it and got that confirmed in writing. Can that be possible?
 
Eyeblinks said:
I have read this thread numerous times and even though I would consider myself quite financially savvy, I'm a bit confused.

I recognise that charges are only a part of the issue and asset allocation is important, but if I could just stick to the charges.

The AMC , split between the two elements that make that up, seems straight forward, but I'm confused about the set up charge.

I have got a quote with an AMC and no set up charge at all. I have queried it and got that confirmed in writing. Can that be possible?
Click to expand...
Yes. The setup fee can be recouped through a higher AMC, lower advisor commission, or just by the provider taking a lower margin.
 
Eyeblinks said:
The AMC , split between the two elements that make that up, seems straight forward, but I'm confused about the set up charge.

I have got a quote with an AMC and no set up charge at all. I have queried it and got that confirmed in writing. Can that be possible?
Click to expand...

You can buy an ARF with an AMC and no early exit charges.

You can buy an ARF with an AMC and early exit charges.

Both will have 100% allocation.

If there are early exit charges then there's an initial commission payable to the intermediary, unless you're doing it on a fee basis. There may also be a trail commission, depending on the level of AMC.

Early exits are to protect the product provider so that they can recover the initial commission paid to the intermediary in year one over 4/5 years.

If a client wanted to switch providers ( say they found a cheaper alternative) then the penalty would be imposed on the client but the provider would also claw back some of the initial commission paid to the intermediary.

I suppose it's up to client/intermediary to interpret whether initial commission (with 100% allocation) is a set up 'charge'.
 
Thanks for that.

Basically, if I understand that correctly , the cost of the commission paid from the provider to the intermediary, is one or both of an early exit charge and/or an increase in the AMC.

Where is the cost of an increase in the allocation to excess of 100% ?
 
Best use an example:

ARF €250,000 - Allocation 104% (Gross) and AMC of 1.25% (where 0.25% is trail)

Inretmediary decides to give you 101% allocation so there's 3% initial commission paid (for the advisory service and set-up) and annual servicing is paid for out of the 0.25% trail.

You have early exit charges of 5/4/3/2/1% in years 1//2/3/4/5

Provider recovers the initial commission via the 1% AMC on the (now increased fund value) of €250,000 x 101% (or, more accurately, 1% divided by 12 of whatever the actual value is in any month).
 
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GSheehy said:
Best use an example:

ARF €250,000 - Allocation 104% (Gross) and AMC of 1.25% (where 0.25% is trail)

Inretmediary decides to give you 101% allocation so there's 3% initial commission paid (for the advisory service and set-up) and annual servicing is paid for out of the 0.25% trail.

You have early exit charges of 5/4/3/2/1% in years 1//2/3/4/5

Provider recovers the initial commission via the 1% AMC on the (now increased fund value) of €250,000 x 101% (or, more accurately, 1% divided by 12 of whatever the actual value is in any month).
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Or you may get 100% gross allocation and 0.65% amc. Any set up fee either comes straight out of your investment or you write a cheque.

I'll let you take a guess on which is better over the lifetime of the policy, 101% allocation and 1.25% amc or 97% allocation and 0.65% amc...
 
Does anyone have a recommendation for a broker that charges the lowest rate?

I am interested in the arf with royal London (as posted by Colm Fagan). I understand you need a broker to get this arf product. It would be good to get a tip for a broker who is best value for money.

my preference would be for a once off cost for arranging the arf, rather than a trail of 0.25% or something for ongoing advisory charges. Preference is for an execution only arf.
 
greenor said:
Does anyone have a recommendation for a broker that charges the lowest rate?

I am interested in the arf with royal London (as posted by Colm Fagan). I understand you need a broker to get this arf product. It would be good to get a tip for a broker who is best value for money.

my preference would be for a once off cost for arranging the arf, rather than a trail of 0.25% or something for ongoing advisory charges. Preference is for an execution only arf.
Click to expand...

These brokers are Askaboutmoney.com regulars and offer execution-only products, so they should be able to help you...

www.prsa.ie
www.ferga.com
www.labrokers.ie
 
As an investment/ pensions novice, I started out reading this post seeking clarity on charges and I'm left feeling punch drunk at this stage trying to piece together the various options.
I'm considering early retirement this year (end of) and on the advice of a financial advisor converted 2 small personal pensions (c70k) into an ARF with Zurich. Workwise I'm currently in a DB scheme and plan to transfer out of that on retirement. The current Zurich Matrix ARF is invested across 3 funds(Prisma4, Gold & performance pension & Investment)each charging from what I can ascertain 1.25% Mgt charge PA each. Additionally there is the trailing commission payable to the advisor and early encashment charges of 5% on year 1 descending to 1% in year 5. Based on what I've learned here today that seems expensive to some of the other options available. However over the last 12 months the fund has performed reasonably with c 10% growth

here's where I need some advice/clarity based on my lack of experience and knowledge - when I transfer out of the DB scheme ( ETV c700k post 25% TF lump sum) - if I were to invest these in to the existing Zurich ARF:
a) does the broker continues to receive trailing commission on the new sum invested (I am no longer using him) - I assume yes
b) Given that the fund value will have increased significantly - are the charges negotiable to more agreeable levels.
c) Are there other funds under the Zurich umbrella with more palatable AMCs?
I'm clearly looking for an passive fund mgt approach as I've no experience and for simplicity it would be easier to utilise what's already been incepted. However I don't want to pay extortionate mgt charges and unwarranted trailing commission.
Alternatively would I be better off setting up a new ARF from scratch?
 
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greenor said:
Does anyone have a recommendation for a broker that charges the lowest rate?

I am interested in the arf with royal London (as posted by Colm Fagan). I understand you need a broker to get this arf product. It would be good to get a tip for a broker who is best value for money.

my preference would be for a once off cost for arranging the arf, rather than a trail of 0.25% or something for ongoing advisory charges. Preference is for an execution only arf.
Click to expand...

See this post:
https://www.askaboutmoney.com/threads/pension-products-execution-only.236522/
 
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Flybytheseat said:
See this post:
https://www.askaboutmoney.com/threads/pension-products-execution-only.236522/
Click to expand...

That's a post about execution-only services. Execution only services are suited to people who need no advice and know exactly what they're doing. This poster is considering moving a fund worth nearly a million out of a Defined Benefit pension scheme into an ARF and, from their post, clearly could benefit from some advice before entering into such a large transaction. Do you really think that execution-only is the way to go for someone about to cash in almost a million of a Defined Benefit pension? They describe themselves in their post as an investment / pensions novice.

Don't get me wrong. I'm a great believer in execution-only services. Where the person involved knows exactly what they're doing. If they don't, they could be making a million euro mistake with no advice to help them.
 
TBF, the original post by @castnhope at 5:57 made no reference to a DB Scheme (first post jitters on publishing too soon) and it was last edited at 6:29, and the reply at 6:06 with the link above was to a different poster.

@castnhope needs to clarify what age they are and what (if any) advice they've received on transferring out of the DB Scheme.

The 1 year performance of those three funds is circa 14%, 21% and 20% so not sure where the 10% is coming from.

You can't invest new monies in an existing ZL ARF that has early exit charges, so it's going to be a new policy.

a) Yes
b) Yes
c) The AMC is the same for all the funds listed here that don't have 'Additional AMC' listed in the first column. The Other Ongoing Costs (column two) vary by fund and the (not explicitly disclosed but included in the fund price/performance) Portfolio Transaction Costs will also vary.

Simplicity, in this instance, would not have been your friend.
 
castnhope said:
The current Zurich Matrix ARF is invested across 3 funds(Prisma4, Gold & performance pension & Investment)each charging from what I can ascertain 1.25% Mgt charge PA each. Additionally there is the trailing commission payable to the advisor and early encashment charges of 5% on year 1 descending to 1% in year 5. Based on what I've learned here today that seems expensive to some of the other options available. However over the last 12 months the fund has performed reasonably with c 10% growth

here's where I need some advice/clarity based on my lack of experience and knowledge - when I transfer out of the DB scheme ( ETV c700k post 25% TF lump sum) - if I were to invest these in to the existing Zurich ARF:
a) does the broker continues to receive trailing commission on the new sum invested (I am no longer using him) - I assume yes
b) Given that the fund value will have increased significantly - are the charges negotiable to more agreeable levels.
c) Are there other funds under the Zurich umbrella with more palatable AMCs?
I'm clearly looking for an passive fund mgt approach as I've no experience and for simplicity it would be easier to utilise what's already been incepted. However I don't want to pay extortionate mgt charges and unwarranted trailing commission.
Alternatively would I be better off setting up a new ARF from scratch?
Click to expand...
Zurich Life don't have an ARF contract with a base management charge of 1.25% plus trailer on top of that. Their highest charge is 1% base amc. It is likely that the total amc including trail is 1.25%.

The charges on the contract are not competitive and you have actively managed funds. I don't see why you have money in the Prisma funds and the Performance fund. They invest in the same equities and bonds, just different weightings.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Steven Barrett said:
Zurich Life don't have an ARF contract with a base management charge of 1.25% plus trailer on top of that. Their highest charge is 1% base amc. It is likely that the total amc including trail is 1.25%.

The charges on the contract are not competitive and you have actively managed funds. I don't see why you have money in the Prisma funds and the Performance fund. They invest in the same equities and bonds, just different weightings.

Steven
Click to expand...
Thanks Steven , You are most probably correct - I'm just copying directly from fund docs the AMC quoted.

In terms of the fund selection - it was what the Fin adviser configured as a "Balanced fund" with even split across find in question. I padi for the advice but it wasn't really made clear that I'd be paying again in trailer fees at the time it was setup - hence we're no longer "engaged."
 
castnhope said:
In terms of the fund selection - it was what the Fin adviser configured as a "Balanced fund" with even split across find in question. I padi for the advice but it wasn't really made clear that I'd be paying again in trailer fees at the time it was setup - hence we're no longer "engaged."
Click to expand...

There are a lot of charlatans in the financial broking / advisor business unfortunately. Best to pick some of the gud uns on here or from personal recommendations. Personal experience is that the majority are charlatans.
 
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@GSheehy - More crap typing that 1st post jitters - TBH!:oops::oops:

Thanks for providing on clarity on my questions asked and link to zurich fund charges. The 10% is based on what the current fund value Vs original investment amount based on online portal yesterday.

I'm 61 and have decided to transfer out of DB scheme because in the event of me kicking the bucket it ensures that the full amount of the pension value can then be passed on to spouse & kids as opposed to 50% of annual DB pension. Thinking about doing all this in next 6 months/year end.

I am currently getting engaged with another 'paid for service advisor' but wanted to sense check the setup fees and subsequent charges. Current FA is aware there is an existing ARF in play but am looking for clean slate approach from them.

@Flybytheseat
You're spot on - Looks like I got a lot to learn :eek:
 
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