We've seen some very poor charges disclosure recently
If your broker is focused on the big brand, allocation rates and past performance, get in touch immediately. It could save you a fortune.
globalwealth.ie
From an earlier AAM post on the same subject
Please remember that an “increased allocation“ isn’t really the benefit it seems.
it is sold like this “I’m getting 3% commission, but the life company is paying 2% of that by the increased allocation”
it actually works like this
you give the company say €100,000 they purchase units with 102% allocation so €102,000 - so far so good
then they apply their annual management charge to the €102,000
A typical life company contract costs over 2%pa when properly disclosed.
So each year you are paying a couple of grand in fees and if you try to break the contract the additional fees are recouped by way of an early surrender penalty.
For example and this is a very rough illustration
Amount | € 100,000 | | | |
Allocation | 102% | | | |
Invested | € 102,000 | | | |
Illustrative Annual fee | 2.41% | using Irish Life MAPS 4 Investment Bond product as a proxy because fee disclosure for ARF is opaque | | |
| | | | |
Commission | 3.00% | | | |
Commission Paid | € 3,000.00 | 5% Growth | Charge | |
Year | 1 | € 107,100 | € 2,581.11 | |
Year | 2 | € 109,744.83 | € 2,644.85 | |
Year | 3 | € 112,454.98 | € 2,710.17 | |
Year | 4 | € 115,232.06 | € 2,777.09 | |
Year | 5 | € 118,077.71 | € 2,845.67 | |
| | Cummulative Charges | € 13,558.89 | |
| | | | |
It looks like the commission is "only 1%" when you focus on allocation rates | | | | |
For illustrative purposes only | | | | |