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


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.
 
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.
 
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.
 
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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
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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.
 

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.
 
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
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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