Is a comparison quote a legal requirement?

A financial advisor advised us to move a private Acorn Life pension to a Zurich non-Standard PRSA, in order to get a better return / growth / choice of funds.

Acorn Life are quite unhappy about this, and said if the advisor didn't give a comparison quote, he was acting illegally.

Is this right?

It's definitely a private pension, not an occupational one.

What exactly do you mean by "private pension"?
PRSA, personal pension plan aka Retirement Annuity Contract, buy out bond/personal retirement bond, etc.?

Sounds like rubbish from Acorn Life to me but there could be some key information missing from your post.
Did they mean that you need a Certificate of Benefits Comparison in order to transfer?

By the way, I'd also be a bit concerned that your current pension advisor (what sort of advisor exactly?) is citing better returns as a reason to transfer.
How can they know that given that the markets cannot be predicted?

Usually the key issues with pensions are to minimise charges and to opt for an appropriate asset allocation which will usually mean a high/all equity maybe index tracking fund especially if you're not retiring imminently (and maybe even if you are - but that's a bigger debate that has been thrashed out elsewhere on Askaboutmoney).

Not enough information in the post to give a comprehensive reply but I'm going to assume that the Acorn 'pension' is not a PRSA and that it's a Personal Pension (RAC), and it's of a fairly substantial value. I'm also assuming that you are talking to both on the phone and that none of what you've posted, from them, is in writing.

You're dealing with two pension salespeople in competing offices. I would say that Acorn are more accurate here than the advisor, in their (costs) conclusion. but the use of the word 'illegal' is wrong

The advisor seems to be selling you a product solely based on access to the TopTech100 Fund and hasn't done an analysis of the full costs on the Acorn pension. Fair enough, there might be a nil allocation period for any 'new' money that's going into the Acorn pension but I would guess that the current AMC is less than the 1.25% (?) being offered by the advisor. On some of their plans they also have a 'hook', that keeps you in, whereby they add 5% to the value of the fund at retirement age.

You have to be given a suitability letter or reasons why letter that would list the reasons why, in the opinion of the advisor, you should switch plans. I'll assume you don't have this and that this is what the Acorn rep is on about. If there was ever a dispute in the future as to why it was bad advice (to switch - maybe someone else does ananalysis at another time) then, the letter would be very much relied on by the Regulator.

Ask the advisor via email for the reasons why/suitability letter now. Also ask them for a like-for-like quote (with the Acorn one - I presume you have this as Acorn rely a lot on 'quotes') on the expected value at retirememt age. If they immediately ring you up and ask you why you are looking for these, walk away. If the only reasons for the advice is to switch to have access to the TopTech100 Funds, in the hope that this fund will outperform the Acorn one/s and 'compensate' for the higher charges, then walk away.

There may be some merit in not adding new/more money to the Acorn plan (because of a nil allocation period ie. no money invested for XY months) but you'd need to see a proper analysis of the costs and charges from both options before making a call on that. I suspect that the difference for an advised product would be marginal but a no advice/execution only one might do a lot better. As you appear to need advice, the latter option would not be suitable for you.

As an aside, a lot of people don't think about the need for a Non-Standard PRSA. Remember, AMCs are not limited to 1%, or less, (ask Davy's clients). They can be increased with a few months notice. The advisor also has to tick a box as to why they're justifying selling you a Non-Standard PRSA. That can be (i) Investment choice requested not available under Standard (ii) The client requires ongoing advice and monitoring or (iii) Charges are more appropriate.



Gerard

www.execution-only.ie

Thanks for the replies.

The Acorn life pension is a Regular Premium Personal Pension, (not a PRSA). Yes, it has the 5% at retirement bonus.
30+ years until retirement.

It was set up 16 years ago and never looked at again. The Acorn life advisor hasn't done a finanical review / risk profile or anything in 16 years, and he also sold us one of the controversial whole of life policies (we have switched out of that). So we haven't had a great experience. When we mention switching, we are bombarded. I thought he was meaning a Certificate of Benefits Comparison but I think it's just a comparison quote he was talking about (whenever I asked a question, I seemed to get an "example/ personal story", not facts)

The independent advisor has sent emails giving the reasons for his recommendations and a personalised fund comparison report. Reasons for swtiching include better fund selection and ongoing advice. (presume the last is to justify the non-standard PRSA, thanks for that info, Gerard)

Currently: Managed Growth Fund Acorn. Started it in July 08, paid in €52,671, it's current value is €81,472

Recommended to move the fund to:

Prisma 5 63% Zurich.

5 Star 5 79% Zurich.

Indexed Top tech 100 134% Zurich.

The fees are higher with the new PRSA (1.5% annual management charge, 100% allocation) but there are regular financial reviews, it's not investing in these 3 funds and leaving it for another 16 years. Maybe too high of a fee?

Acorn life fees are quite low, I think?
Policy Fee: €11.35 monthly
Bid/Offer Spread: 5% of the allocated premium
Management Charge: 0.50 % per annum of the value of the Policy Unit Account

The advisor said "overall the charges would increase by roughly 0.5% when everything is factored in, but your growth rate over the last 5 years counting from 2023 back would be 47% more."

If I wanted a 2nd opinion from someone who would not be affected by whatever decision made, how would I go about that?

Thanks again for the info, very helpful.

In 2008, things were a mess.

Wouldn't have been unusual to be conservative on a risk profiler and arrive at a fund rated 4. I don't think Acorn do a 6 (or 7) on their risk scale so 5 is their max. Yes, peoples attitude to risk changes, depending on how fuzzy-wuzzy they feel about the future (like now Vs 2008).

Easy to diss a 4 when someone else (in hindsight) is comparing it to three 6 rated funds. Easy to diss a 4 against another 4, in hindsight, also, if the other 4 has done better. The need for the three funds is something I'd question. Are you going all in on equities or is your preference for a multi-asset fund with a very high equity content? The advisor is hardly going to predict when to switch in/out of funds over the next 30 years. The strategy should be from now, choose and stick with it.

Up to you to decide on the charges you're willing to pay for the current work and ongoing service. A lot of the regular posters on here will be having conniptions over an AMC of 1.5% and ".....there are regular financial reviews, it's not investing in these 3 funds and leaving it for another 16 years.". They can add their views on that.

I don't think you'll rue missing out on the 5% if you are going 100% equity (risk rating 6 Vs a mixed fund with a risk rating of a 4) for the next 30 years (and beyond into an ARF) but that increase in AMC of 0.5% is very severe.


Gerard

www.execution-only.ie

Ola1234 said:

The fees are higher with the new PRSA (1.5% annual management charge, 100% allocation)

Acorn life fees are quite low, I think?
Policy Fee: €11.35 monthly
Bid/Offer Spread: 5% of the allocated premium
Management Charge: 0.50 % per annum of the value of the Policy Unit Account

The advisor said "overall the charges would increase by roughly 0.5% when everything is factored in, but your growth rate over the last 5 years counting from 2023 back would be 47% more."

Click to expand...

It's difficult (for me at least) to compare these charges on a like for like basis. At a glance both seem a bit high for my liking but I'd be happy with a low cost execution only/no advice arrangement myself. Such as with the likes of the usual suspects...


I'd always be wary of an "advisor" looking to churn a customer from one pension provider to another. There may be legitimate reasons for this but critical skepticism/caveat emptor would be my default position - e.g. just in case their main motivation is generating commission for themselves.

It may well be that the charges are around the same, or the Acorn ones are perhaps lower, and just staying put and switching to a more suitable fund/asset mix for your needs would be a better choice.

Maybe someone else with more knowledge can compare the two charging structures if necessary...

I'd be thinking along the lines of switching the fund within the Acorn policy to something more aggressive, then stop paying premiums and set up a new policy, possibly the one the advisor is suggesting, and paying the premiums there.