Pension query

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Alan Moore

Guest
The answer.......

Quiet? Thats rich seeing that nobody can explain to me why Quinn should do well from AA referrals and why AAM has listed Quinn as "The Pension Recommendation"

Anyhow, in response to "not ratna", its quite easy to attain info on the direct sellers. Indeed there are companies that sell systems/websites to brokers that compare some of these products with those that are sold through broker channels.
 
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Not Ratna

Guest
attaining info on the direct sellers

Under regulations, financial advisers (AAs) must recommend the best product from all the companies on the market.

A handful of AAs possibly do, but talking to many of these providers its safe to assume the vast majority do not.

It's not because they can't find anything good to say, (these companies sell business with or without AA help) it may be, they simply don't have the required data on the products to feel comfortable recommending them.

If they don't readily have access then this surely questions some regulatory rules.

Alan and others in the industry. If we just take the life and pensions providers -

I'd like to ask how many of the following providers/ distributors provide easy access to technical manuals (as opposed to promotional brochures) to financial advisers?

Acorn
Ark
Boi Life
Quinn
Royal Liver

One Direct
Tesco

I suppose we could also include Combined, Anglo, and the business of Scottish Prov, Scottish Legal, Royal Life and Equitable (although some not trading, people would have policies).

Lets not single out Quinn for example but look at the broad picture.

How many of the above provide necessary technical manuals on their product range to AAs?
 
A

Alan Moore

Guest
Methinks.....

We are going to agree to disagree.

"Under regulations, financial advisers (AAs) must recommend the best product from all the companies on the market"

Agreed

"A handful of AAs possibly do, but talking to many of these providers its safe to assume the vast majority do not."

Or in other words, its same to assume that the vast majority of AAs are in breach of IFRSA regulations. Total hearsay. Give me some facts.

We have used a number of the companies on your list ( when they have been most appropriate for the client, one of which does quite well from our referrals ).

Again, much of the information is available through third parties (who provide comparison engines etc) and much of the information including technical details is readily available from these companies.
If companies believe they have the best product they will give you the info (and actively seek business) if they believe you should be recommending business to them. In my time in Equitable I made approaches to the broker market.

The reason I picked on Quinn is that they get a lot of postive publicity on AAM which I feel isn't necessarily warranted and to give the AAM contributor a chance to prove that AAs aren't giving Quinn a fair deal.
 
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Not Ratna

Guest
technical information

All of the above companies provide all of the relevant up to date data to AAs whenever required? Is this how others interpret the situation?
 
A

Alan Moore

Guest
Good luck......

.... and hope you find your witch.

Won't be commenting further unless someone has some facts.
 
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Not Ratna

Guest
Good luck......

Thats understandable and I shouldnt have expected or brought pressure to bear on a resistered user to comment further.
 
S

Shiela

Guest
comment

Working in the marketing department of one of the larger life offices I concur with Not Ratna. Information in any great detail can be difficult to obtain from some providers. It must be a difficult situation for those who must offer broad based advice.
 
A

Alan Moore

Guest
Isn't "Shiela" spelt "Sheila"

Most lame. I suspect multiple schizophrenia. If Joe Public can get info out of these companies surely an adviser with half a brain can.

Finished with this thread unless someone can show me using FACTS proof of either:

(A) Ratnas argument - That Quinn should be doing well from AA referrals or
(B) Not Ratnas argument - That the vast majority of AAs are in breach of regulations to give best advice)
 
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Ratna

Guest
Information

Sean Quinn has an instinct for business and common sense, Alan. The company has demonstrated that there is a market for their products through their own unique selling proposition.

Your analysis may be unrealistic, and prejudiced in many ways. Yet, as an AA you cannot afford to be naive in your judgment. Astute customers recognise this trait a mile off.

Right now I can say that most of the AAs out there do not have a clear understanding of the Acorn's, Tesco, Ones, Ark, BOI Life, Combined, Quinn, Royal Liver etcs products because I know the quality of the information given to them by these providers just isn't there and worse still its too arduous a task for most AAs to obtain themselves.

If they don't have the required information then there is not a strictness in practice and its therefore not illogical to assume that best advice suffers.

Regulation needs to take one more step.
 

Brendan Burgess

Founder
Messages
38,648
Hi Alan

You said in an earlier post that you have two pet hates:
The Guide's recommendations
1) of Quinn Life as by far the lowest charges of any pension fund and
2)"We recommend that you put 100% of your investment in equities"

You then combine the two pet hates with an illustration of the Quinn Biotech fund. I hope it's clear from everything I have written that I would never recommend 100% investment in any specialist fund, whether it has low charges or not. The overall point is that investing your pension fund in equities is likely to be the safest option and the highest return over the longer term. I disagree strongly with the lemming like wisdom which says that you should switch into cash as you approach retirement age. This only applies if you are obliged to buy an annuity. For many people, retirment means switiching from a pension fund into an ARF. They should remain in equities and, yes, they should be 100% in equities.

Now let's look at the statement that Quinn Life is by far the cheapest. I have not updated the book as often as I would have liked. So perhaps it should now be updated to "one of the cheapest"?

This advice would have held good for the initial question from JJones. He is being charged a 5% initial charge on every premium. From the subsequent discussion, it appears that he could get the exact same product through Hibernian or New Ireland for a lot less. How can the advisor justify this? Surely the products from Hibernian and New Ireland should have been recommended? Presumably it was a Lifetime "counsellor"?

Maybe if you go to a discount broker and get a product on a nil commission basis, it will be marginally cheaper than Quinn Life. But, for most people, choosing Quinn Life instead of one of the funds with 5% initial charges and initial allocation periods, will save them a lot of money.

Pensions can be complicated and good advice can save you money. But many people go to advisors and get bad advice or get ripped off. By going directly to Quinn Life, you will at least know that you are not getting ripped off.

Brendan
 
G

gerry

Guest
Pension Choice

Just because something is cheapest doesn't mean it is the best Brendan.

Where are Equitable now ?

Where are Scottish Provident Ireland ? (Down to the present and future cost of providing Guaranteed Annuity Rates).

Similarly just because an execution broker provides a cheap service doesn't mean best unless the client knows what they are doing.

Ever dealt direct with a general insurer after an accident ?
 
A

Alan Moore

Guest
Response.....

Will respond to yor post Brendan when I get a bit of time. Might be tomorrow, there is a lot in there.
 
A

Alan Moore

Guest
There goes the lunch hour....

Hi Brendan.

First off I appreciate you’ve put a lot of time and effort into the guide and no matter what the content is, someone is doing to pick holes in it.

So takes take each of your points in turn.

“The overall point is that investing your pension fund in equities is likely to be the safest option and the highest return over the longer term.”

I would generally agree that equities will most likely out perform other asset classes. Safest I’m not so sure. Best example would be Japans Nikkei, peaked in 1989 at 39,000. It is now at 10,200, over 14 years later. Now if your Japanese employee had 100% of their retirement fund 100% in local equities, they would have committed hari kari long ago. Even with growth of 7% per annum it will take 20 more years for this market to get back to it’s peak.

Now I’m not saying that we’re due a similar collapse here but the point I’m trying to make is that as a financial adviser I would only recommend total equity funds to those that understand that this is a high risk approach and there is a potentially large downside as well as upside.

I have found that there are two types of client that will invest 100% in equities:

1)&nbsp &nbsp &nbsp &nbsp Those that are new to pensions and are generally younger. They understand that they have a long term to drawing down on the proceeds and volatility does not effect them too much in the early days ( 25% drop in a fund of €10,000 is not as horrific as a 25% drop in €1M ).

2)&nbsp &nbsp &nbsp &nbsp The client that understands the risks involved but is not solely dependent on a pension fund in retirement ( i.e. people that can afford to take the risk, that are coming into large inheritances or have property).

In summary on this point, if a client demonstrates to me that they are looking for some degree of safety and I produce a report that shows “that investing your pension fund in equities is likely to be the safest option and over the longer term.” IFRSA will ensure that I never work in the industry again. Most clients that are serious about their pensions and have funds built up that they generally tend to be more cautious and need/want a more balanced portfolio of equities, property and bonds.

Next up

“I disagree strongly with the lemming like wisdom which says that you should switch into cash as you approach retirement age. This only applies if you are obliged to buy an annuity”

Okay, I think from reading between the lines that you may be agreement that those that must buy an annuity may be best advised to go the cash/index linked route. And this covers the bulk of people.

“For many people, retirement means switching from a pension fund into an ARF. They should remain in equities and, yes, they should be 100% in equities”

For those that avail of the ARF/AMRF, not so sure 100% equities would be best. e.g. Would I be comfortable putting my folk’s savings over 40 years 100% into equities? Answer is no? Because they wouldn’t be comfortable with the potential downside and again most clients I have met are not comfortable with 100% equities and especially post retirement, think Eircom was an eye opener for many. Most are more comfortable with a balanced proportion of equities, bonds, property. It comes back to risk and affordability and where you want to strike the balance. There will be those that will be full comfortable with 100% equities.





Now onto Quinn Life

“Now let's look at the statement that Quinn Life is by far the cheapest. I have not updated the book as often as I would have liked. So perhaps it should now be updated to "one of the cheapest?”

I’ve done a few quotes comparing Quinn Life with the industry on a nil commission basis.
Person aged 35 retiring at 65 with an indexing premium. Saving at retirement by going nil commission with another company 5-7% at retirement based on the premium. Hardly marginal?

If you want cheapest option and don’t want to put in the legwork, go to a financial adviser, and negotiate a fee for the set up of the cheapest. Would agree 100% with Gerry though that cheapest isn’t always the best. Personally I would prefer my funds to be actively managed by a fund manager I have confidence in. Quinn used tracker funds and is therefore passively managed. But that’s a separate issue.

“This advice would have held good for the initial question from JJones. He is being charged a 5% initial charge on every premium. From the subsequent discussion, it appears that he could get the exact same product through Hibernian or New Ireland for a lot less. How can the advisor justify this? Surely the products from Hibernian and New Ireland should have been recommended? Presumably it was a Lifetime "counsellor"?”

Can’t speak for the other adviser? Maybe he/she is a tied agent. Maybe the agent is expensive and would set up New Ireland/Hibernian on similarly high charging structures.
The higher the charges, the higher the commission.

When you go to an advisor what do you expect?

A pension review on your current holdings?
Advice on which is the best pension for you?
Advice on your full financial situation?
Ongoing annual advice on your financial situation?
No advice ( execution only )?
Advice on which is the cheapest?

Like an accountant, advisers have to be paid for their time and services. The amount the adviser charges should be proportional to the amount of work done or to be done. Once agreed at the outset the client can either pay a fee or the products can be structured in such a manner that the commission ( which is flexible ) to cover the costs. Some advisers will charge more some less.

“Maybe if you go to a discount broker and get a product on a nil commission basis, it will be marginally cheaper than Quinn Life”

See above, 5% to 7% ain’t marginal on a good size pension fund.

“But, for most people, choosing Quinn Life instead of one of the funds with 5% initial charges and initial allocation periods, will save them a lot of money. Pensions can be complicated and good advice can save you money. But many people go to advisors and get bad advice or get ripped off.

Bad advice – You can sue for bad advice. Ripped Off- It’s the only industry that I know off with disclosure of commissions.

“By going directly to Quinn Life, you will at least know that you are not getting ripped off”
Are you sure? If you go to an adviser and agree a fee for setting up a pension (on nil commission) you could save.
 
S

Skinflint

Guest
.

“By going directly to Quinn Life, you will at least know that you are not getting ripped off”

Are you sure?
What evidence do you have that QL are ripping people off then?
 
A

Alan Moore

Guest
Rip Off.......

Maybe too strong a term.......

You are taking me slightly out of context as the point I was trying to illustrate that there are better deals out there ( 5-7% based on the illustration I did ).

The only criticism on the charges would be the AMC with is 1% when most personal pensions tend to have an AMC of 0.75%.

The following is taken from the motley fool.
Trackers vs Managed Funds
their charges (trackers) tend to be a lot lower. They don't employ expensive fund managers that make numerous buy and sell decisions that in the end merely cancel each other out.
 
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Skinflint

Guest
.

Fair enough - I just thought that it was a cheap shot to insinuate that QL might be ripping people off.
 
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Investor

Guest
Illustration

Hi Alan

5-7% difference.

Are you sure your illustration is reflecting the fact that QLife management charge reduces from 1% to 0.5% after 15yrs? Can you provide details on the funds/providers you are comparing QLife to?
 

Brendan Burgess

Founder
Messages
38,648
Re: Illustration

Alan

I think the 100% equities position has been argued exhaustively - well at least I am exhausted by it, so I will stick with Quinn Life.

Quinn Life is a tracker and will have a much lower TER than any actively managed fund. It is not fair to do comparisons between a tracker and an actively managed fund. My guess is that actively managed funds quoting .75% probably charge around 1.75% in TER.

Despite all the data, it's just impossible to convince people that they simply cannot predict which actively managed funds will outperform over their chosen time period. The passively managed funds will outperform the average.

Brendan
 
A

Alan Moore

Guest
Response.....

Brenadan
"I think the 100% equities position has been argued exhaustively - well at least I am exhausted by it, so I will stick with Quinn Life."
Fair enough, we'll agree to differ.

"It is not fair to do comparisons between a tracker and an actively managed fund"
Well why not compare to a passively managed fund ( like a consensus fund ).

Investor,
What providers/funds did I use for the comparison? Off the top of my head Quinn/Arklife/Friends/Hibernian/New Ireland/Eagle Star/ILAC. I know there are others ( some even cheaper again, depending on the fund chosen).
 
A

Alan Moore

Guest
P.S

The reduction in AMC was taken into account. They are not the only company offering this type of reduction.
 
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