Use a financial advisor or DIY

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A99_01

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Hi - Last year I paid a financial advisor to review my existing pensions (multiple old PRSA accounts & my current company pension). They recommended that I combine my old pensions & transfer my existing company pension to Zurich & specified the fund to use, the fees I should expect to pay, why it was better etc …….. I would be transferring approx. 350k & then would be continuing to contribute 2.5k per month into the company pension. Overall I was happy with the advice & felt this was a good service I received. My initial thought was that if I was going to follow the advice that I would set it up myself.

After I paid the financial advisor I then got a proposal from them offering to do all this for me. The proposal stated there would be no cost to me & it clearly listed the commission that they would receive for setting this up for me.

My question is
  • Why would I use the financial advisor instead of doing this myself
  • Is there any advantage to getting the financial advisor to do this for me or should I just contact the new pension company myself & say I want to transfer x, & expect the following fees
  • I understand that I wouldn’t be paying the financial advisor’s commission for setting this up & there is no upfront cost to me but is there something that I am missing ?
Thanks in advance
 
I’d now question the validity of the advice you received and assume that the advisor had a vested interest in the suggestions they made. This may not be the case but it’s problematic that the industry defaults to a commission based sales model when what you want is valid independent advice. In many cases the advisor is tied to a single provider. If they don’t have access to the product that are less likely to recommend it.
 
If you went directly to Zurich, you will deal with the direct sales team, who work on commission. It may be more expensive to you.

Using the advisor who did your review, they will know your situation already and be able to do it quicker and properly.
 
I have seen it advised on TV programmes etc to get an 'Independent' financial advisor, it may cost more but they are not tied agents. I think you have to look into the small print with all this.....
 
If you deal with Zurich directly, your charges will be set at a level so that they can pay commission to a broker or to their sales team.

If you have already paid this guy a fee, then he should set it up on what is known as a nil-commission basis, which means that the charges would be lower.

As you know what you want, you could also set it up through a discount broker such as https://www.labrokers.ie/ They won't give you any advice or do a fact find. But you don't need that as you have already had the advice.

Brendan
 
FWIW my experience was that I got some very useful advice from a financial advisory firm who recommended a Zurich Exec pension with an AMC of 1.25%. I contacted Zurich and was offered the same pension with an AMC of 0.75%. There were some other fees by going directly (€3.50 per month fund fee, €5 trustee fee (waived) and early encashment penalties that expire after a few years) but over the lifetime of a pension that I am in the fortunate position of being able to fund aggressively, the savings by going directly are in the many multiple tens of thousands. I'll be able to afford to pay for as much independent advise as I could ever possibly need.

Not right for everybody of course...
 
@A99_01

You paid for a review, only?

No money has exchanged hands for the setting up and servicing of the product?

Have you asked the advisor (that you were happy with and provided a good service) if they would consider setting up the product on a fee basis and what would be the recurring cost of servicing it annually?

It's an absolute myth, when it comes to pensions/savings/investments etc., that you can buy those products cheaper (or on better terms) directly from the company, than you can from a discount broker/intermediary/agent.

It's not a case of 'Financial Advisor or DIY' , you need a regulated broker/advisor/agent/tied-agent/intermediary/direct-sales agent to do/complete the transaction. Every single one of them will not do the tranasction for free. You just have to decide who you're going to use and what level of service you need.

You're in a good position to negotiate terms with a transfer-in of €350K.

Gerard

www.prsa.ie
 
Thanks all for the replies

The financial advisor advised I transfer the 350K to Zurich Life Assurance Executive Pension (Zurich Life International Equity Fund) & said the new contract would be 100% allocation & carry the following charges ,

Annual management fee = 0.75%
Annual pension board fee = €8

He was upfront about his commission fee’s as below,

3% of the transfer value
15% on annual premium

My real question was why would I use a broker to organise this for me when its seems very straight forward to do what “Zenith63” did & contact them directly & get the same or possibly better deal.
 
No matter how good was his advice, I see no sense in a 3% fee on the transfer amount (c€10,500). That's coming out of your €350k. You can negotiate a much better deal.
 
To be fair my requirements were much more basic, I wasn't transferring anything in.

If I was in your situation I'd speak to Zurich and see if they can make it painless to transfer in and if not I would personally happily pay somebody to help me do it right. However without knowing how complex your situation is, those sound like hefty fees you've been quoted - €15000 in year one.

Is that "15% of the annual premium" just for the year they help you with the move or is it an on-going fee to pay for their advice? If you're very near retirement then €4500/annum MIGHT be an OK amount to spend as you'll probably want a good bit of advice, if not then I don't see why you would spend that on the off-chance you need some advice the odd year.
 
Zenith63 said:
Is that "15% of the annual premium" just for the year they help you with the move or is it an on-going fee to pay for their advice?
Click to expand...

I'm familiar with Zurich Life's charging options and I would say that it's 15% for one year and a much smaller percentage in subsequent years.

If a fee has already been paid for the advice, I'd agree that a much better deal can be negotiated for executing this transaction. I'd imagine that an execution-only Discount Broker would be able to do it for far less than a direct sales employee of Zurich Life, but if in doubt get a quote from both channels and see who offers the better deal.
 
A99_01 said:
My real question was why would I use a broker to organise this for me when its seems very straight forward to do what “Zenith63” did & contact them directly & get the same or possibly better deal.
Click to expand...

Because you probably won't be told what the commission is, as there is no disclosure requirement on Executive Pensions. If memory serves, Zenith63 wasn't told at the point of sale.

Plus, you'll probably have early exit charges in the first five years of the contract and, as Conan said, you can negotiate a better deal now, so that you're not suffering from buyer remorse in a few months time.

I really don't understand why you would go direct to the provider for the same deal. What was the main reason you didn't go direct to do the review?

Gerard

www.prsa.ie
 
Thanks for all the replies

From reading the comments above it looks like I have 3 options

1. Get the financial advisor to organise this & then they will get their commission as they advised (10.5K to transfer + 4.5k for year 1 contributions)
2. Contact the sales team direct & try myself to negotiate a better deal & then the direct sales team will get their commission which I understand they may not disclose
3. Look into setting this product up as a fee only basis

My initial query was, was there any advantage in getting the financial advisor to set this up for me & the answer seems to be No,
because from what I understand from the different replies,

option 2 (going direct) "might" give me a better deal as I may be in a good position to negotiate

option 3 (fee only basis) will probably give me a better deal (although I understand this is a different service)

and if I don’t get offered a better deal from option 2 or option 3 then I can always revert to option 1.
 
A99_01 said:
Thanks for all the replies

From reading the comments above it looks like I have 3 options

1. Get the financial advisor to organise this & then they will get their commission as they advised (10.5K to transfer + 4.5k for year 1 contributions)
Click to expand...
What benefit exactly are you getting for 15k ? It's hard enough to build a pension pot without having others dip their beak in it and slurp away. The absolute only reason that I would use a broker for anything would be if it demonstratably saved me money. I just can't see any justification for that kind of fee. Happy to be enlightened.
 
Rasputin said:
The absolute only reason that I would use a broker for anything would be if it demonstratably saved me money.
Click to expand...

I presume you also might use one if you wanted their expertise on an area that you knew nothing about.

Assuming that's not the case here, you might use a broker because they can negotiate lower costs and product charges than dealing with pension companies directly.

I agree fully that the €15,000 suggested above is far too high and as I said above, the OP should shop around for a much better deal.
 
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