Which pension fund

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cremeegg

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I am transferring a UK pension fund to Ireland and a buy out bond has been advised.

The investment advised is in the Standard Life Myfolio Active IV fund. 100% allocation, 1.5% AMC and a monthly policy fee of €5.42. With the pensions adviser "remunerated by SL from within the AMC"

I am looking for a 15 year minimum investment in equities, hoping to achieve market return with low fees.

Does this meet the bill ?

Any comments or advice most welcome
 
Just wondering was it Cornmarket that advised you on the Standard Life Myfolio fund? Curious.
 
monthly policy fee of 5euro. What a joke? over 15 years that's 900! for what? Whats the AMC for?

MyFolio Active IV has a high equity allocation so should return the market. However the most important thing is to get the contract pricing first as this will be the biggest drag on performance. 1.5% AMC is base cost of this contract. There is also the monthly fee. Then there is portfolio and transaction costs for the fund itself. You are probably all in for more than 2% per annum. Its for you to decide if that's worth it?
 
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Is there exit penalties? i.e do you have to keep the funds with them for a 5/6 years?
 
but your 0.75% has no advisor trail as presumably you didn't want that service? If the original poster wants that service it will be dearer which is fine so we have to factor that in when comparing your policy to the one proposed.

I like you believe the AMC is on the high side. I think he shouldn't be paying more than 1.25% as a base AMC if he wants an advisor on board. (Advisor fee would generally be 0.5% so would tally with your policy AMC.)

I have a hunch that there is commission payable as well which is why its up around the 1.5% and not around the 1.25%.

Myfolio is active while vanguard is passive. This is a choice of styles for the investor and some people do value the active management. Again this depends on what service the investor wants.
 
A trail commission is paid out of the 0.75% AMC.

Cremeegg said he wanted to achieve market returns. The best way to archive that is to invest in a simple index fund - not a fund of active funds.
 
Questions:
1. Do you want continuing advice from the Broker? If so, presumably that’s included in the 1.5% AMC (typically 0.5%)?
2.If not then 1.5 % is very expensive for a type of Managed Fund. There are Managed Funds available for circa 0.75%.

If you want the Broker to provide an ongoing service then you must pay for it. If however you are paying a fee for the transfer/ establishing the BOB, then you need to question what ongoing service will be provided if no further funds are being invested on an ongoing basis.
Minimizing the AMC is the best way to maximize returns. Saving 0.75% or 0.50% pa is very significant.
 
Sarenco said:
Looks very expensive to me @cremeegg.

I bought a BOB a few years ago (Zurich) - 0.75% AMC, 100% allocation, no policy fees.

I personally wouldn't be wild about the MyFolio funds. If your goal is to simply achieve market returns, why not opt for the Standard Life Vanguard Global Index Fund?
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I did the same with Zurich. And have no reason to regret it since.
 
Fergal19 said:
but your 0.75% has no advisor trail as presumably you didn't want that service? If the original poster wants that service it will be dearer which is fine so we have to factor that in when comparing your policy to the one proposed.
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I think it’s well worth calling it out any time this conversation comes up on AAM though, it took me a long time when looking for a pension to discover that you can get them “direct” without the advisor fee, pension advisors are not exactly incentivised to tell you this.

Not sure what cremeegg’s pension pot is like here, but if it’s €100k then going from 1.5% to 0.75% AMC would be a saving of €750 every year for 15 years, more as it grows in-fact. They could buy a lot of pension advisory services for that! If it’s €200k or €500k then that extra 0.75% fee is just insane IMHO.
 
cremeegg said:
I am transferring a UK pension fund to Ireland and a buy out bond has been advised.

The investment advised is in the Standard Life Myfolio Active IV fund. 100% allocation, 1.5% AMC and a monthly policy fee of €5.42. With the pensions adviser "remunerated by SL from within the AMC"

I am looking for a 15 year minimum investment in equities, hoping to achieve market return with low fees.

Does this meet the bill ?

Any comments or advice most welcome
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If you have a 15 year investment period, the gross allocation for this policy is either 102% or 103%. The advisor is taking the 2% or 3% (I suspect it's the 3%). If you are paying a direct fee on top of this, he is charging you twice. You are also paying the standard Standard Life amc on this contract with an additional 0.5% broker fee added to the amc. Standard Life have lots other contracts that have no monthly policy fees either. It appears you are paying the most expensive contract they have.

If you want the market, invest in the Vanguard Global Equity Index. You'll also get a 0.1% rebate on the amc from investing in the low cost fund.


Steven
www.bluewaterfp.ie
 
Zenith63 said:
I think it’s well worth calling it out any time this conversation comes up on AAM though, it took me a long time when looking for a pension to discover that you can get them “direct” without the advisor fee, pension advisors are not exactly incentivised to tell you this.

Not sure what cremeegg’s pension pot is like here, but if it’s €100k then going from 1.5% to 0.75% AMC would be a saving of €750 every year for 15 years, more as it grows in-fact. They could buy a lot of pension advisory services for that! If it’s €200k or €500k then that extra 0.75% fee is just insane IMHO.
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You will deal with a tied agent who works for the life company. They will charge you instead of an advisor who can offer any contract on the market. Life companies rely on the broker market for their business. They are not going to undercut the broker market by offering cheaper contracts directly (although I work on the assumption that this will change at some point in the future).


Steven
www.bluewaterfp.ie
 
SBarrett said:
You will deal with a tied agent who works for the life company. They will charge you instead of an advisor who can offer any contract on the market. Life companies rely on the broker market for their business. They are not going to undercut the broker market by offering cheaper contracts directly (although I work on the assumption that this will change at some point in the future).
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All I can say is that while looking around for pensions, 1.25% AMC was common enough. I contacted the pension provider directly and now have the exact same pension setup at 0.75% AMC.

I do fully accept that the advisory services with this direct approach are much more limited than going through a broker and this is a call people need to make themselves. I also understand that brokers have to wait a long time to actually make money at 0.5% when pensions start from.

However looking at a 25 year build up towards a €1m pension that extra 0.5% AMC represented €60k in advisory fees; I personally felt more comfortable buying advisory services myself as required, doubting I will get anywhere near €60k.
 
However that's all good if you know what your doing. most people don't and an advisor is essential and worth the 0.5%. I just hate when they don't disclose their fees and commissions!
 
Fergal19 said:
However that's all good if you know what your doing. most people don't and an advisor is essential and worth the 0.5%. I just hate when they don't disclose their fees and commissions!
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It’s definitely personal choice and pensions are complex and big financial decisions.

I’m just calling out that 0.5% becomes a very big number over 20-30 years and as a pension pot grows. You can still consult and pay for an advisor separately and people should ask themselves whether they think they’ll need more than €60k+ of those services over the lifetime of a pension.
 
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