Zurich v Wealth management company

My husband and I are looking for some help and advice. We are both retired and have a lump sum of 200k that we want to invest. The Morgage is paid, we have no debts and we have some emergency funds outside of this lump sum and we have our monthly pensions. We have no experience whatsoever of investing and ideally want to put the money somewhere we can get access to at short notice if needed without penalty ; where it makes a reasonable return and we don’t have to worry about managing it on a day to day. We understand the need to invest for a longer rather than shorter period ie 7-10 years.
We’re not huge risk takers. With my husband scoring a level 4 and me a level 3-on one of the Zurich risk assessment tool.
We were considering investing either with Zurich or through a financial wealth management company recommended by a colleague. But to be honest we’re a bit confused and overwhelmed about it all. It seems like the fees for a wealth management company are higher than just going direct to Zurich as they first take a fee and then whoever they invest our money with takes a fee, so I’m not sure the vale of a wealth management compan but We’d be happy to pay the higher fees if it was worth it. We would be most grateful for any direction, advice or help or other suggestions re what to do with our lump sum and thank you for taking the time to read this .

Keep it simple, avoid worrying about possible dodgey wealth firms and go with Zurich, just focus on getting lowest possible fees.There is another live thread on this site ATM where life savings have been lost and one of the questions being asked is why did they invest there. Probably recommended by a colleague I guess.

Zurich is fine but their fees add up and you're limited to their products. A decent financial advisor would be worth it if they're working in your best interests and don't just flog you expensive products... but it's not that easy to be able to tell a good one from a bad one if you don't have much experience, so I can't argue too much with @JoeRoberts advice unless your willing and able to put in some work to vet the advice and maybe look around for other options.

Do watch those fees like a hawk - even 0.25% is €500 a year of your money. Sounds like you should avoid anything with surrender penalties too. If you let us know what the proposed charges and allocations are then you'll get a sense here whether they are good or not.

At the risk of being boringly repetitive, I think that this sort of question can only be addressed properly in the context of a Money Makeover.
There could be some key information missing that would influence any feedback.

Also to be boringly repetitive in relation to choosing where to invest money. (I'm not saying that direct equity investment is necessarily the most appropriate option here but it may be an option to consider).

Shannb1 said:

Sounds like you should avoid anything with surrender penalties too.

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Why do you say that?

Thank you Joe and Shannb1 for your prompt replies.
The fees outlined are as follows:
1. The financial wealth management advisory company will charge us an annual management fee of 1% and then they invest the money, with Irish Life who will charge us another fee ranging from 0.55% to 0.8 %. There is no penalty for early withdrawal.

2 . Zurich outline an annual management fee of 0.85% and there may be a 1% additional charge if we invest in external funds . Furthermore if we select funds from some of their other top-class management funds. eg Blackrock) there would be further charges that vary depending on the fund. (But we are only looking at their base level funds not these ones.) They have recommend an Easy Access fund in particular one called “Auto invest “and suggest that we drip feed the money each month into the investment account rather than investing all of it at the start. (Not fully sure if that’s a good option or not? ) There also is no penalty for early withdrawal. They are suggesting a “60% level 4 medium risk fund and 40% in a level 3 risk fund and as a combined selection would be considered a level 4 selection.”
Thank you again and look forward to hearing your views.

Fortune said:

Why do you say that?

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Just from the original post:

Hourglass said:

ideally want to put the money somewhere we can get access to at short notice if needed without penalty

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obviously you don't want to be taking it out for no reason and its better to be planning to leave it in for the long term, but in case of emergencies it's frustrating to have to pay a penalty to get your money (unless they are giving you extra allocation or lower AMC in return)

Hourglass said:

The financial wealth management advisory company will charge us an annual management fee of 1% and then they invest the money, with Irish Life who will charge us another fee ranging from 0.55% to 0.8 %. There is no penalty for early withdrawal

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Fairly high total annual fees - above 1.5% is steep unless the value provided justifies it. You’re effectively paying for two layers of management: the advisor and the fund manager. To be frank, assuming you've met them then it doesn't sound like they have convinced you of the value they are adding - if they did you shouldn't be feeling confused and overwhelmed.

Hourglass said:

Zurich outline an annual management fee of 0.85%

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This doesn't sound too bad - maybe others could give a view on how this sits these days for a 200k fund. It's definitely more cost-efficient, assuming you stick to their core funds. Are you getting 101% allocation to cover the government levy as well?

Hourglass said:

and suggest that we drip feed the money each month into the investment account rather than investing all of it at the start

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Drip feeding ("euro-cost averaging") is often recommended to reduce the psychological risk of investing everything just before a market drop. It’s especially useful when markets are volatile or near all-time highs. However, statistically, investing a lump sum immediately usually wins in the long run - because markets tend to rise more than they fall, so being “in the market” earlier benefits from compounding returns. A balanced approach could be to invest some (half?) now and drip the rest over, say, the next 6-12 months, but that depends on your own psychology and what you would be comfortable with - how often are you going to be checking the investment, would you be temped to sell at a bad time after a market downturn etc. etc

I don't really have a view on the specific fund mix they have recommended - the Prisma funds are decent I think and on the face of it it's relatively low on the risk spectrum for a 7-10 year investment but as @ClubMan says there could be extra context needed here e.g. around your risk capacity (your financial ability to endure potential losses without significantly impacting your financial goals or standard of living). It kind of depends on what you might want to do with the money as well, things like planning to pass on gifts/inheritances and estate planning might come in to it depending on your circumstances. Maybe the money makeover would be a good option!

Hi Clubman Thank you for your suggestion re doing a money makeover. Hopefully below think below is the information related to same.

We are in our sixties , no kids. We have no mortgage or any debts. We have 70 k in the AIB bank (emergency money); 100k in prize bonds - lodged there a year ago as didn’t know where to put it ; we won € 600 in the year so these returns are not great so we probably need to move these funds elsewhere-. We have no car loans or any loans what so ever and credit cards when used are paid in full each month. We both have defined benefit monthly pensions, which we can comfortably live on and we have our wills made with our solicitor and everything is in joint names.

Hourglass said:

Hopefully below think below is the information related to same.

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You should use the Money Makeover forum and template that I linked to earlier if you want to do a money makeover.

Hi Shannb1, yes we are getting 101% allocation to cover the government levy as well.

Thanks Clubman we actually did a review of finances with an accountant, possibly similar to what you term a “ Moneymakeover” so feel we have covered all the bases for estate planning etc, as much as one can that is but not a bad idea to revisit it again. Thanks to everyone here who has taken the time to contribute to the discussion and shared your advice, it has been really really helpful to us. We intend to go with Zurich. If anyone has any other views or advice re the 60:40 prisma split outlined by Zurich in the image attached previously, if you can share same with us that would also be helpful.

Hourglass said:

If anyone has any other views or advice re the 60:40 prisma split outlined by Zurich in the image attached previously, if you can share same with us that would also be helpful.

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FWIW, I think you’re being too risk-averse with this. The image above says your capacity for loss is medium… but with no mortgage, no debt, defined benefit pensions x2, it’s really much higher than that. Technically you have capacity to lose it all and not particularly suffer…. not that I’d want that to happen to you!

So a significant other risk is that the funds sit somewhere for a very long time, perhaps until your demise and subsequent bequests to family members, say 25-30 years from now. If you do have children, do you want to leave them €200k (in today’s prices) or €850k, or something in the middle? €850k is the likely outcome from 200k invested in equities for 25 years at an average 6% return, which is around about the return you’d have gotten historically after inflation and fees.

The proposed product mix might get you, say, 400-500k in today’s prices after 25 years instead.

Obviously there are many other potential outcomes (e.g. you need the cash in 5 years, your beneficiaries inherit in 15 years, etc), and I’m not outlining the downsides of 100% equities, but mostly because I feel you don’t want to use these funds, you want to keep them in reserve, so they will most likely go to your beneficiaries…. many, many years from now, I hope!

Hourglass said:

If anyone has any other views or advice re the 60:40 prisma split outlined by Zurich in the image attached previously, if you can share same with us that would also be helpful.

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I agree with conor_mc above. Too conservative in my opinion. I had a Prisma 4 fund for most of the last few years when markets have generally done very well. After taxes and charges taken out the returns were very poor relative to what could have been achieved elsewhere.

Set up an account with Lightyear

100k in Berkshire Hathaway ( massive US diversified fund).
100k in world/global Equity Fund.

Costs a dollar to buy the 100k shares in Berkshire ( fx exposure though)

Possibly find a decent global equity with accumulating dividend for 0.07%- 0.1% per year and no charge to buy ETF on lightyear.

* Currently 41% capital gains on ETF disposal in Ireland but maybe brought back to 33% but who know.
* Deemed disposal on ETFs after 8 years....also under review.

WoW ! Thank you Conor_mc and Bagman. What you suggest is very insightful, we hadn’t really thought about it from that perspective! But it makes a lot of sense! We sure don’t want to make money for others to spend after our demise or as they say fund relatives to fly first class in the future!! In light of this we are going to review the level of risk and move risk up the PRISMA ladder! As We do indeed have the capacity to weather a higher level of risk taking.

Persia thank you also for your suggestions but we really don’t want the day to day management of the investment we just want to give it to someone like Zurich to manage it for us.

Hourglass said:

WoW ! Thank you Conor_mc and Bagman. What you suggest is very insightful, we hadn’t really thought about it from that perspective! But it makes a lot of sense!

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Look, don’t come trying to find me if equities take another wobble this year or next…. ….. but if you need it for a care home or something like that in the far future, you’ll be glad you took on a little additional risk. And in the great scheme of things, it’s not actually that much extra risk, even in the Great Depression the market pulled through eventually.

Conor_mc your safe enough . Genuinely though thank you and everyone here for sharing your input and advice and for also making us look at things from a different perspective! This forum is such a valuable resource thanks to all of especially to those of us with limited knowledge on investments etc.

Taking into account the discussions here we have decided to be less risk adverse and are looking at a medium to high risk portfolio more a Zurich PRISMA 5 level with maybe wee bit of Prisma 4. If it’s not too impertinent, could I ask advice at to what asset split would you suggest in the context of a 7-10 year investment? I’m not sure if it’s appropriate for me to ask this question on this forum or if it needs to be posted on one of the other forums. So apologies in advance for posting it here.

Hourglass said:

a Zurich PRISMA 5 level with maybe wee bit of Prisma 4

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It's quite likely that there's a lot of overlap between the two in terms of asset allocation. Splitting between the two may not significantly improve diversification.