Zurich v Wealth management company

Sorry I may have phrased the question incorrectly. In the previous portfolio suggested by Zurich (image added) the following breakdown in assets splits was suggested. I was just wondering if there may be a better way of dividing the assets split now that we are somewhat less risk adverse. If that makes sense…
 

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Tbh, I don’t know why they’d recommend a mix of funds. Their funds are already a diversified mix of assets. To me, Prisma 5 with 79% world equities is plenty diversified for your situation, and even a little too conservative if I was in your shoes. I’d only be looking at Prisma 4 if I needed a slow and steady growth rate, i.e. if I had to draw an income from it.

I’m not trying to push you into a risk category you’re uncomfortable with, but I personally would consider Prisma Max. So you should be fine with Prisma 5 imo.
 
It's a bit of a jump in your risk appetite since Tuesday . Your investment horizon of 7 to 10 years is quite short to plunge 200k into this mix in one go when markets are still quite high despite the recent pullback.
 
JoeRoberts said:
It's a bit of a jump in your risk appetite since Tuesday . Your investment horizon of 7 to 10 years is quite short to plunge 200k into this mix in one go when markets are still quite high despite the recent pullback.
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Seems to me, but @Hourglass can comment, that the timeframe is more like minimum 7-10 years in reality? Even still, is an 80:20 mix that risky over that timeframe? Particularly when @Hourglass clearly has the capacity (time - only in their 60’s, defined benefit pensions, no mortgage/debt, 70k rainy day fund elsewhere) to recover by just leaving the investment in place for longer.
 
But they have worked all their lives and made good savings. Do they need to be trying to make a profit from their savings or should they just seek enough to protect against inflation. If the former then work away and Irish whiskey investments may be good value now based on some other threads.
 
It’s up to them really - I’ve just outlined what I would do in their position and raised questions (rightly so, in my opinion) as to what their real capacity for risk is. Whether they take on that risk is their decision, but it’s now an informed decision and not based on a limiting belief (as in “we’re risk averse type of people”).

The comparison to whiskey investments is disingenuous and confusing. A globally diversified fund of 80% equities and 20% bonds/others is in no way analogous to a specialised investment like whiskey, watches, fine art, or anything like that.
 
conor_mc said:
A globally diversified fund of 80% equities and 20% bonds/others is in no way analogous to a specialised investment like whiskey, watches, fine art, or anything like that
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Those that piled into whiskey a few years ago obviously thought different . My simple point is that the OP arrived on this forum with a reasoned risk profile already established, to seek an opinion about using a wealth mgmt company or Zurich for that profile. But in a matter of 2 days they leave with a totally different risk profile. That's not right.
 
Quite likely another case of an XY problem - very common here on Askaboutmoney and generally in life...

XY problem - Wikipedia

en.wikipedia.org
 
They leave with a better understanding of their tolerance for risk, and a better understanding of long-term risks (underperformance, nursing care costs in their 80’s) over short-term risks (an impending market crash).

Nobody made them change their minds, they came to their own conclusions based on reasoned argument.

You have a view that matching inflation is sufficient, I have a view that with no want/need to spend this money on the horizon that they most likely will need it (and possibly more) to fund nursing care in a good many years from now, or not need it at all. In either of those two scenarios, they risk very little by being invested for an appropriate timeframe at an appropriate risk level.

I merely challenged their self-limiting beliefs that a) they are risk-averse folks and b) whether their timeline is actually 7-10 years. In good faith and with zero ulterior motive.

I reject that there is anything “not right” about that.
 
Just an example of a toned down level to ESMA 4.

I’d sleep better in today’s increased uncertainty by drip feeding in half over six months with the other half held in a six month fixed term BOI ? account while waiting to be invested.

The use of 50% Prisma 4 and 50% Prisma 5 wouldn’t be to increase diversification but to rather dial down potential volatility to a 4 with 60% in equities.
Can be tweaked further to where you feel comfortable.
Sleep is important .

I don’t work in financial services.

[Edit]. I’ve since noticed that with the estimated volatility level of 11.42% on this sample portfolio the ESMA risk rating should be in fact the lower end of ESMA 5.
 

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Deauville said:
I’d sleep better in today’s increased uncertainty by drip feeding in half over six months with the other half held in a six month fixed term BOI ? account while waiting to be invested.
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Why would one have such a convoluted strategy for an investment timeframe of min 7-10 years and more likely 20+ years? What you’d save on the over-complicated short-term drip-feeding tactic, you’d lose on underperformance over the long-term with 40% bond/other exposure. It’s like double-conservatism. Either mitigate the risk of imminent market correction by dollar-cost averaging or by diversification, there’s really no need to do both…. or either, if your likely timeframe is 20+ years.

Also worth pointing out that the purpose of non-equity exposure is already met for the OP by having not one, but two(!) Defined Benefit pensions - probably with a portfolio value in excess of €1m each. With fully paid-up mortgage, probably 2x state pensions (another €400k each) and already having 70k in rainy day cash, it really doesn’t make sense to not be 100% all in on equities for the long haul with their 200k, it’s just about 7% of their retirement portfolio based on assumptions above. Dialling down to Prisma 5 is already a conservative concession imo.
 
If I had the same guaranteed income and 20 year potential investment timeframe I’d go 100% global equity.
However,
each of us tend to comment with ‘I personally would’, ‘I’d be comfortable with’, ‘If it was me’ ‘…….
But that’s just it. We bring our own knowledge, understanding, experience and biases to the party.
Each of us has our own level of risk tolerance. I suspect that even we as individuals don’t really know what that level is until we’ve been there and been tested.

How we subsequently react to volatility and even a market melt down will be a personal thing.
Even if we are aware of the potential biases, it may not guarantee we avoid being victims to them.

We need to imagine negative scenarios and think about how we would feel and how we would react.

Risk profiling tools are pretty basic and crude instruments of assessment but should at least be considered and taken into account in association with a conversation with a good advisor if you’re lucky enough to find one. They are out there.
 
I don’t disagree with much of what you say there, except to point out that there is a distinction between the level of risk that our financial needs/plans can tolerate, and a level of risk our individual psyche’s can tolerate. Much of what I have advised in this thread has focused on the former. Up to OP or any other reader to take that and roll it up with their psychological capacity for risk and decide the right thing for themselves.
 
Annulalized returns on Prisma 3, 4, 5 over the last 7 & 10 years net of all charges/costs and an AMC of 0.85%

P3 - 3.1% & 2.26 (currently 22% equities)
P4 - 6.51% & 5% (45% equities)
P5 - 9.85% & 7.47% (74% equities)

Fund Sizes (circa) €2.7bn in P3, €5bn in P4 and €4bn in P5

At a guess, I would say that P4 is larger because it is advised a) in the ARF sphere because (psychologically) people want to try and (safely) preserve the capital and b) in investments bonds because they 'just' want to try and do better than deposit rates/inflation.

It's kind of the same psychological reason why someone would look for a medium/long-term savings/invesment product and also pay more to have a no exit charges contract in the first couple of years of the contract. It would make no sense to an execution only customer but probaby would to an advised client.
 
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GSheehy said:
Annulalized returns on Prisma 3, 4, 5 over the last 7 & 10 years net of all charges/costs and an AMC of 0.85%

P3 - 3.1% & 2.26 (currently 22% equities)
P4 - 6.51% & 5% (45% equities)
P5 - 9.85% & 7.47% (74% equities)
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Really interesting, thanks for sharing this.

Having mentioned my disappointment with returns from a long term Prisma 4 investment previously there are 2 things I note from the figures there.

1. The importance of going with an execution only broker if you have the necessary knowledge to choose the investment yourself, my AMC was 1.5% (I was new to investing!) so 5% annualised return for Prisma 4 in your figures becomes 4.35% for me.
2. The impact of exit tax. Take off exit tax from those figures and its down to approx 2.5% net annualised over 10 years for Prisma 4. Over a period of considerable growth in the market that is not great and thats before inflation is factored in.

I suppose my point again is, over a longer period, particularly if you decide to take on some risk by investing rather than saving, a higher equity fund like Prisma 5 is probably the starting point. Whether an investor wants to go further in terms of risk totally depends on what they are comfortable with themselves.
 
And the option of investing directly in equities for the even lower charges and better tax treatment should be never be dismissed.

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...
www.askaboutmoney.com
 
Thanks to everyone here for all your helpful advice and comments. You have certainly enhanced our understanding and knowledge on making investments and given us a lot to think about. And thank you GSheey for providing that very useful information on the breakdown of previous investment returns on the various Prisma funds. Much appreciation everyone!
 
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