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Am I right to be grumpy with my IFA?

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  • 28-09-2020 1:16pm
    #1
    saccades
    Registered Users Posts: 1,256 ✭✭✭


    Not too sure the thread title is correct but...

    My statement arrived for a recently started pension and I had a either a 5% (payments this year) or 1.2% (total amount in) contract charge and I have a 1.00% management charge.

    My IFA hasn't been in touch for 2 years.

    The contract charge is making me quite grumpy, can I dump the IFA and this charge (I presume it's for them as the pension fund fees are the annual management charge)?


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    #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    You can change advisor anytime, but you can't change the contract terms. They and any fees or commission should have been disclosed before sale. Starting another might be worse than carrying on as you are.

    p.s. Advisor should be in touch every year for a review.


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    #3
    saccades
    Registered Users Posts: 1,256 ✭✭✭saccades


    Henry Ford III wrote: »
    You can change advisor anytime, but you can't change the contract terms. They and any fees or commission should have been disclosed before sale. Starting another might be worse than carrying on as you are.

    p.s. Advisor should be in touch every year for a review.


    I'm hunting through all my paperwork (most was by email and I have all that, the prsa application etc) but I have nothing stating a 5% charge on all contributions (which is what I think is happening), I'm putting 25% of salary in so they are raking it in.

    And absolutely nothing from the IFA since it was set up.

    Unless the contract breakage fees are savage it has to better to break it than pay nearly a grand a year to put money into the prsa?


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    #4
    Wuff Wuff
    Closed Accounts Posts: 1,429 ✭✭✭Wuff Wuff


    could it be that your allocation rate is 95% as set by the Life Office and it is them collecting it not the IFA


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    #5
    saccades
    Registered Users Posts: 1,256 ✭✭✭saccades


    Wuff Wuff wrote: »
    could it be that your allocation rate is 95% as set by the Life Office and it is them collecting it not the IFA

    Ah, this is a new term and makes me think my terminology has been incorrect so far. Apologies.

    My company pension goes through a financial company who did a lifestyle assessment and suggested a fund for my pension, I've been calling this the IFA, but they would be the "life office", I do think it's them collecting the 5%.

    Can I move to a different life office? Do I even need a life office or can I arrange a reduction in the amount they collect?

    This clarity is much appreciated, it's really hard to nail things down going through my paperwork and the web.


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    #6
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    Life office means Insurer. A standard PRSA with 5% initial charge and 1% AMC would be reasonably inexpensive.

    Consider what has to be done in setting up and running a PRSA - staff costs, compliance costs, costs of buying and selling investments, actuarial.......


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    #7
    saccades
    Registered Users Posts: 1,256 ✭✭✭saccades


    Henry Ford III wrote: »
    Life office means Insurer. A standard PRSA with 5% initial charge and 1% AMC would be reasonably inexpensive.

    Consider what has to be done in setting up and running a PRSA - staff costs, compliance costs, costs of buying and selling investments, actuarial.......

    I'd be fine with an initial fee and 1% AMC, but only 95% of all the funds I put into prsa get there. There is 5% 'missing" as a contract charge (which excludes the AMC). I think this 5% is going to the firm that suggested the fund and haven't been in touch since.

    That's removing all the fund gains at this early stage of its life.


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    #8
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    5% initial charge and 95% allocation are the same thing.


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    #9
    at9qu5vp0wcix7
    Closed Accounts Posts: 738 ✭✭✭at9qu5vp0wcix7


    Henry Ford III wrote: »
    Life office means Insurer. A standard PRSA with 5% initial charge and 1% AMC would be reasonably inexpensive.

    Consider what has to be done in setting up and running a PRSA - staff costs, compliance costs, costs of buying and selling investments, actuarial.......

    Isn't this the maximum permissible as per standard prsa regulations?


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    #10
    saccades
    Registered Users Posts: 1,256 ✭✭✭saccades


    Jadiel Stocky Businessman wrote: »
    Isn't this the maximum permissible as per standard prsa regulations?

    That's my understanding too, which for the level of service is very frustrating.

    Can I move/change the terms?


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    #11
    Geuze
    Registered Users Posts: 13,108 ✭✭✭✭Geuze


    Henry Ford III wrote: »
    Life office means Insurer. A standard PRSA with 5% initial charge and 1% AMC would be reasonably inexpensive.


    Given that 100% allocation and 1% AMC is easily available, IMHO 95% allocation is criminally expensive.

    Imagine that 5 euro of every 100 monthly contribution you save being taken.

    Then 1 of every 100 in total savings being taken, also.

    There are funds abroad with 0.15% AMC.


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    #12
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    Geuze wrote: »
    Given that 100% allocation and 1% AMC is easily available, IMHO 95% allocation is criminally expensive.

    Imagine that 5 euro of every 100 monthly contribution you save being taken.

    Then 1 of every 100 in total savings being taken, also.

    There are funds abroad with 0.15% AMC.

    Cheap doesn't always mean good. It just means cheap.

    Consider an equity fund. What are the stamp duty and stockbroking costs of buying and selling? What if you turned over the assets a couple of times a year?

    I've seen and advised quite a few clients who used cheap funds and discount brokers but hadn't a clue where they should be invested.


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    #13
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    Geuze wrote: »
    Given that 100% allocation and 1% AMC is easily available, IMHO 95% allocation is criminally expensive.

    Imagine that 5 euro of every 100 monthly contribution you save being taken.

    Then 1 of every 100 in total savings being taken, also.

    There are funds abroad with 0.15% AMC.

    Are these funds simple index trackers?


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    #14
    The J Stands for Jay
    Registered Users Posts: 5,669 ✭✭✭The J Stands for Jay


    saccades wrote: »
    I'm hunting through all my paperwork (most was by email and I have all that, the prsa application etc) but I have nothing stating a 5% charge on all contributions (which is what I think is happening), I'm putting 25% of salary in so they are raking it in.

    And absolutely nothing from the IFA since it was set up.

    Unless the contract breakage fees are savage it has to better to break it than pay nearly a grand a year to put money into the prsa?

    There are no breakage fees on PRSAs. The only way to reduce charges is to move.

    If you advisor is taking commission, they are not an IFA.


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    #15
    saccades
    Registered Users Posts: 1,256 ✭✭✭saccades


    Henry Ford III wrote: »
    Are these funds simple index trackers?

    Yes.


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    #16
    saccades
    Registered Users Posts: 1,256 ✭✭✭saccades


    McGaggs wrote: »
    There are no breakage fees on PRSAs. The only way to reduce charges is to move.

    If you advisor is taking commission, they are not an IFA.

    Thanks, I'm going to move, have talked to a proper IFA and already looking at a 3% drop in fees.


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    #17
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    McGaggs wrote: »
    ...If you advisor is taking commission, they are not an IFA.

    Nonsense.

    Brokers can take payment by means of a fee or a commission (rates vary and can be varied by the Broker) or a combination thereof. All fees and/or commissions must be disclosed before sale.

    IFA is a UK term and has no meaning in Ireland.


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    #18
    The J Stands for Jay
    Registered Users Posts: 5,669 ✭✭✭The J Stands for Jay


    Henry Ford III wrote: »
    Nonsense.

    Brokers can take payment by means of a fee or a commission (rates vary and can be varied by the Broker) or a combination thereof. All fees and/or commissions must be disclosed before sale.

    IFA is a UK term and has no meaning in Ireland.

    From the Consumer Protection Code:

    An intermediary may use the description 'independent'...in its legal name...
    ...and in either of these circumstances, only where the intermediary does not accept and retain any fee, commission, other reward, or remuneration where advice is provided


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    #19
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,638 Mod ✭✭✭✭Henry Ford III


    McGaggs wrote: »
    From the Consumer Protection Code:

    An intermediary may use the description 'independent'...in its legal name...
    ...and in either of these circumstances, only where the intermediary does not accept and retain any fee, commission, other reward, or remuneration where advice is provided

    Rather selective. We weren't discussing legal names btw.

    To repeat IFA as a description doesn't apply in Ireland, and independent Brokers (whose legal name doesn't include the word Independent) can take their remuneration by either fee or commission or any combination thereof.


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    #20
    Wuff Wuff
    Closed Accounts Posts: 1,429 ✭✭✭Wuff Wuff


    maybe one of the resident evils for the build up to Haloween?

    has 7 been done before on plus?


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