What are your pension and investment charges?
Clearly, consumers can benefit from shopping around for financial advice, however, in practice, it may often be difficult or indeed impossible for you to do so. You may not know that cheaper options are available, or may at best be only peripherally involved in the choice of a product and fund.
Intermediary remuneration can be paid by the consumer either by paying a fee directly to the intermediary or allowing commission to be paid by the insurer to the intermediary.
There are typically two types of commission options offered by insurers to intermediaries:
1. Initial commission. This can range from 0% to 5% of the initial amount invested.
2. Recurring or “trail” commission. This can range from 0% pa to 1% pa of the annual value.
For both initial and trail commission, the maximum commission available varies by insurer.
Nelson Life will offer you the option to pay for our services either by fee, via commission or combination of. The size and nature of pension and investment fees in Ireland varies considerably between product provider and advisor.
PLEASE NOTE THAT FOR ALL PENSION, SAVINGS AND INVESTMENT RELATED PRODUCTS , "Intermediary remuneration is paid for from the charges deducted from your contract".
The cornerstones to building a Plan to meet a particular goal are based upon and investment performance and fees/charges. You have no control on performance, however, you can control fees/charges.
Charges and fees can really eat into your fund (see below).
At Nelson life we want you to know, (a) What you are paying, and (b) How you are paying for the advice.
QUESTION: Does "a straight forward pension solution with competitive charges", really offer you value for money?
Many savers have absolutely no idea what they are paying, so to help you here are some of the typical charges we encounter when reviewing existing contracts:
Contribution charge/allocation rate: This is the percentage that is taken out every time you make an investment. This can range between 0.00% - 5.00%. This funds commission.
Advisor annual management fee/fund based commission/Advisor Portfolio Management Fee: This is where the advisor is paid a percentage of your fund each year during its lifetime. This may range between 0.00% to 1.50% per annum.
Annual management fee/platform fee: Pays for your contract management costs. Starting at 0.30% per annum.
Custody and Dealing Fees: These may apply where a customer does not avail of other services, such as financial planning, retirement planning and investment planning services.
Fund management fee: Underlying fee that pays the money manager. Often this is combined with the above - typically between 0.10% to over 2.50% per annum!!!
Exit, Early Encashment Charges and Transfer fees: These vary widely. Typically apply for 5 years. This lock normally ensures that the advisor is paid a larger commission payment OR you receive a lower annual management fee. Either way, there are providers and advisors that do not use these contracts anymore. Important to note here is if you top one of these contracts up, the 5 year penalty starts again on the increase! This keeps you locked in and can be a real problem if require access to funds or early retirement.
Inactivity or "paid up fees": You may have to cease payments onto your pension e.g. sole trader to company, or cash flow. In this instance there are contracts where there is an extra 0.25% per annum added to the existing annual management fee.
Service fee or policy fee: Typically ranges between €0.00 to €5.50 per month. This is charged by the administrator. Does not sound like a big amount, however, for smaller level investments this can represent a big percentage.
Annual management fee: 0.30% to +2.00% Your headline annual management fee for the fund you are invested into.
Want to know more? We are available to discuss your options, and we look forward to hearing from you.
telephone | 091441188 and/or email | office@nelsonlife.ie
RETIREMENT & PENSIONS | INVESTMENTS | FINANCIAL PLANNING | LIFE INSURANCE
Nelson Life Limited trading as Nelson life is regulated by the Central Bank of Ireland.
WARNING: Past performance is not a reliable guide to future performance. WARNING: The value of your investment may go down as well as up. WARNING: You may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. WARNING: If you invest into this product you will have access until you retire (Pension Products). WARNING: The above content does not constitute investment advice, as it does not take into account the investment objectives, knowledge and experience of financial situation of any particular person. Prospective investors are advised to make their own assessment of the information contained herein and to obtain professional advice suitable to their own individual circumstances. WARNING: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for professional tax, legal and investment advice.