The impact of charges on your investment, savings and pension fund.
Clearly, you can benefit from shopping around for financial advice - in practice this may often be difficult.
You may not know that cheaper options are available or where to go for advice. Unlike other advisors, Nelson Life are not tied to one particular company and we have access to over 20 different product providers.
Nelson Life offer advice on a fee or a commission basis. We will discuss the options available to you.
We prefer to offer contracts that offer a better opportunity to increase the profits on your investment and pension monies. We offer:
clear pricing and charges.
clear commission and / or fee payment for your policy set up.
clear annual advisor management fee for the monies you have placed with us.
no early fixed encashment charges.
no fund switch costs.
access to trusted financial asset managers.
We offer the option to pay a fee for an investment and pension review.
In return you will receive a report outlining investment options, the impact of on going charges on your financial product and suggestions on how it may be possible to improve the structure of your contracts.
Performance and charges
The two main factors which will determine the outcome of your pension fund, your savings or investment bond are (all other things equal)
Investment return (the higher the return, the more money at maturity) and
Charges (the lower these charges are, the more money at maturity).
Performance of your pension, savings or investment bond has a big impact on the outcome of your financial product. However, performance is to a large degree uncontrollable.
The fees and charges deducted from your policy are controllable and negotiable.
The charging structures used in insurer products can be complex, making it extremely difficult for the average consumer (or even their intermediary) to determine the relative charge status of any product compared with other similar products in the marketplace. To complicate things further the product providers have multiple charging structures for the same product - to suit customers and the advisor.
Impact of charges and how you can compare
Reduction in Yield (RIY) is used as a way of expressing the impact of all charges on a plan. For example, a RIY of 1.00% would have the impact of reducing a gross growth rate of 6.00% down to 5.00%. Reduction in yields are increased by initial commission (deductions made against your investment) and the deduction of an annual advisor management fee.
The provider may refer to the On-going Charges Figure OCF. This highlights the impact of costs against your returns.
Financial Advisor Fees and/or Commission
Remuneration to the financial advisor can be paid by the consumer either by paying a fee directly or allowing commission to be paid by the insurer to the intermediary. There are currently two types of commission options offered by insurers to intermediaries:
Initial commission: This can range from 0% to 5% of the initial amount invested. This is deducted from your pension investment/transfer, savings or investment bond.
Advisor annual management fee/fund based commission/Trail 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 1.00% per annum.
Annual management can be paid for a fee or an annual based payment, which is deducted directly from your investment fund. For both initial and trail commission, the maximum commission available varies by insurer.
Product Producer Charges may include combination of:
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.
Annual management fee/platform fee: Pays for your contract management costs. Typically starting at 0.30% per annum, however, some providers will have higher starting point.
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!!! if you switch fund, from standard to non standard, this may increase.
Exit and transfer fees: These vary widely and 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 - preferring to charge a fee instead. 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.
Annual fund management fee: 0.30% to +2.00% Your headline annual management fee may not be the actual fee, if you are in a non standard fund.
Bid/offer spread: When first investing in a fund, the investor may pay an initial charge to cover the costs of setting up the policy. The initial charge is expressed as a percentage and is the difference between the price at which units in a fund are bought and sold.
Want to know more? We are available to discuss your options, and we look forward to hearing from you.
Our job is to help you choose a product and structure that will help you meet your goals.
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.