Prsa Advise

brian ireland

I have to start a PRSA. Can someone point me in the right direction please. If I just go to a broker are there different fees or hidden fees. Where is the best place to get advise. Thanks.

Toots

A lot of banks will have pensions advisors in their branches, who will set you up on a pension without charging you. You could call into a couple and see what they have to say.

brian ireland

Thanks, I don’t really have much spare time on my hands in the day time, so I was kinda looking for a short cut.
Just thought someone who has been through it will tell me what nasties to look out for. Don't get me wrong I know I have to do it myself, but i am just looking for the voice of experience.

Thanks.

ferga_com

Watch out for charges and avoid going for a "Non Standard PRSA" unless there's a very good reason. (Standard PRSA charges are capped; non-standard PRSA charges are not.) Maximum permissible charge on a Standard PRSA is 5% of each contribution and 1% of the fund per year. Some brokers will offer lower charges than the 5% but the 1% is generally non-negotiable.

If you know what sort of fund suits you, pick a PRSA provider that has the sort of funds you want. If you don't, pick the "Default Investment Strategy" - the PRSA provider invests in higher-risk funds when you're young and then automatically switches to lower-risk assets as you approach retirement age.

Toots85

You have two service options:

1. 'Advisory' - You need help with choosing a provider/company and you are also looking for advice on what fund/s to select.

2. 'Execution Only' - You know what provider/company you want and you are confident enough to select your own fund/s.

The former is going to be more expensive than the latter as the advisor is going to need to be remunerated for his/her time.

You can buy the latter without the contribution charge but the Annual Management Charge of 1% (of the value of the investment fund) will apply.

Toots85 wrote: »

A lot of banks will have pensions advisors in their branches, who will set you up on a pension without charging you.

I'm not so sure about this? Do you mean not charge a fee as well as commission?

Toots

There's a management fee, same as any PRSA, but no commission. At least that's the case with the ones operating out of BOI.

This (under Fees and Charges)would imply that there is a 5% Charge on each contribution on the BOI PRSA. This 5% goes towards remunerating the sales person. They may not call it 'commission' but that is what it is.

dotsman

brian ireland wrote: »

Thanks, I don’t really have much spare time on my hands in the day time, so I was kinda looking for a short cut.

OK, this sentence here shows up a major red flag for me!

A Pension is a life-long commitment that will affect you for the rest of your life and by the time you realise there's a problem it will be too late to do anything about it (ie you're retiring and suddenly realise that there's not enough money in your pension fund to support you for the remainder of your life).

A pension is as big (if not bigger) a commitment than a mortgage. You really need to take all the time necessary so that you are 100% sure of what you are doing. Don't rush into any decision, and try to get as much information as possible.

I'd suggest start here, and after that try lots of different other websites and the websites of pension providers, to educate yourself on all the various types of pensions and what the different providers offer. Then, take the time off during the day and go in and speak to an advisor (or numerous advisors) to confirm that you are making the right decision.

Pensions (and pension providers) are not black and white and it may take some time (and perseverance) to choose the right one for you and your circumstances. After that, you should constantly monitor it's status and adjust where necessary.

Toots

Deleted User wrote: »

This (under Fees and Charges)would imply that there is a 5% Charge on each contribution on the BOI PRSA. This 5% goes towards remunerating the sales person. They may not call it 'commission' but that is what it is.

There's not a charge to the advisor that sets up your PRSA though. You can go into them and have a full review of all your finances, and it's free. You don't have to take up any of their products, but any review or advice they give you is free. You don't have to actually pay to sit down with an advisor. AFAIK, AIB, PTSB etc have a similar service.

brian ireland

Thanks,
ferga_com & Toots85 For you help.

I will take your advise and Study a bit more.

ferga_com

Toots85 wrote: »

There's not a charge to the advisor that sets up your PRSA though. You can go into them and have a full review of all your finances, and it's free. You don't have to take up any of their products, but any review or advice they give you is free. You don't have to actually pay to sit down with an advisor. AFAIK, AIB, PTSB etc have a similar service.

Why do you think a commercial organisation is going to offer you something for free? For one reason and one reason only - as a method of identifying what they can sell you so that they can get their commission.

broker2008

Bank of Ireland Life do charge commission, 5% however you one shouldn't get het up over commission.

You should source someone you can trust, someone who knows what they are talking about and more importantly is around in the years to come to continually advise you for your working life investment vehicle. There is no point in taking advice from someone who will be either gone from the business or moved branch or department in future years - QFA qualified or not.

A decent advisor that charges a fee or takes a commission could/might make you a greater return over the medium /longterm than someone who charges you less or no commission. Just a thought.

Toots

ferga_com wrote: »

Why do you think a commercial organisation is going to offer you something for free? For one reason and one reason only - as a method of identifying what they can sell you so that they can get their commission.

Of course that's why they're offering you the service for free. But that's no reason that you can't use it to your own advantage. As I said before, you're under no obligation to take out a pension or savings product with them. It might be a good idea to go along and speak to one however (in any bank, not necessarily BOI), take the free advice, and then when you're meeting another advisor you'll be a bit more knowledgeable on the subject.

ferga_com

broker2008 wrote: »

A decent advisor that charges a fee or takes a commission could/might make you a greater return over the medium /longterm than someone who charges you less or no commission.

How?

broker2008

ferga_com wrote: »

How?

Liam I surprised you of all people should know

An advisor who continually gives advice and not just at outset, could give advice that works to a client's advantage e.g. advising a client to invest into a geared property fund a couple of years ago and then advising the client to take their gain and switch into say a cash or bond fund and maybe then advise them to switch to another fund for potential growth. (Of course many an advisor has got it wrong over the last 2 years though)

No doubt you've seen the figures of how much extra one fund would be worth if it outperformed another by 1% p.a.

Fund performance is the key indicator unless of course you were comparing say an Eagle Star PRSA which had an allocation rate (throughout the term) of 95% versus one of a 100% :rolleyes:

ferga_com

Are you suggesting that a client should agree upfront to pay Broker A higher charges than Broker B because Broker A claims to have an ability to advise on fund switches in advance of market movements in a client's favour?

Liam I surprised you of all people should know

I know what I can do and I also know what I cannot do.

broker2008

Not at all.

Advice on life, pensions, PRSA's and Investments can be obtained from a variety of sources: eg tied agents (including customer advisors from some banks), intermediaries (brokers & some banks). These intermediaries can be MAI's or AA's. Some of these can be members of Professional Associations, eg PIBA, IBA, IMAF. No matter which category one is in though they may provide advice and for this, may charge a fee and/or commission or even charge no fee or earn commission and then there are those that give no advice - execution only brokers who may or not get rewarded for their time.

Whichever route one chooses one should be aware of the pros and cons of both. eg A customer who takes a PRSA out with BOI is not necessarily worse off or better off than purchasing a PRSA via a low cost or no commission provider.

When I post I am generally providing guidance or sharing my life experiences with other boardsies to enable them to make their own informed decisions or mostly to direct them to where they can obtain the information The most important thing would be that someone realises the merits of taking out a PRSA or pension for the long term.

One of the rules of this forum is not to give advice.

Toots

broker2008 wrote: »

One of the rules of this forum is not to give advice.

Not technically true, by all means, give people advice, but anything that could be considered advertising or soliciting business is prohibited in the Charter. Personally I'd never tell a poster that they should definitely take out X Product with BOI, because I work for them, so I'd consider that I'm soliciting business for them, and would have to infract or ban myself for breaching the charter I'd suggest that they investigate that product for themselves and compare it with other similar ones to see which works best for them. Same goes for any other user of this forum who works for financial service providers.

It also goes without saying, that anyone who does follow up a recommendation given on this forum should also obtain professional financial advice before entering into a product, as outlined in the Disclaimer sticky at the top of the forum. But TBH, that's just common sense.

ferga_com

broker2008 wrote: »

Whichever route one chooses one should be aware of the pros and cons of both. eg A customer who takes a PRSA out with BOI is not necessarily worse off or better off than purchasing a PRSA via a low cost or no commission provider.

I agree. My point is that if a client can buy the same BoI PRSA from Broker A with lower charges than Broker B, s/he should always go with Broker A if the services offered are the same.

Our industry has been blighted for years with sales folk of all types (bank staff, tied agents, multi-agency intermediaries & authorised advisers) who attempt to lure customers into higher charge products for personal gain, peddling the notion that the higher charge product will definitely produce a higher return in the future. I've seen people paying into Non-Standard PRSAs with high charges, who had no idea why they were in a Non-Standard PRSA and for whom the equivalent lower-charging Standard PRSA would have been perfectly adequate.

Sorry for the rant and please don't think I'm suggesting for a moment that you rank among such snake-oil salesmen. Your subsequent post clarifes your point and I fully agree that ongoing services must be remunerated, provided that the remuneration is disclosed clearly and agreed in advance.