Now Ye're Talking - To a Financial Broker

I'm A Financial Broker, AMA

bungaro79 wrote: »

thanks for the great info so far.

what would you say are the top 3 things someone in the 30's, with a young family and 5 years into their mortgage, needs to have sorted financially?? and where are people getting ripped off by their lack of financial knowledge ??

If we consider Mortgage, Life Assurance, Serious Illness cover, Income Protection, Savings, Investments, Pensions as the list:

• Life Assurance
• Serious Illness
• Income Protection or Mortgage

Savings and Pensions are provisions for the future, illness/death covers are provisions for unforeseen events that require immediate financial assistance. Many people dont value these covers and consider them dead money. As somebody who sees the benefit these covers gives to people who make claims on them, I can tell you that they are important considerations for people who have dependents and worthwhile policies for people who claim!

Are people being ripped off with lack of financial information? I think it certainly leaves them exposed to being ripped off and poorly advised but I dont necessarily think it means they will be.

I think of it like buying a car. I havent a clue about cars and wouldnt be confident buying one directly of a person (without any warranty/security). I would either bring along a mechanic friend I trust or buy off a reputable dealership. That way I reduce my chances of being ripped off. I feel its the same with these products. If you dont have the knowledge find somebody who you (or a family/friend) believe you can trust and piggyback on their knowledge.

I'm A Financial Broker, AMA

orthsquel wrote: »

Very interesting AMA, thanks for the responses!

You mentioned and I've interpreted that the best way to get a broker is by getting a recommendation and see how you get on with them... what if you don't know anyone who knows or engages a broker? How would someone best go about finding one? (I wouldn't necessarily trust what google came up with) I did find the IBA and the PIBA, both which are representative bodies for Brokers, I don't see what the difference is and am a bit puzzled that there are two separate entities doing the same thing (I found IBA first last night and PIBA just now) but both provide a database of Brokers (members) to choose from. Is there any difference from a consumer's point of view?

Its not an easy question to answer but Some people feel better contacting the financial regulator directly. I must disclose that I am friends with one of the brokers whom they recommend people consider.

PIBA and IBA are just two separate broker associations . I dont think there is any benefit choosing a broker from either as I don't really think either organisation is anything special/differant from the other.

I'm A Financial Broker, AMA

secman wrote: »

Just reviewed my annual statement from my life assurance provider... as well as having the main policy on myself and wife there is a policy referred to as a Cap policy. The monthly payments have jumped considerably over the years, but the pay out remains the same , unlike the main life cover policy which is indexed. I looked at the current encashment value and took into account what I would pay over the next 7 to 10 years.. I would only get roughly the same
Current value plus my monthly instalments back in 7 to 10 years from now
But the buying power of the current encashment
Value would be greater than that of the future value. Seems a no brainer to cash it in now.
Don't get the purpose of a CAP policy ?

This sounds like a reviewable whole of life policy. Without seeing specific conditions of the policy I can only speak from a general perspective.

In short, these policies are no longer available in the mainstream market. They usually start off cheap and in later years become extremely expensive (when people need them the most!).

These policies were, in my opinion, rip offs to the core. A certain element of your premium went towards a savings plan and every 5 or 10 years there would be a review of the cost of your cover. The life company would, at that time, determine a new cost for the cover and dip into the savings to reduce any increase in cost (ie - savings value would go down and the monthly premium would remain the same).

If your health is good, I recommend that most clients try to get alternative, fixed Life cover as a direct replacement to these covers. Life cover and savings should be kept seperate in my opinion and I cant think of any example off the top of my head that works out better for clients (when you are leaving reviews of cost up to the life company!).

I'm A Financial Broker, AMA

ken wrote: »

I have €500 to invest in cheese. Which cheese would you recommend?.

Cheese made from Balkan donkeys

I'm A Financial Broker, AMA

RedXIV wrote: »

When should I look into engaging with a financial consultant? I'm on a good salary with 3 kids, no mortgage at 28. Have a rough plan but never gotten any financial advice before.

The first question to consider is "why do I need to contact a financial consultant?". What do you feel that you might get from the experience? (ask yourself that, you dont need to post it here).

One of the reasons, I gather, that many people dont ever contact a financial consultant is because they are concerned of being pressured into buying stuff they dont want/need. There are brokers/advisers out there who will put you under pressure.

But, if you remain clear about your goal, you can set the tone of your relationship. Contact a broker and say your goal is to do up a long term plan for your family.

I am not primarily a fee based broker but offer the service. In short, people discuss their financial circumstances, fill in a financial factfind and I make a recommendation. We agree a fee (maybe €100-€200 depending on work required) and they decide whether they want to take up the advice or not. If you know an accountant/adviser ask them if they would help advise on same for a fee.

I'm A Financial Broker, AMA

FURET wrote: »

What expertise do you feel you have, exactly?

How would you make the case to yourself for recommending actively managed funds over low cost passive index trackers?

And now, how would you make the case to your clients for actively managed funds over low cost passive index trackers?

Also do you think that having a client who is ignorant about investing fill out a questionnaire is a satisfactory way of gauging their ability to take risk?

I have changed doctors in the past. Not because they dont have the relevant/same qualifications, but because I felt more comfortable with the advice and techniques of my current doctor. If people dont like a certain aspect of how I do business, they are entitled to move to a different broker. I make no apologies when I say I will succeed or fail based on my ethical , moral and professional conduct.

If you want a broker to be extremely good at academics and getting qualifications, you might not be comfortable with me only getting the QFA's. If you want a broker who is meticulous in dealing with technical queries, has over 15 years experience working in the industry and questions/challanges conventional wisdom (instead of just learning about it from a book or being told what to sell from major companies), then you might appreciate my service.

I have a good size clientbase of people who value my advice and service. I have never had any complaints (even when investment values have gone down) and once my clients value my expertise, I will continue to remain in my position. In short, its not for me to quantify my expertise, my clients will determine its value by remaining and referring me to others or by finding another broker.

I don't make any case to myself regarding actively managed funds versus low cost passive index trackers. If a person is availing of my services, they see the companies I deal with. I don't believe I have an obligation (ethical or professional) to have a broad knowledge of every possible other option for a client. I am specialised in the services I advise on so focus on improving my knowledge and competency in this regards.

If people clearly need to keep their money on deposit, I recommend they consider banks or post Office (I am not permitted to professionally advise on products I dont have an agency on!) . If a person wants to go outside the mainstream companies I advise on, I recommend they contact an alternative broker or stockbroker. When a person contacts me they can find out quite easily (my website or terms of business) the companies that I give advice on.

In relation to your last question, I have plenty of clients who don't want to fill in the investment questionnaire (the look on their faces when I hand it to them!). However I think its a reasonably informed/educated way of determining a clients risk then the way it used to be. It might not be perfect, but then again Investing money is always a gamble so it stands to reason that determining your aversion to risk would be a prudent step.

I will give you an example of why there is no perfect way to determine a persons risk aversion. I had one client come to me September year ago. At that time we were reviewing their Pensions. They are in their 50s and I was talking to them about considering protecting their capital for their retirement (reducing risk). They were unemployed at the time, feeling low and wanted to go entirely into Cash. It didnt matter what i recommended, they FELT low and didnt want risk.

I met them 7 months later and they had a job and were flying. They wanted to move their pensions into medium-high risk. They were FEELING braver. My job is to help this person take an informed, professional approach to their Pension. Its not easy and a questionnaire they complete in September was different from a questionnaire that they completed 7 months later. In the absence of definitive , consistent targets of this client, i default to a conservative low-medium risk strategy based on their retirement age (for pensions). The client doesn't have to take my recommendations (they did in this case), but that's my advice.

gormdubhgorm

Isn't investing in high risk stocks just a form of gambling? Only that it sounds better when you can tell people have have x,y or z stocks. Instead of saying I put a few bob on a treble at the Galway races..

Second question are financial brokers required for a layman to deal in stocks?

Thirdly is it possible for "non-broker" to educated themselves on investments so they would not need a broker?

December2012

So I had a chat with the other half, who is self employed and the main earner. He feels that income protection insurance is prohibitively expensive for us, but now I'm not so sure. I'm an employee but wouldn't get my income paid.


I've asked around and nobody I know has it or has a broker to recommend. So how do I find somebody impartial to talk to that will be value for money?

I'm A Financial Broker, AMA

gormdubhgorm wrote: »

Isn't investing in high risk stocks just a form of gambling? Only that it sounds better when you can tell people have have x,y or z stocks. Instead of saying I put a few bob on a treble at the Galway races..

Second question are financial brokers required for a layman to deal in stocks?

Thirdly is it possible for "non-broker" to educated themselves on investments so they would not need a broker?

1. I think investing in high risk stocks is a form of gambling. That's one of the reasons I don't get involved in stock picking/recommendations. In saying that, its a gamble putting your money under your mattress (that your house will burn down or get robbed), so it could be argued that anywhere you put your money is a calculated gamble of sorts.

2. I would presume Stockbrokers are usually more informed and appropriate for people looking to deal in specific stocks. I believe there are options for people to engage in "execution only" stock investments with stockbrokers. This is where you pay less if you don't get professional advice on where to invest your money.

I think I saw an option to invest in stocks/shares once on my online banking system but never investigated any further!

3. It is very possible for laymen to educate themselves so they don't need a broker. Like a self employed person doing their own accounts, its possible to get a good grasp of investments at a basic level. The main benefits of using a broker (even if you know your stuff), is that they can normally get better deals then a direct client can get and they can sometimes be more objective in their advice then a person will be about their own financial dealings.

You mentioned gambling earlier. If you are a person that may take more risks them you can actually afford, having a financial broker assess your risk profile and recommend a suitable investment strategy can sometimes protect people from themselves.

I'm A Financial Broker, AMA

December2012 wrote: »

So I had a chat with the other half, who is self employed and the main earner. He feels that income protection insurance is prohibitively expensive for us, but now I'm not so sure. I'm an employee but wouldn't get my income paid.

I've asked around and nobody I know has it or has a broker to recommend. So how do I find somebody impartial to talk to that will be value for money?

Some people contact the financial regulator and ask for impartial brokers. I suppose some people might phone up one or two brokers and get a feel for them.

I can try and give you a basic understanding of an Income protection application so you can at least have some confidence discussing it.

The following details are the most important in determining the cost of Income protection:

• Age
• Smoker Status
• Amount of Cover
• deferred period
• Job specification
• Normal Retirement Age (NRA)

In many cases, people look for an NRA of 65 (but you can go as low as 55) and they change the deferred period to suit cost. Deferred period is the time that elapses before a payment can be claimed on a policy.

The specific Job a person does can be the biggest factor. If you are in an office job (like accountant), you should have a low occupational rating. If you are working as an engineer in high rise buildings or cranes, you might get declined.

Different companies can be cheaper depending on all these variables. I seldom advise on Indexation on these policies because they can be costly and sometimes the cheapest company at the start ends up being the most expensive.

I would also recommend that people (if possible) avoid the "reviewable" income protection plans and request fixed rate quotes. They can also be costly after one or two reviews!

If your partners income fluctuates a lot annually, ask about New Irelands confirmed income option on their Income protection.

In short, Income protection can be expensive, however there are plenty of things you can do (if your health, job spec isnt the problem) to reduce the cost and get at least some cover!

Trabejo

sell me this pen?

I'm A Financial Broker, AMA

Trabejo wrote: »

sell me this pen?

I will consider offers.

diomed

How much is the up front fee?
How much is the annual fee?
Are you allowed tell people not to invest because the market is too high?
Why would people not do their own investing?

Galwayguy35

Are you a Guinness man?

I'm A Financial Broker, AMA

diomed wrote: »

How much is the up front fee?
How much is the annual fee?
Are you allowed tell people not to invest because the market is too high?
Why would people not do their own investing?

There is no set in stone up front fee or annual fee right now with me.

Most of my clients were inherited from a long standing family business. I have adopted this model (mostly commission based) for the time being. I am aiming, in the longer term, to become a more fee based broker. Ideally, it would be something like €15-€20 a month that would include annual reviews and your own personal broker (that you contact as you need).

I would love to get to the stage where I don't rely on any commissions (can pass entire savings back to clients), but it is hard for a small brokerage to implement these kind of changes.

In some cases I have clients offering to pay me money even when I get paid commissions (they feel bad because in their mind they paid me nothing). In other experiences people want free advice.

I spoke with one new potential client twice on phone in the last week (for over an hour) and did up a financial review for her (spent over 3 hours sifting through the personal information she had provided). When it came to giving her a recommendation I quoted a price of €195 for all work done to date, to include a meeting (in local vicinity) and a professional recommendation. Haven't heard back from her to date. People are entitled to not value my service/expertise just like I am allowed to put a value on it that you can choose decline.

I am allowed to inform clients that they should not invest if markets are too high. I must stress though that I don't get into the game of trying to predict market fluctuations. One of Warren Buffets most famous quotes is that people should "be fearful when others are greedy and greedy when others are fearful".

So the question is not "when is a good time to buy", its how risk averse is an individual investor at any given time and how long are they willing to sit on their investment decision. I have one client right now leaving his money in cash because he wants to "wait until this China thing sorts itself out". He is a nervous, low risk investor who is doing right by how he feels. Some would argue that its the perfect time to make a killing (with unit prices low), but thats a financial viewpoint that does not factor in the individual clients aversion to risk.

I will answer your last question with a question. Why would people not learn to fix their own cars or do their own accounts? Why would people not represent themselves in court if they were in trouble?

People will pay others for peace of mind and for an extra layer of protection on areas they are not fully confident on doing themselves. Paying somebody else to make important decisions or represent you professionally is even worth considering when you know your stuff.

Investments isn't always just about knowing your stuff and investing in the right things. Its not easy for everybody to take their emotion out of the equation when making investments. Many people don't have the confidence to make such big decisions.

My clients trust my advice, appreciate me making informed recommendations and in essence pay me for the knowledge and experience I have gained working in the industry for over 15 years.

I'm A Financial Broker, AMA

Galwayguy35 wrote: »

Are you a Guinness man?

Used to drink the black stuff, but now I prefer sparkling water with a dash of lime... Been on a massive health buzz for last few years . .

evolving_doors

Have you ever used any of the maths (or business!) you sat through school or is it all mainly just percentages and ratios you use?

I'm A Financial Broker, AMA

Gebgbegb wrote: »

Have you ever used any of the maths (or business!) you sat through school or is it all mainly just percentages and ratios you use?

Its been 15+ years since I was in regular full time education so I am not sure I can give you a definitively objective response on that!

I enjoyed maths and I enjoy working with figures and ratios. I feel that this side of maths does help in this profession and its one of the reasons I would probably consider accountancy if this doesn't work out for me! There are some crossovers with accountancy practises (tax relief, tax incentives, tax penalties. inheritance issues, tax loopholes!).

I cant honestly say off the top of my head if there was much I learned in my Business Degree, that would be a huge help in this job on a regular basis.

I feel that school/college/professional exams helped me get a solid general understanding of business. However, I feel I work best and learn more when I have specific challenges/queries/problems to work on as opposed to abstract like information that doesn't mean anything to me.

I hope that answered your question ?!

diomed

I'm A Financial Broker, AMA wrote: »

I will answer your last question with a question. Why would people not learn to fix their own cars or do their own accounts? Why would people not represent themselves in court if they were in trouble?

1) fix car
The cost of car repairs and servicing is minor. The downside of doing the work yourself is major: expensive damage; accidents
2) do own accounts
I could do my accounts. I am a Chartered Accountant. Preparing accounts is not difficult with computer software packages.
3) represent themselves in court
Knowing the law takes plenty study of acts and cases, and experience to present a case. Again the downside is large.

Why would people pay for investment advice?
The advice costs money. The adviser does not have any special information.
The investor pays for initial advice, probably pays an annual fee, and if there are losses the investor also takes that cost.
The investor thinks that by asking someone for advice they are protecting themselves from mistakes.

beauf

I don't under stand what you mean by "special information" In all cases, You pay for other peoples time and expertise. To reduce the potential for making mistakes, and usually get a better result than you would yourself, and to save yourself time. The risk is, IMO that the person you pay for the service may have objectives, not aligned with your own.

A question for the Broker. What's the best means evaluate a advisor track record.

I'm A Financial Broker, AMA

diomed wrote: »

1) fix car
The cost of car repairs and servicing is minor. The downside of doing the work yourself is major: expensive damage; accidents
2) do own accounts
I could do my accounts. I am a Chartered Accountant. Preparing accounts is not difficult with computer software packages.
3) represent themselves in court
Knowing the law takes plenty study of acts and cases, and experience to present a case. Again the downside is large.

Why would people pay for investment advice?
The advice costs money. The adviser does not have any special information.
The investor pays for initial advice, probably pays an annual fee, and if there are losses the investor also takes that cost.
The investor thinks that by asking someone for advice they are protecting themselves from mistakes.

Most car repairs are minor, the average person could educate themselves to maintain their own servicing of their cars. As you confirmed, the average person could educate themselves to do their own accounts. As I said in previous posts, the average person could educate themselves, to a standard that wouldn't require a financial adviser. The point I am making is that many people choose to pay professionals to do that work for a similar reasons.

People come to me for advice when they lack the confidence to make major financial decisions with their money or when they dont want to make that decision them self (for their own personal reason). I help people understand the level of risk they are taking with certain investment decisions and help guide them into investment strategy that matches the risk they are comfortable taking. I am also with them during their investment journey (got a call earlier today from a client who wanted to ask about how the current volatility was effecting their fund). Most people don't want to keep an eye on investments and don't want to "play the markets" themselves.

Anybody who takes my advice, pays no more (annually/initially) in fees then they would if they did the work themselves and went directly to the investment providers that I recommend. The investment companies include financial broker fees in all their products, so even people doing business with them directly are paying the same fees they would if they used a broker.

I met a gentleman at lunchtime today who trusted his bank with financial investment advice a couple of years ago and got burned badly. He is 77 years of age and they advised him to invest in a medium/high risk investment. He could complain and would have a great chance of winning his money back , but he does not want to for his own reasons.

He only disclosed this information when I started to go through a risk profile questionnaire with him and one question was "If you lost 20% or more of your investment, what would you do?".

Now, this does not mean I will give him amazingly perfect advice, but what it does mean is that the investment strategy I recommend will be more suited to his appetite to risk. It also means that he is much less likely to get the surprise/shock if the fund goes down. It is not perfect and does not "prove" that a financial adviser is a perfect profession, but if you are a competent, knowledgeable adviser, clients will certainly have one extra layer of protection when making big investment decisions.

I met him two weeks ago to discuss his financial status. I met him today to reaffirm what we discussed 2 weeks ago and see if he had more questions. I am posting him out a 3-4 page explanation of what I am recommending him do and information about these funds. I am meeting him again in two weeks, with his wife, to confirm that the strategy suits them both and that they understand what we are doing.

As Louis Van Gaal would say, its a process. I dont know how other financial brokers do business, but this is how I roll . . :cool:

I'm A Financial Broker, AMA

beauf wrote: »

A question for the Broker. What's the best means evaluate a advisor track record.

That is a great question and I am not sure if I can give you a perfect way to rate a broker if you have no experience with them.

However, there are a few things you can do to increase your chances of finding a broker who gives you the correct advice:

• Engage services of a broker known to family/friends or professional acquaintances whom you trust (like your accountant) - piggyback on others experience with the broker
• If you meet them and get advice, take time to review it and understand it
• Contact more then one broker to get comfortable with how we operate
• Educate yourself a little bit on the services they offer (so you are more confident asking questions and rating their advice)
• Ask - Why this company ? Why this policy? Why this term? Why this price? Why this much cover ? Why this much monthly premium?
• Discuss charges - ask what other companies would pay them if they placed business elsewhere
• Meet them more then once before placing business with them.
• I cant say for definite but you might be able to check with the central bank (or online - google) to see if there was any complaints/claims against the brokerage at any stage
• If your gut tells you something doesn't feel right or you are not comfortable with the advice being provided, definitely get a second opinion

I am sure there are others, but I think if you understand the advice you are being given and it makes sense to your long term plans, its a good start

Celticfire

Do you think that the average Public Sector pension is as gold plated as it's made out to be?

bungaro79

I'm A Financial Broker, AMA wrote: »

If we consider Mortgage, Life Assurance, Serious Illness cover, Income Protection, Savings, Investments, Pensions as the list:

• Life Assurance
• Serious Illness
• Income Protection or Mortgage

Savings and Pensions are provisions for the future, illness/death covers are provisions for unforeseen events that require immediate financial assistance. Many people dont value these covers and consider them dead money. As somebody who sees the benefit these covers gives to people who make claims on them, I can tell you that they are important considerations for people who have dependents and worthwhile policies for people who claim!

Are people being ripped off with lack of financial information? I think it certainly leaves them exposed to being ripped off and poorly advised but I dont necessarily think it means they will be.

I think of it like buying a car. I havent a clue about cars and wouldnt be confident buying one directly of a person (without any warranty/security). I would either bring along a mechanic friend I trust or buy off a reputable dealership. That way I reduce my chances of being ripped off. I feel its the same with these products. If you dont have the knowledge find somebody who you (or a family/friend) believe you can trust and piggyback on their knowledge.

thanks for the reply.

in relation to my second question i probably should have said more where do you think a person's naivety could get them taken advantage of. i'm a teacher and cornmarket are the official financial advisors of the INTO but i don't like their scare tactics and i know having priced around for AVCs that they don't offer nearly as good rates as others but i know loads of teachers who go with them. similarly when we took out our mortgage with aib we signed up for mortgage protection and life assurance with them as we felt that we had too. only when i was talking to a friend a couple of years later did i realise that we didn't have to have them with aib and that we were paying a lot more!!

I'm A Financial Broker, AMA

Celticfire wrote: »

Do you think that the average Public Sector pension is as gold plated as it's made out to be?

Bit of a loaded question because I find this usually turns into a subjective discussion between people who will get them and people who wont! There are different Public service pensions out there and I know the terms of newer entrants are less favorable. If you gave me specific details, example, I could be more specific.

But in my experience the guaranteed Pensions from Defined Benefit (DB) arrangements practically always work out much better value for the employee, then in a defined contribution (DC) arrangement. I meet many people retiring on PS pensions and I find that the ones who contributed to an AVC plan value them more then the ones who don't. These people have personal experience understanding the concept of risk in the Pension world, whereas those who only get their Public service DB Pension take it for granted that this is the way it is!

From a psychological point of view alone, there is no investment risk to worry about and you know exactly the minimum you will have depending on your service and salary. I think alot of people undervalue or underplay this benefit (particularly the public service unions).

The term "Gold played" may sound derogatory, but in the Pensions world, having a guaranteed return in your Pension contributions from the start is as "Gold plated" as they come. The only private companies that usually have DB schemes at this stage are older Pension schemes (not available to existing employees) that are in many cases under funded (because it costs so much to guarantee the payouts and the funds weren't able to match it) or big executives (like bank execs etc). You need only ask why DB schemes are all but extinct to wonder if they are more value for money in favor of the employees or employers.

Many comparisons (to DC pensions) are inaccurate because most DC Pension projections use a guaranteed return (like 5%-6% net of charges) which is normally unrealistic. There are funds that have achieved this target over 10+ years , but they are never the default strategy funds used. The industry works off the blunt strategy "High risk when young, reverting to lower risk when closer to retirement age". This bears little to no reflection to your retirement value when you are working off an average return over 20-40 years and contributing monthly to a high risk fund that fluctuates regularly!

To be fair to your question, I must disclose that I find it frustrating listening to some public service friends/employees complaining about having to contribute more to the Public service Pension when they don't understand the actual value and return it gives.. I must also disclose that I am a little annoyed that despite making huge profits the Central bank of Ireland has increased our Industry levy by over 500% in the last 4 years to fund the central bank employees DB arrangement. Bearing that in mind people can interpret my comments at least knowing I feel a certain bias on this topic

I'm A Financial Broker, AMA

bungaro79 wrote: »

thanks for the reply.

in relation to my second question i probably should have said more where do you think a person's naivety could get them taken advantage of. i'm a teacher and cornmarket are the official financial advisors of the INTO but i don't like their scare tactics and i know having priced around for AVCs that they don't offer nearly as good rates as others but i know loads of teachers who go with them. similarly when we took out our mortgage with aib we signed up for mortgage protection and life assurance with them as we felt that we had too. only when i was talking to a friend a couple of years later did i realise that we didn't have to have them with aib and that we were paying a lot more!!

Hmm, I might have to filter some of my comments on larger brokerages and banks.. As a financial broker its obviously in my interest to make them look bad, but in my experience their advice can be " regulation sound" but poor in practice.

There are disadvantages with using a small Financial Broker. You are usually trusting an individual with your entire financial plans. With larger companies, some people feel more comfort in the knowledge that its a huge institution/company that is probably a safer bet.

I suppose I can only speak from my own experience and I must stress that I generally only get queries from people who are unhappy or concerned like you have posted so my experience is one sided.

When clients come to me with their AVC information, they are usually in a default strategy fund. They get the annual Benefit statements (ABS) and they get their retirement options when they request them. In some cases, people are not getting their full entitlements and I couldnt say is it because of negligence on the part of the adviser or because the client didnt respond to information request.

When you get retirement options, you should also get a sheet requesting that you confirm the information they have on file is correct. Sometimes people overlook it but its vitally important that people read all documents. This is something I stress to people that come to me that for whatever reason regularly gets overlooked.

I am meeting a client in 2 hours who was working as a Nurse in a hospital. Their retirement options showed a maximum tax free lump sum of circa €50K. Very long story short, I got that bumped up to €84k. How? Because the service they had was incorrect for two reasons. One was because the hospital had been private and made public, but the nurse had continuous employment which means she is entitled to all service. Secondly, your service starts when you join a company, not when you join a Pension plan in the company and many people assume its the right date.

You can in some cases choose your best salary in the last 5-10 years (depending on your pension rules). In her case, the Pension provider was working off an old salary, I made sure she got her highest P-60 to maximise her Tax free lump sum.

The retirement options and information you get from these companies can sometimes be difficult to interpret. The client I mentioned above (max tax free cash) was entitled to use the balance of her fund as an AMRF. It was technically stated on her retirement options but it was extremely difficult to filter through the information to realise it!

One important part of this was drawing down her Pensions in a certain manner. Your AVC contributions can be used to maximise your tax free lump sum and the balance can usually be used to purchase an AMRF/ARF. If you have other Pension benefits, try to use them to maximise your tax free lump sum because you wont always have the AMRF/ARF option that is available to AVC pensions.

I usually review a persons retirement details, work out what I feel is the maximum benefits I can get them and then I instruct the Pension provider as I feel the claim should be processed. So I put the pressure on the Pension provider to challenge my calculations. Sometimes they don't accept my calculations and in many cases they do. I find this part of my job most enjoyable and satisfying, but its not the most lucrative because I am getting more money out of the industry and into peoples hands.

In my experience, large brokerages have generic systems in place, some good and some not so good. They also have generic sales/advice techniques that have good and bad points. I hope that my clients feel they get more personalized/specific advice for their needs and that I treat them as a valued individual as opposed to a number!

In relation to your Mortgage protection and banks query's you are correct. Some banks give people the impression that the mortgage protection must be done with them which shouldn't be the case. However, what I would suggest is if people are being put under pressure, make sure that the mortgage protection is setup separate (not in same direct debit as mortgage) to the mortgage. Then a month after the mortgage is released (and bank cant change their mind), you can shop around (yourself or broker) for a better alternative. You are only required to have life cover to match your mortgage amount/term and once you start a life policy you are not limited to that policy for the term. (Never cancel a life policy without replacing or getting appropriate advice!!!).

beauf

Celticfire wrote: »

Do you think that the average Public Sector pension is as gold plated as it's made out to be?

Its a bit of a vague question and it depends on the context it being asked in. Because a PS pension is entirely linked to the job you do, and how long you stay in it. So the question could be is it worth taking a PS job over say contracting, because of the pension. Whats the context.

I'm A Financial Broker, AMA

beauf wrote: »

Its a bit of a vague question and it depends on the context it being asked in. Because a PS pension is entirely linked to the job you do, and how long you stay in it. So the question could be is it worth taking a PS job over say contracting, because of the pension. Whats the context.

I suppose it depends on the individual circumstances. I dont mean to be so vague myself, but I will try and give you an example that I experience regularly.

One of my clients owns a huge medical clinic. He can offer HSE staff up to 10%-20% increase in salary to join him. He asks me to do up Pension alternatives for him. In all cases thus far, the cost to compensate the loss in Pension entitlements is extremely prohibitive.

These are usually staff getting circa €60k plus in the HSE and in specialised roles, so I accept they may have better terms on their Pensions!

In one case, the employer was offering the potential employee 15% pay increase, but the Pension benefits they would miss out on made it more financially beneficial for this person to remain in the HSE. I have to also say that this employer client of mine doesnt really get the value of the Pension.

I tried to do as close a comparison (but explained there were too many variables that could require employer to have to top up the Pension) and it came in at €4,500 pension premium per month (employee is contributing less then a then a quarter of this personally!). The employer doesn't fully understand the cost of HSE pensions and has struggled to poach staff as a result.

Dav

Right folks, we're going to call it there, it's been more than a week.

I'd like to thank you all for your questions and our Financial Broker for their time and answers.