Pension for Uninitiated

ScottL

Hi,
I'm hoping some of you kind people can offer me some pension advice.
Background is that I'm 30, not married, house with no mortgage, no loans and salary of about;€360000 per year. I went to a broker last week and still have maybe more questions than answers
I have decided that I'm willing to put away around€350-€400 per month. The only two funds he really showed me were Zurich and Friends First and advised an ESMA rating of 3/4.
The thing is I don't really have the interest (I know should because it's my money and future) or particularly the financial knowledge, to research the endless options and because I feel I'm late to the party already I'm tempted to just sign the dotted line on whatever he puts in front of me.
The question is, if I say, opt for friends first ESMA 3 rated fund can I sit back safe in the knowledge that right, I'll never be a millionaire from it, but my money is somewhat safe and doing more than it would in the bank? The horror stories you hear about people losing all as they approach retirement, is this a real possibility for a fund such as this in time of a future crash or is this down to good old greed ?

Henry Ford III

Get another broker. The one you've consulted hasn't explained things very well.

ScottL

Henry Ford III wrote: »

Get another broker. The one you've consulted hasn't explained things very well.

Especially wheny you consider he is owner! My last encounter with an advisor from my bank wasn't much better to be honest. He scared the pants off me suggesting I'd need a pension of €3000 per month when I'm 65 which equated to me putting almost half my wages into it as far as I recall.

tatumkelly

Absolutely agree with Henry Ford. A good broker will explain in simple terms the pension they are recommending and you should understand exactly what the fund is, what potential return is/risks etc. They should also be explaining charges; find out what the total annual charges are ie. Annual charge by the provider, plus any plan management charges added by the broker.

In that broker's defence, they may have only presented you with Zurich/Friends First in an effort to not overwhelm you with info from Aviva, New Ireland, Irish Life etc so I wouldn't judge too harshly on that.

If an advisor leaves you feeling confused or overwhelmed & feeling that it's all very complicated etc, they haven't done their job.

https://financialbroker.ie/find-a-broker

Henry Ford III

tatumkelly wrote: »

Absolutely agree with Henry Ford. A good broker will explain in simple terms the pension they are recommending and you should understand exactly what the fund is, what potential return is/risks etc. They should also be explaining charges; find out what the total annual charges are ie. Annual charge by the provider, plus any plan management charges added by the broker.

In that broker's defence, they may have only presented you with Zurich/Friends First in an effort to not overwhelm you with info from Aviva, New Ireland, Irish Life etc so I wouldn't judge too harshly on that.

If an advisor leaves you feeling confused or overwhelmed & feeling that it's all very complicated etc, they haven't done their job.

https://financialbroker.ie/find-a-broker

Yep. I'd be more inclined to ask a trusted contact for a referral than use that link.

PIBA is a trade association after all and is akin to SIMI for motor dealers. The members have no special ability or extra qualifications in my opinion.

tatumkelly

Henry Ford III wrote: »

Yep. I'd be more inclined to ask a trusted contact for a referral than use that link.

PIBA is a trade association after all and is akin to SIMI for motor dealers. The members have no special ability or extra qualifications in my opinion.

That's actually a fair point. OP ignore that link!

ScottL

Agreed, I don't want to sound too harsh on the guy as a lot of it could be attributed to my incapacity to ask the right questions at the time. His fee was either a once off payment of €240 for advise and initial set up, or a percentage (which I don't recall, of first years earnings). The two funds I mainly looked at charged 0.75% and 0.95% per annum.
To be honest, as daft as it might seem I just don't want to get bogged down in the finer details just now, so I'll just go back to my general point.
I realise if I had the time and knowledge I could invest in some Vanguard ETF's or whatever they are but I don't so the point I'm trying to grasp is..
If I take one of these low risk off the shelf options the broker had offered, what is the chances of me losing all due to another crash down the road as I approach 65? The people who have lost, particularly in the past recession, what kind of funds where these?

tatumkelly

ScottL wrote: »

Agreed, I don't want to sound too harsh on the guy as a lot of it could be attributed to my incapacity to ask the right questions at the time. His fee was either a once off payment of €240 for advise and initial set up, or a percentage (which I don't recall, of first years earnings). The two funds I mainly looked at charged 0.75% and 0.95% per annum.
To be honest, as daft as it might seem I just don't want to get bogged down in the finer details just now, so I'll just go back to my general point.
I realise if I had the time and knowledge I could invest in some Vanguard ETF's or whatever they are but I don't so the point I'm trying to grasp is..
If I take one of these low risk off the shelf options the broker had offered, what is the chances of me losing all due to another crash down the road as I approach 65? The people who have lost, particularly in the past recession, what kind of funds where these?

ESMA 3/4 are low to medium risk funds. Your fund will be affected by market crashes but bear in mind that if you keep contributing during these market dips, as the fund recovers you will reap benefits of having invested during bad periods. As you near retirement age, you can secure your funds in capital protected products if you are still concerned about your fund dipping drastically.

For now, the products recommended are fit for purpose. Perhaps ask the advisor to split funds between ESMA 3 & 4 so you have a little diversification and spreading of risk.

Review your annual statements and discuss any concerns with your broker.

Henry Ford III

ScottL wrote: »

Agreed, I don't want to sound too harsh on the guy as a lot of it could be attributed to my incapacity to ask the right questions at the time. His fee was either a once off payment of €240 for advise and initial set up, or a percentage (which I don't recall, of first years earnings). The two funds I mainly looked at charged 0.75% and 0.95% per annum.
To be honest, as daft as it might seem I just don't want to get bogged down in the finer details just now, so I'll just go back to my general point.
I realise if I had the time and knowledge I could invest in some Vanguard ETF's or whatever they are but I don't so the point I'm trying to grasp is..
If I take one of these low risk off the shelf options the broker had offered, what is the chances of me losing all due to another crash down the road as I approach 65? The people who have lost, particularly in the past recession, what kind of funds where these?

Two thoughts on that:-

1/. I think you're quite right to not get overly concerned with the day to day workings of your pension. At age 30 you're more interested (possibly) in your career and having fun in your spare time.

Pay to let someone else take the strain. There's nothing wrong with an off the shelf solution if it's priced decently.

With 35 years to nrd and paying monthly premiums I'd take the view now is the time to be aggressive. Take some risk. There's loads of buying opportunities if prices fall.

Reviews are essential.

As time passes you may want to consolidate and reduce risk. Maybe from age 55 onwards? That will help minimise volatility as your get nearer retirement.

2/. The pricing model you've been quoted isn't too bad. The level of advice however has left you asking questions, which the advisor should have been able address.

ScottL

Henry Ford III wrote: »

Two thoughts on that:-

1/. I think you're quite right to not get overly concerned with the day to day workings of your pension. At age 30 you're more interested (possibly) in your career and having fun in your spare time.

Pay to let someone else take the strain. There's nothing wrong with an off the shelf solution if it's priced decently.

With 35 years to nrd and paying monthly premiums I'd take the view now is the time to be aggressive. Take some risk. There's loads of buying opportunities if prices fall.

Reviews are essential.

As time passes you may want to consolidate and reduce risk. Maybe from age 55 onwards? That will help minimise volatility as your get nearer retirement.

2/. The pricing model you've been quoted isn't too bad. The level of advice however has left you asking questions, which the advisor should have been able address.

Thanks for your advice. In truth I think I was just looking for reassurance that my uninformed decision to perhaps go ahead with this wasn't completely foolish and I think you've done that!