Choosing a pension provider: Aviva or Zurich?

St1mpMeister

I've been offered a choice of setting up a pension between either Zurich or Aviva.

Both have similar annual management fees / allocation (over 20 years Aviva ends up slightly better 0.7% annual fee, vs 0.75% with Zurich)

The financial adviser I'm consulting with recommends "Zurich all the way", but is there anything obviously beneficial in going with Zurich over Aviva?

Are there other benefits to having a pension with them that Aviva doesn't offer? Better range of funds for example?

Henry Ford III

Why the limited advice?

p.s. Not being smart here but I'm not going to give free advice as you're already paying for it. You should address your queries to your adviser.

St1mpMeister

It's a valid question, and I've been trying to get the guy on the phone but seems to be out today, but I need to make a decision this week as I have my own deadline I'm trying to reach.

So wanted some outside viewpoint before I contact him.

From what I can see Aviva should be better choice as they have a lower annual management fee.

Henry Ford III

There's a lot more to it than that.

Your adviser is obliged provide you with a letter justifying their recommendation. If they don't call a prospective customer back, or don't provide timely and valid reasons for their choice of product (EPP vs PRSA) or insurer I'd be wondering about their status, ability and/or knowledge.

Why are you only being offered 2 insurer choices?

coylemj

Henry Ford III wrote: »

Why are you only being offered 2 insurer choices?

OP called him a 'financial adviser' but maybe he's just a broker on commission and he's pushing the investment company that pays him more?

You suggested in your first response that the OP is paying for the 'advice' but he hasn't stated that explicitly.

St1mpMeister

coylemj wrote: »

OP called him a 'financial adviser' but maybe he's just a broker on commission and he's pushing the investment company that pays him more?

You suggested in your first response that the OP is paying for the 'advice' but he hasn't stated that explicitly.

So the guy I'm dealing with is an "independent broker" and has two fee options...

- Paid by commission ... and pension has higher annual management fee.

- Paid by fee (no commission) ... and pension has lower annual management fee


So I'm opting for "paid by fee". I'm happy enough with his advise so far, although still need clarification on why Zurich is his preference.

The other option I'm looking at is setting up a Davy Select pension, but I think their fees are pretty exorbitant, so I'll stick with this guy for now.

I consulted with several banks regarding their pensions and all had higher fees than I'm getting with this broker.

Liam D Ferguson

I'm going to assume that the financial adviser has gone through a detailed analysis of your financial circumstances in terms of the product choice, amount of your contribution etc. I'm also assuming that he's gone through the choice of funds from each provider with you and recommended specific funds that match your specific requirements and your specific risk profile out of the ranges of funds available. As Henry Ford III has said above, you should also be provided with a letter detailing exactly why a specific product and provider is being recommended. This letter should go into detail about why the Zurich Life product suits your particular requirements above others, not just "we love Zurich Life".

I do business with both Aviva and Zurich Life among others and both companies have products and funds that are suitable for particular customers' requirements. Without knowing all of your specifics, it wouldn't be possible for me or anyone else to come out with a broad statement that one company is better than the other for what you need.

St1mpMeister

Liam D Ferguson wrote: »

I'm going to assume that the financial adviser has gone through a detailed analysis of your financial circumstances in terms of the product choice, amount of your contribution etc. I'm also assuming that he's gone through the choice of funds from each provider with you and recommended specific funds that match your specific requirements and your specific risk profile out of the ranges of funds available. As Henry Ford III has said above, you should also be provided with a letter detailing exactly why a specific product and provider is being recommended. This letter should go into detail about why the Zurich Life product suits your particular requirements above others, not just "we love Zurich Life".

I do business with both Aviva and Zurich Life among others and both companies have products and funds that are suitable for particular customers' requirements. Without knowing all of your specifics, it wouldn't be possible for me or anyone else to come out with a broad statement that one company is better than the other for what you need.

OK thanks. I'll grill the guy over the phone when I get onto him.

It's no an ideal situation unfortunately, but I need to have this done and dusted this month.

Liam D Ferguson

St1mpMeister wrote: »

The other option I'm looking at is setting up a Davy Select pension, but I think their fees are pretty exorbitant, so I'll stick with this guy for now.

The Davy option gives you a lot more choice of funds, ETFs and shares than a traditional pension company like Zurich Life or Aviva. And yes they charge more for that flexibility. If you want to be very involved in the investment side of your pension fund e.g. choosing your own shares / ETFs etc., you might consider the Davy offering worth it. If not, then go with the lower charges.

St1mpMeister

Liam D Ferguson wrote: »

The Davy option gives you a lot more choice of funds, ETFs and shares than a traditional pension company like Zurich Life or Aviva. And yes they charge more for that flexibility. If you want to be very involved in the investment side of your pension fund e.g. choosing your own shares / ETFs etc., you might consider the Davy offering worth it. If not, then go with the lower charges.

I had my fill of investments with Rabodirect.

To be honest it was too much work with little reward (and a nasty tax bill on the profits).

I'll put my faith in Zurich / Aviva :pac:

St1mpMeister

I got a response finally...

"Fund performance stronger historically. No guarantee of future performance as you know but I’d be using Zurich."

so the recommendation for Zurich is generally better fund management.


Zurich has 101% allocation, 0.75% Annual Management Charge, No early encashment/transfer charges.
Aviva has 100% allocation, 0.7% Annual Management Charge, No early encashment/transfer charges.


Marginal difference in the management charge, but is fund management generally better with Zurich in your experience?

The funds I would be interested in would be things that performed well for me in Rabodirect like Global Technology fund, etc.

Liam D Ferguson

Zurich has a small edge on charges with the 1% extra allocation up-front. It would take decades for them to recoup that with their extra 0.05% annual charge. But the difference is very small, one way or another.

In very general terms, Zurich Life do have a good track record of managing funds. You should be aware that past performance is not a reliable guide to future returns.

That said, if you have expressed a wish to invest in a tech fund to your broker and he is recommending Zurich Life because of their fund management track record, this is questionable. Zurich's tech fund is not managed by Zurich's fund managers. For that fund, they buy into an ETF tracking the Nasdaq 100 index. So Zurich's fund management skills are irrelevant to this fund.

St1mpMeister

We didn't discuss a fund, he was just recommending them based on their transparency and previous experience with them.

Are those annual management charges good or average?

Those are the only fees, as I'm going non-commission based.

Henry Ford III

I suspect the fee being charged is relatively low, and this may be limiting the time available.

Could be completely wrong on that.

St1mpMeister

Henry Ford III wrote: »

I suspect the fee being charged is relatively low, and this may be limiting the time available.

Could be completely wrong on that.

Nah the time limit is something I'm setting as I need this done and dusted before I head away.

So back to the rates, are they good or no?

ANXIOUS

I find it hilarious that you're paying someone to deal with these queries and then asking randomers on line. If your only goal is low fees Google low fee broker or if you know what you want ask a broker for execution only.

St1mpMeister

yeah worth a chuckle I guess.

What I find hilarious is that nobody is able to say whether a 0.75% annual charge/100% allocation is "good" or below average.

Similarly I asked a question last year: "can someone recommend a financial adviser", and got 0 replies... but getting many replies when I'm told I chose the "wrong" adviser.

ANXIOUS

What type of pension are you setting up? Have you any existing benefits? Do you know what fund you want to invest in?

ANXIOUS

Will there be a regular premium?

St1mpMeister

I've decided on a Zurich pension but interested in hearing opinions on the 3 ESMA 4 risk funds I've narrowed down the scope to:

- Prisma 4

https://www.zurichlife.ie/DocArchive/servlet/DocArchServlet?docId=DOC_8697&docTag=

- Cautiously Managed

https://www.zurichlife.ie/DocArchive/servlet/DocArchServlet?docId=SI_CM_FF&docTag=

- Active Asset Allocation

https://www.zurichlife.ie/DocArchive/servlet/DocArchServlet?docId=DOC_883&docTag=


Annual management fees for all are 0.75% and no other fees (100% allocation).

Prisma 4 has 50% equities.
Cautiously Managed has 50% euro bonds.
Active Asset has 60% equities.



I like Cautiously Managed as it performed well in the past, but is there a risk in having 50% euro bonds, or are they pretty secure vs equities?

Prisma 4 seems to be getting a lot of press as a great fund to invest in.

e.g. https://www.independent.ie/business/...-36716533.html

coylemj

St1mpMeister wrote: »

I like Cautiously Managed as it performed well in the past, but is there a risk in having 50% euro bonds, or are they pretty secure vs equities?

The biggest risk with bonds is that a period of rampant inflation will see interest rates go up and bond prices will then fall. But share prices would tend to follow inflation so the equity element will balance things out.

If you're looking at a 10 year or more horizon, I think Prisma 4 might be a bit too conservative. If I was you I'd go for Prisma 5, definitely if you are 20 years or more to retirement age. Share prices go up and down and now and then there can be a 'correction' (a crash to the man in the street) but over time equities will always perform best so for a 20 year timeframe, you really need to be heavy into equities.

When you are within 10 years of retirement you can mitigate risk by starting to gradually move your pot to more conservative funds. Zurich allow one or two 'free' fund movements per annum.

St1mpMeister

Looking at pretty much 20 years and trying to max it as much as possible in that time.

If we have a hard Brexit, will Euro bonds be worse affected than North American equities?

Cautiously Managed is euro bonds and Prisma is largely NA equities.

coylemj

St1mpMeister wrote: »

Looking at pretty much 20 years and trying to max it as much as possible in that time.

Then pick a fund that is heavily weighed towards equities. And avoid any fund with 'cautious' in it's name, they are suitable for people who have already retired and who cannot afford to take risks. With a timeline of 20 years or more, you have to worry about beating inflation and a cautiously managed fund simply won't cut the mustard.

St1mpMeister wrote: »

If we have a hard Brexit, will Euro bonds be worse affected than North American equities?

I suggest you let the fund managers worry about that sort of stuff. By the time you're retiring, Brexit will be a question in the Leaving Cert history paper.

St1mpMeister wrote: »

Cautiously Managed is euro bonds and Prisma is largely NA equities.

Prisma 4 has a heavy weighting to NA equities according to the current fund fact sheet but that will shift back and forth over time, you should not be making decisions based purely on where that fund is investing today.

St1mpMeister

great thanks for the insight