Could someone explain pension investments simply to me?

murphyebass

Henry Ford III wrote: »

I think you're largely correct above.

CFP aren't necessarily any better than a QFA btw.

Aren’t necessarily, but more than likely are more knowledgable as the CFP is a far more intense proposition than the QFA.

Having completed the QFA a number of years back and am going to be sitting my final grad dip exam in financial planning before Xmas this year before sitting the CFP exam in Feb 2022 I can tell you they are an absolute world apart.

QFA is 6 fairly simple exams. Multiple choice. NCQ level 7.

Grad dip in financial planning (which then leads to the CFP exam, if you want to sit it) is another 6 modules and NCQ level 9, all written exams.

Most people will have completed the QFA prior to sitting the grad dip in financial planning because it has been the industry standard for financial services for many years in Ireland.

The CFP is becoming the new norm or benchmark for financial advice here and is recognised as a world wide qualification as opposed to the QFA which is pretty much useless outside of Ireland.

All of that said there is without question some very bright QFA’s and Grandfathered advisers who are well capable of doing the CFP and advise just as well as one for the most part but just couldn’t be bothered putting the vast amount of time in to do get the qualification.

Ultimately if a family member asked me who to go to outside of talking to me I’d make sure the person they sought advice from was a CFP without question.

dunnerc

6 wrote: »

Pensions should be taught in schools to all students. They aren't complex, but so many adults think that they are.

This leads to poor investing or even worse none at all. It definitely leads to poorly educated adults on the subject.

I personally know some people who pay the minimum of 1% at their company. The company matches that 1%. However, if they pay 5 the company will pay 10!

Rough maths showed them that paying 1000 a month into a pension will cost a them net about 370 a month!

You'll probably be in or around half a million pension pot after 25/30 years with that. Again rough maths from memory. I'm probably being conservative tbh, given the compounding aspect. Obviously this is a fund(s) that is allowed to grow, eg equities. Taper it down closer to retirement into cash or lower risk funds if required.

A lot of people cant afford 370 a month into a pension , I also know people who only pay the minimum 1 % which there company matches , the reasons i have been told vary from its all they can afford right now due to mortgages creche fees etc , to they want to enjoy life now to the full , not when they are 65+ and to old to. Each to there own i say .

The J Stands for Jay

Henry Ford III wrote: »

I think you're largely correct above.

CFP aren't necessarily any better than a QFA btw.

CFP are better than QFA in that they have a better qualification. QFA is far too easy to get.

Henry Ford III

garrettod wrote: »

My reason for saying that I'd opt for the CFP, is because more work in independent roles... Most QFAs work in Banks, Insurance Companies, Brokerages etc that are often tied to specific pension companies, so are potentially conflicted (or at risk of being conflicted).

And I'm not a CFP, or studying to become one, btw

Nah.

The vast majority of QFAs are independent, and can charge on a fee basis with no commission and no conflict of interest.

I've plenty of direct experience in this area btw.

Henry Ford III

McGaggs wrote: »

CFP are better than QFA in that they have a better qualification. QFA is far too easy to get.

How do you compare the 2? I've contacts who have both and say there's nothing in it.

I can see it's rated Level 7 vs Level 9.

p.s. There's no guarantee at all that you'll get better advice from a CFP over a QFA or vice versa.

Jim2007

Wanderer78 wrote: »

pension funds are in trouble, this is clearly obvious, we need a rethink, and fast

A statement like this is completely pointless. Do you want to provide us with a factual reference that you based this on, or at least tell us which talking head you were listening to at the time.

Jim2007

batman1 wrote: »

I have a pension but not much knowledge of them. I understand the tax relief and how the pension is used in retirement etc.

Perhaps more of a general investment question but I was looking at a couple of statements today and was just curious after as to how it all actually works as I pay my monthly amount into it.
For example, last year it said it was worth 161k and I'd paid in 143k. This year it's 163k and i've paid in 154k. If that continued would that mean that next year I'd be paying in more than the value as I pay in just over 11k per year.

This might be a complete silly question....

It is prudent to make the effort to understand you pension fund, no doubt about it.



The problem is that you are not providing us with sufficient information for us to give you any valid comments. It's like asking us if a piece of string is long enough without telling us what the string is going to be used for....


Pension funds are not generic, they vary greatly in terms of investment and return. So perhaps you could start by telling us the types of investment that is in your fund......

Happyhouse22

garrettod wrote: »

If this thread has done one thing, it has shown just how much confusion there is about pensions.

I'm not a pension expert, but I have passed a number of relevant exams, and work with people in the industry regularly...

Some of the people here haven't got a clue what they are taking about, and yet are making rediculous statements about how all funds should have performed over the last 12 months, what fees are correct etc. These people are true examples of where a little knowledge is a dangerous thing. I think they all need to go get some professional advice themselves, tbh.

Best advice is obtained from an independent Chartered Financial Planner imho. They'll charge you a fee, and won't try to sell you any particular product, so they've no potential conflict of interest.

Fair enough- I was the person who posted my thoughts this morning and revived this thread. I tried to be very clear that I didn’t know much about pensions and am only learning - but I felt bad that the OP had not gotten many replies and none that really attempted to answer his question. I gave it my best shot and if nothing else it prompted some debate.

murphyebass

Henry Ford III wrote: »

How do you compare the 2? I've contacts who have both and say there's nothing in it.

I can see it's rated Level 7 vs Level 9.

p.s. There's no guarantee at all that you'll get better advice from a CFP over a QFA or vice versa.

There’s no guarantee of anything in life. A nurse could give better advice than a doctor in certain circumstances but you’re going to go for the highest qualified person and potentially a consultant if needing specialist advice.

A monkey could pass the QFA. It’s piss easy with literally on a few days of cramming required to pass if you’re any way bright.

The CFP is two levels above it for a reason. It’s an in-depth look into financial planning. A lot of calculations and a deep dive into someone’s finances, tax, pension planning etc..

garrettod

Henry Ford III wrote: »

Nah.

The vast majority of QFAs are independent, and can charge on a fee basis with no commission and no conflict of interest.

I've plenty of direct experience in this area btw.

Not trying to undermine you, but we're clearly keeping company in very different circles... and I happen to have some direct experience here too

We agree that you don't have to have a particular qualification, although I would agree with murphyebass regarding the QFA exams, compared with the CPA exams, and level of knowledge and expertise that I would associate with them etc.

We also agree that a QFA can just charge a fee for advice, they don't have to be commission driven...

But where we differ, is in the amount of QFAs that are genuinely independent. To use an example, I don't consider a QFA working in a multi-agency brokerage to be independent for example, do you? Thereafter, I'm not sure why we see this one so differently, unless you've access to a listing of where all QFAs work, for example?

Maybe, as I said above, we just move in very different circles (not that all of this really matters btw)

batman1

Jim2007 wrote: »

It is prudent to make the effort to understand you pension fund, no doubt about it.



The problem is that you are not providing us with sufficient information for us to give you any valid comments. It's like asking us if a piece of string is long enough without telling us what the string is going to be used for....


Pension funds are not generic, they vary greatly in terms of investment and return. So perhaps you could start by telling us the types of investment that is in your fund......

So it looks like the printed statement was incorrect. I finally got onto the online portal and it shows my contributions are 161k and the fund is 202k. As I'm in my early 40s, does this look reasonable for my age?
The pension is with Aviva L&G ARF

Henry Ford III

garrettod wrote: »

Not trying to undermine you, but we're clearly keeping company in very different circles... and I happen to have some direct experience here too

We agree that you don't have to have a particular qualification, although I would agree with murphyebass regarding the QFA exams, compared with the CPA exams, and level of knowledge and expertise that I would associate with them etc.

We also agree that a QFA can just charge a fee for advice, they don't have to be commission driven...

But where we differ, is in the amount of QFAs that are genuinely independent. To use an example, I don't consider a QFA working in a multi-agency brokerage to be independent for example, do you? Thereafter, I'm not sure why we see this one so differently, unless you've access to a listing of where all QFAs work, for example?

Maybe, as I said above, we just move in very different circles (not that all of this really matters btw)

Maybe and maybe not.

The mandatory Terms of Business letter will set out how they get paid, and all fees, charges, and commissions must be disclosed in any event.

Fee based assignments - be they fixed price, hourly rate, or a hybrid commission/fee with offset are becoming increasingly common.

The J Stands for Jay

murphyebass wrote: »

A monkey could pass the QFA. It’s piss easy with literally on a few days of cramming required to pass if you’re any way bright.

Speaking as a QFA, I'd say you could pass 4 of the 6 exams without any cramming.

garrettod

McGaggs wrote: »

Speaking as a QFA, I'd say you could pass 4 of the 6 exams without any cramming.

So, if you work in the pension industry, then your thinking that you need to cram for Loans and Financial Planning?

..... If you work in Banking, swap the Loans module for Pensions

The J Stands for Jay

garrettod wrote: »

So, if you work in the pension industry, then your thinking that you need to cram for Loans and Financial Planning?

..... If you work in Banking, swap the Loans module for Pensions

I was thinking you'd need to cram for regulation (the rules aren't all logical) and financial planning. For loans, having seen a few ads for mortgages would be enough studying.

Skill Magill

As someone who doesn't have a pension it seems the best advice from this thread is to go to an independant financial advisor, how do you go about that, not knowing any? Yellowpages or its online equivelant? Or do you get them through word of mouth?

sbs2010

If this thread has taught us anything, it is that most people just want to waffle on about their own issues.

The OPs first question was based on hugely incorrect information from a wonky statement but no one picked up on that and it descended in a squabble about qualifications.

OP has since clarified his figures and no one has ventured any opinion.

And the - get professional advice - advice is a cop out unless you add something extra. If everyone stuck to that this forum wouldn't exist.

I'm qualified in SFA by the way.

Henry Ford III

This has descended into nonsense. I'm closing it.