Re: Here we go again.
Laser do you work in the industry? Are you one of the Authorised Advisers that the Central bank regulates? if so my faith in the profession has gone way down.
It's fair enough for you to argue that 5% of all contributions represents good value. I happen to disagree. I don't know of anyone who has ever gotten any advice AFTER they signed the dotted line, so an ongoing charge makes no sense to me.
But you're more than welcome to try to convince me.
But when you personalise things the way you have you lose any chance you might have had of convincing anyone. I sure as hell woudn't like to be giving YOU 5% of my contributions if that's the approach you take.
Ah so Clubman, we get to the bottom of the argument. As I suspected all the guff on AAM is for the informed skinflints, leveraging their advanced knowledge on the subject and buying at below cost. That's no different than any other market.
First of all, you might want to rethink calling execution only PRSA's "Below Cost". I don't think that's the case.
Secondly, It doesn't take much advanced knowledge to decide between one PRSA that takes 5% of everything you contribute and another that doesn't. It's unfortunate that knowing about 0% PRSA's is considered advanced knowledge. That's why AAM exists. This kind of stuff should be COMMON KNOWLEDGE. You seem to be implying that Clubman is trying to secretly profit from some inside knowledge. The reverse is true.
I get the feeling that you'd prefer people not know about these 0% PRSAs. I wonder why that might be the case!?!
The simple fact is that small percentages matter MOST on long term investments or debts, such as pensions, or mortgages. A 5% loss on every contribution makes a HUGE difference over the life of a pension.
I hope my figures are right here, but if we take a person contributing €300 p/m, for simplicity forget about increases, and forget about the 1% management fee. The difference in the final balance assuming just 7% growth is €17,000.
It gets worse, if the pension grows at 12%, the difference is a whopping €43,500. In other words the better the fund performs the more you pay for the advice, even though the adviser has no way of affecting the performance of the fund, and will make a point of telling you that he can't predict it.
I have never received any advice of any kind from anyone that was worth €17,000. Certainly none worth €43,500. And if you don't mind I'll stay a skinflint and keep that money in my fund. It'll help overcome inflation.
Also it's fine to say that people can switch after year one, and then average the 5% of year one over the life of the pension. But how about this! Average 0% over the live of the pension. It works out even better!
-Rd