Tracker Bond Performance

[Spinner2]

Double dipping....

"A word of warning about such arrangements - in theory a broker can choose to take commission from both the wrapper provider and the tracker provider, essentially being paid twice for the same sum of money. Such commissions must be disclosed, but personally I think that this level of double-charging shouldn't occur."

Liam,
Are you sure? I thought the reason "double dipping" worked was that only the LifeCo commission was subject to disclosure and the bold boys involved can take commission from the deposit tracker on the quiet.

 

[LDFerguson]

"A word of warning about such arrangements - in theory a broker can choose to take commission from both the wrapper provider and the tracker provider, essentially being paid twice for the same sum of money. Such commissions must be disclosed, but personally I think that this level of double-charging shouldn't occur."

Liam,
Are you sure? I thought the reason "double dipping" worked was that only the LifeCo commission was subject to disclosure and the bold boys involved can take commission from the deposit tracker on the quiet.

I don't sell trackers so I'm not sure, to be honest. As far as I know, trackers can fall into one of two camps - life company trackers which are subject to normal disclosure rules and deposit trackers which, as you say, would be subject to less disclosure. In the end of the day, if someone is setting up a financial product for you, it's a fair and reasonable question to ask a straight question - "How much are you getting for doing this job?"

 

[Steven Barrett]

I've only been on here about a week and there certainly is a bad impression of financial advisers.

Some of us do actually work for our money, have our client's best interests at heart and in return, are expected to get paid for the work that we do...just like everyone else.

A lot of people think advisers are out to screw people on commissions yet on the other hand there's people who expect advisers to work for free and only pay them if they purchase a product off them. How about paying someone for the job you asked them to do i.e. give you financial advice. That way they don't need to try to sell you a product to get paid.

Rant over

Steven
http://www.bluewaterfp.ie

 

[kateball]

"A word of warning about such arrangements - in theory a broker can choose to take commission from both the wrapper provider and the tracker provider, essentially being paid twice for the same sum of money. Such commissions must be disclosed, but personally I think that this level of double-charging shouldn't occur."

Liam,
Are you sure? I thought the reason "double dipping" worked was that only the LifeCo commission was subject to disclosure and the bold boys involved can take commission from the deposit tracker on the quiet.

If brokers are getting paid on the double then the lifeco and the tracker provider must be facilitating this. Does everyone just turn a blind eye to commission of up to 8% on an ARF?

And now we have just found out these bonds produce zero/negative returns after locking customers money away for 5 years.

This is shocking

 

[Steven Barrett]

If brokers are getting paid on the double then the lifeco and the tracker provider must be facilitating this. Does everyone just turn a blind eye to commission of up to 8% on an ARF?

And now we have just found out these bonds produce zero/negative returns after locking customers money away for 5 years.

This is shocking

Can you get 8% commission on an ARF?!!!! With who?

 

[kateball]

Hi SBarrett - No disrespect but are you reading the last few threads?
This packaging of a tracker inside a lifeco product is facilitating brokers getting paid on the double.

The lifeco pays 5% commission (disclosed) and the tracker provider pays another 3% "on the quiet". When the tracker brochures says "available as an ARF or personal pension"- Happy days - 8% commission!!!

Must be time for RDR!!!

 

[Jim2007]

And now we have just found out these bonds produce zero/negative returns after locking customers money away for 5 years.

This is shocking

You mean you've just found out! Had you been following the discussions for the past several months or taken the time to use the search function, you'd beware that general consensus is that you should avoid these bonds like the plague!

In deed this time last year you were banging on about tracker bonds as well, so I fail to see how you could suddenly be so shocked about!

 

[mercman]

Some of us do actually work for our money, have our client's best interests at heart and in return, are expected to get paid for the work that we do...just like everyone else.

A lot of people think advisers are out to screw people on commissions yet on the other hand there's people who expect advisers to work for free and only pay them if they purchase a product off them.

Look I have written enough posts on AAM as to how the public have being ripped off by the Investment Community. The entire thing is an absolute scandal. Top, Middle and Bottom. I could write a book on how I've been ripped off.

It really does boil down to the fact that people working on commission earnings in Ireland are going to rip you off -- simple as that. The law in this country is scandalous. It makes it easy for the Financial Providers to empty the pockets of the average Joe and get away with it.

 

[DerKaiser]

I've only been on here about a week and there certainly is a bad impression of financial advisers.

Some of us do actually work for our money, have our client's best interests at heart and in return, are expected to get paid for the work that we do...just like everyone else.

A lot of people think advisers are out to screw people on commissions yet on the other hand there's people who expect advisers to work for free and only pay them if they purchase a product off them. How about paying someone for the job you asked them to do i.e. give you financial advice. That way they don't need to try to sell you a product to get paid.

Rant over

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Don't take it personally!

The rants are about fees these days, in 2008 you had an outcry over the incompetence of fund managers (amidst the biggest upheaval sice the Great Depression!). Funnily enough, after five years of rising markets, I have yet to see a thread with someone saying how well their funds have performed. At the moment, most people who have contributed to a pension over the last 15+ years have done really well.

The whining minority will always outshout a satisfied majority.

Bashing the financial sector is like bashing farmers, teachers, civil servants, etc. you can't just label an entire segment of society as rip off merchants. It's an ill informed generalisation to the point of insult.

 

[Steven Barrett]

Hi SBarrett - No disrespect but are you reading the last few threads?
This packaging of a tracker inside a lifeco product is facilitating brokers getting paid on the double.

The lifeco pays 5% commission (disclosed) and the tracker provider pays another 3% "on the quiet". When the tracker brochures says "available as an ARF or personal pension"- Happy days - 8% commission!!!

Must be time for RDR!!!

I haven't seen any ARF product offering 8% even with a tracker wrapped in an ARF. Maybe it's because I haven't been looking in the murky places.

Look I have written enough posts on AAM as to how the public have being ripped off by the Investment Community. The entire thing is an absolute scandal. Top, Middle and Bottom. I could write a book on how I've been ripped off.

It really does boil down to the fact that people working on commission earnings in Ireland are going to rip you off -- simple as that. The law in this country is scandalous. It makes it easy for the Financial Providers to empty the pockets of the average Joe and get away with it.

I agree with you to a degree. The financial world works in percentages. Add to that, insurance companies pay an insane amount of commission to get the business. For example, a €500,000 ARF can result in €20,000 in commission. There is no way that an advisor is going to do that amount of work but is he going to turn it away?

On the fee side, a retirement takes a hell of a lot of work. Is a client prepared to pay €8,000 in fees when there is the option of letting the adviser get €15,000 and they get an additional €5,000 added to their pot?

On the consumer side, I have lost count of the amount of times that people have asked me to do work for them and then refused to pay for it. It takes a lot of time to do this work, why should payment be a commission at the end of it? But that is what a lot of people think. If I do nothing it's free work, if I buy something they get paid. And guess what? The adviser always finds something that they need to buy!

That is why since setting up my own company, I am fee based. If you come to me for advice, I will charge you for it. That way, I can give you independent advice. If I believe a product is the best way to solve your problem, I will recommend it and reduce/ offset the fee. Everyone knows where they stand that way.


Steven
http://www.bluewaterfp.ie

 

[Steven Barrett]

Don't take it personally!

The rants are about fees these days, in 2008 you had an outcry over the incompetence of fund managers (amidst the biggest upheaval sice the Great Depression!). Funnily enough, after five years of rising markets, I have yet to see a thread with someone saying how well their funds have performed. At the moment, most people who have contributed to a pension over the last 15+ years have done really well.


The whining minority will always outshout a satisfied majority.

I don't take it personally, I've been on internet forums long enough to understand how it goes.

I was surprised about the feelings about advisers on this site though. People looking for free financial advice from lots of qualified and unqualified people.

I can imagine what 2008 was like. I still have clients hanging onto their AIB shares after telling me that they could do better than those fund managers!

Even today I've heard people reject advice to invest in Bangkok Bank because it sounds dodgy and suggest loss making Bank of Ireland instead!

 

[kateball]

You mean you've just found out! Had you been following the discussions for the past several months or taken the time to use the search function, you'd beware that general consensus is that you should avoid these bonds like the plague!

In deed this time last year you were banging on about tracker bonds as well, so I fail to see how you could suddenly be so shocked about!

Jim 2007 - Am not sure what your contribution is adding to this debate??

We have just discovered that 2 out of 3 trackers that matured in 2012 have produced returns < 0.5%. This means that many ARF and personal pension clients in these so called capital protected bonds, lost more than their capital. When you compound this to the availability of double commission, - that's whats shocking!!

 

[LDFerguson]

We appear to be having a rather one-sided debate here. Nobody is arguing that tracker bonds in general are a good investment product. Nobody is arguing that a salesman taking double commission on a wrapped tracker is a good thing.

@kateball - you wrote a post last year about the issue of double commissions on wrapped tracker bonds last year that Jim2007 linked to above.

There have been countless threads here on Askaboutmoney pointing out that tracker bonds in general are a poor idea, from an investor's perspective. Brendan Burgess has made a few complaints to the Financial Regulator or Central Bank about how some tracker products were/are marketed. There's a Key Post about them here in the Investments forum.

Aren't we just going over old ground here? The only new information I see in this thread is the reference to the iCubed stats that show that 2/3 of trackers returned the capital guaranteed amount. After everything that has been written about them here over the years, is that a big shock?