Am I sophisticated enough to do execution-only PRSA AVC?

I

INYWIFNW

Registered User
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I am weighing up a couple of options regarding making additional voluntary contributions.

Option 1 is to go with my workplace provider who will offer a certain level of advice, automatic deduction from payroll, and a "safety in numbers" feeling of taking the same approach as almost everyone else regarding AVCs - allocation 98% and AMC 1%.

Option 2 is to go with an execution-only service provider, who will obviously offer no advice and I will have to apply for the tax relief myself and set up a standing order to make the payment - allocation 100% and AMC 1%. I have been in touch with one of these providers who has been very helpful and responsive in answering my practical questions on how to set this up.

I have a good idea of what I want the funds to be invested in, and I think it's pretty straightforward - one of the relatively high-risk Zurich actively managed multi-asset or equity funds, such as Prisma 4/5/6, Performance or Dividend Growth. I am conservative by nature but recognise that this is a long-term investment (I am 37) so I can accept volatility in the short-term. I'll be able to figure out how to claim the tax relief on My Revenue.

I suppose I'm doubting myself a bit that I'm sophisticated enough to go execution-only. What happens, for instance, if I want to change funds in 15 years' time and the execution-only service provider has retired, or if I'm nearing retirement and I need someone to hold my hand through the next steps. And I assume that if I go with Option 2, no one is going to be giving me a nudge at an appropriate time to tell me it's timely that I move into something more low-risk like cash and bonds, I'll just have to decide when to do that myself.

Has anyone any positive or negative experiences of having gone down the execution-only route? And do you get a sense from this post that I know what I'm talking about, or would I be safer sticking to the workplace provider?! Thanks for reading.
 
You are sophisticated enough to present your clearly thought out post. You will have no problems with an execution only broker. In the future you are always free to change your broker. If the broker retires another broker would be set up.

If you wanted, you could change to an advice broker in later years. Generally this change would not incur fees.

Go for it.
 
INYWIFNW said:
. What happens, for instance, if I want to change funds in 15 years' time and the execution-only service provider has retired,
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You send your request to change funds to the PRSA provider, exactly as you would do if the execution only service provider is still in business. Once they've executed your order by setting up your policy, your relationship with them ends.
 
Fortune said:
Once they've executed your order by setting up your policy, your relationship with them ends.
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Just not true.

INYWIFNW said:
I suppose I'm doubting myself
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Nothing wrong with this, but if you have someone else in your ear telling you that it's all very complicated, 'what if this, what if that', you might make a mistake and that you need them to hold your hand, then your decision is going to be harder. More research usually solves it though and insist on written responses.

That said, there has been a spike in the number of potential buyers of execution only products who kinda have an idea what they're looking for, of late. Could be a number of reasons for that, including i) someone told them to buy the product but forgot to tell them that it's an execution only service ii) they haven't done any/enough research and don't know the differences between pension products iii) they're transferring from another provider where they didn't fully understand the charges or funds they were paying for (they bought because the default advice on a forum was to go with XYZ company and invest in ABC fund) iv) they do not want to take ownership of choosing a fund/s Etc.
 
My experience of this is that the broker whether execution only or not, will continue to have some input.

On a few occasions I have contacted Zurich directly with very basic questions regarding my ARF. Zurich refused to answer these basic queries They told. me that the questions are only answered through the broker.

My broker arrangement is execution only.
I didn't necessarily want to involve the broker, but this is the way Zurich operate.
 
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As I understand it, execution-only means the broker doesn't advise on which investments to choose or assess the clients attitude to risk.

But the broker will help with the logistics of setting up ARFs, AVCs etc... ie what details are needed to complete application forms, and where to send them, switching funds (not based on advice as to which funds to choose), setting up the ARF/AVC/pension, setting up payments in and out, making changes to your ARF/AVCs.
(i'm sure there's more but none will involve advising clients as to which type of investments are suitable)

Provider companies like Zurich see the person who set up these products for you as your broker - execution-only or not.
 
I got quoted charges of (including advisory, Zurich platform charges and fund charges) 1.32% per annum for investment in a Zurich Prisma 4 fund. I think I’m going to go execution only. Would you (or anyone else) share the details of some execution only providers?
 
Gerard Sheehy (post above) or Liam Ferguson (LDFergusson) offer a very good service.
 
Highly recommend Gerard sheehy. Very responsive and on top of everything from my dealings with him. Switched from a broker who was providing an advisory service also and couldn't be happier.
S class said:
Gerard Sheehy (post above) or Liam Ferguson (LDFergusson) offer a very good service.
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Standard Life will deal direct for execution-only PRSAs with 100% allocation and 0% exit charges. AMC is just whatever the charge is for the funds you select - ranges from 0.92% for Vanguard funds to about 1.2% for the more expensive stuff. I've found them very good to deal with so far, with top notch support for explaining how to set it up and clear forms to fill out that guide you through the process.

Range of index funds is limited, but much better than any of the other Irish pensions I looked at (I'm young enough to only be interested in equity index funds for now), and they do offer a 'default strategy' type option for those who are not keen to do their own picking (not sure of the price, but more than 0.92%).
 
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I think the default investment strategy is a requirement for all PRSAs.
 
I did this back about 7 years ago and no issues.

I opened up a PRSA AVC with Zurich through a broker (can't remember who) execution only with a 100% allocation. I chose my own funds, split my contributions across them and in the years since I was able to move the funds around (you are allowed up to 4 free movements a year) and increase, pause monthly contributions.

You don't need to be an investment guru in order to have somebody help you pick your funds, just some research into the equity : bonds ratio that suits you and then choose a fund accordingly. I myself am still several years away from retirement so have all my funds in passive 100% equities indexed funds which are well diversified.
 
oilmoney said:
Highly recommend Gerard sheehy. Very responsive and on top of everything from my dealings with him. Switched from a broker who was providing an advisory service also and couldn't be happier.
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Yes, Gerard was the broker who set up the PRSA AVC for me too; no issues at all. To be honest, although he set everything up, I dealt with Zurich directly during all communications rather than through him
 
@INYWIFNW

Thank you for your post... It provided lots of useful info for questions I had in my own mind / or had not formed exactly. Then others here have been so helpful as well.

I found a "Claiming Tax Relief" link:

https://www.revenue.ie/en/jobs-and-pensions/pension/relief/how-to-claim.aspx

(I'm a teacher and so Cornmarket are the route that the unions push. However, I will go elsewhere like your initial query, and great to get the information from this forum.)
 
Are you sure you have your money in passive/index funds in a Zurich PRSA? I'm asking because I also have a Zurich PRSA and I was told the index funds (global indexed equity, etc.) aren't available in the PRSA wrapper.
 
penguins said:
Are you sure you have your money in passive/index funds in a Zurich PRSA?
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It's true that there is currently no Global Index Tracker on the PRSA platform but the Indexed TopTech100 Fund is available on their Non-Standard PRSA. I'd say that there will be more passive funds on the PRSA products in the next six months.

TBF, I don't think that redchariot has lost out on anything if what he/she is referring to is the (actively managed) International Equity or Global 5*5 Funds.

The Global Index Tracker on the other pension / investment Zurich platform has had an annualised return of 11.46% over the 10 year period 20/06/2014 to 14/06/2024 (latest price available date) while the International Equity has annulaised 11.75%, 5*5 Global 12.37% and TopTech 20.92%.

That's on a like-for-like AMC basis and includes all Other Ongoing Costs and Portfolio Transaction Costs over the period.

Incidentally, Indexed Eurozone Equity on the pension/investment products had an annualised return of 6.58% while the managed Eurozone Equity was 7.98%


Gerard

www.prsa.ie
 
I have my funds in the International Equity Fund which admittedly is not tracking an index like S&P 500 or MSCI but it has a well diversified equity portfolio, returned 11.6% annualised over last 10 years which is not bad considering the S&P 500 was 10.8% annualised in the same period
 
Some basic questions that seem relevant to this discussion. Met a financial advisor and have an offer of 100% allocation and 1.25% management fee, Is that his management fee or what Zurich charge or a combo of both?

I see execution only noted above. In this case we would work with the financial advisor but there is also a charge for that. I don't mind paying a small fee for support.
 
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