Broker’s Commission

T

The Intern

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Hi, in 2023, I set up a regular contribution investment plan with Irish Life (Pinnacle) via a broker. Provided I made an initial lump sum of €7.5k and monthly contributions were in excess of €1k p/m, I was able to avail of a reduced AMC of 0.75%. Allocation is 101%.

However, scrolling through some old correspondence, I noted the broker advised that the trail commission was 5.5% of the annual contributions in years 1, 3, 5 & 7. From year 9 onwards, the trail commission is a 0.25% share of the AMC.

There is a decreasing encashment penalty within the first 5 years.

I thought I did ok on the initial AMC and allocation rate but the trail commission seems very high (granted it’s not every year) but surely that’s ultimately on me in the form of the unit price available to me (every month)?

I would welcome some insight on these fees and if uncompetitive, what options are available to me either now or in the future (after year 5 etc)? Should I decrease contributions to the bare minimum and consider setting up, for example, an execution only plan, in a similar world equities fund etc?

Thanks
 
Find the Disclosure Schedule. Under the projected benefits it should say something like - The effect of deductions is to reduce the projected investment yield by 1.0% per annum.

Well, that's what it should say if you bought a 101% allocation, 0.75% AMC + 0.25% Trail (1%) contract.
 
The Intern said:
he trail commission was 5.5% of the annual contributions in years 1, 3, 5 & 7.
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Sounds like bullet payments. You get them in life cover cases a lot. Instead of getting small payments each year, you get larger payments at intervals. I wasn't aware they are on regular investment plans.

The money for the 5.5% is generated from the amc, it does not mean that there is 5.5% reduction in your allocation or an increase in amc in those specific years.


..you could always as the broker who set it up for you how it works?
 
for contributions over 1k per month the Irish life pinnacle is one of the most competitively priced on the market . You are getting 101% net allocation and a base amc of 0.75% ( trail is included in base)
 
Realcork said:
You are getting 101% net allocation and a base amc of 0.75% ( trail is included in base)
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You're getting 101% gross and I doubt very much that you're going to be sold this where the effect of the deductions in respect of the expenses and charges on the plan are less than 1.3% per annum. That's no where near 0.75%.

That said, they're not a provider Iook at very often so happy to be corrected.
 
Thanks all. I’ve checked with the broker and awaiting a response. Will revert to thread for completeness. From what I can gather from the responses, the trail commission is part of the base AMC rather than a % of the actual monthly/annual contributions which is reassuring and reasonable.
 
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