Hi there,
Looking for some advise, as i came across this discussion. Apologies for hijacking an old thread.
5.5 years ago as an expat i was sold this product with promises of flexibility and security through someone i had misguided trust in, in the end my own fault.. Currently i am over 5 years into a 25 year contract of 500 euro per month, over 33K invested, currently worth about 30K. Generali have advised me if i want to get out now i would get back less than 15K. Having moved back to Ireland, married, and with kids in the meantime, life and responsibility has changed significantly.
I feel i am caught between a rock and a hard place now, continue to pay is putting a strain on me financially, if i stop and withdraw what money they will return to me i will lose anything up to 20K. I can not determine through their complex fee/bonus structure if i would be better off to cut my losses or continue to pay for the next 10-20 years to see if i can escape with something worthwhile for my family.. My IFA Devere are only interested in up-selling the product so i invest more, and have wiped their hands of the adviser who sold this to me (he has since left the company).
I have noticed many people worldwide are suffering with a similar challenge from Generali Vision and have started a petition to annul these contracts: change.org/en-GB/petitions/generali-annul-vision-contracts-and-return-all-funds-at-current-market-prices
Anyone else here in Ireland in a similar position to me, or anyone familiar with this product who can offer me some advise..
Thanks.
I will try to help. To make it easier - a few notes about me: I am an FA and I work with these kinds of products ( not working for DeVere but on my own ).
You may reduce your premium to the minimum EUR135/month but will loose the extra allocation. Another option would be to either take a holiday until you feel secure enough. The Generali Vision is a double edged sword - at premium levels above EUR900 and adding the special premium incentives they usually run its one of the most efficient products, at low premium levels, however, it would be pretty hard to get you back at least what you paid initially. You`d also get a 5% bonus in year 10. What I would do in such situation would be to change my holdings under the plan to high yield ones ( also involving high risk ) - you`re limited to the long period you signed up anyways - and either take a holiday or reduce the amount invested.
Problem is partially with the product administrator and mostly with the people that distribute them. On the product administrator side, it is mostly due to lack of their regulative activities on the brokers, lack of codes of ethics they have to adhere to and choice of companies to work with. Some companies ( that has pissed me several times ) would not allow the client to see the T&C prior to sign up. They are available and any FA can download them from the provider website, but besides one company, none supplies those as standard. And at least from what I see in the complaints, none of those brokers would allow their client to go through the T&C and explain any binding provisions which are usual for those products.
This is, however, ignorable compared to the brokers that sell these. They seem to push very long term plans ( 25-30 years I see as a common suggestion ) which put the client at risk as no one knows what would happen in 25 years time. The bigger problem I have encountered when I "inherit" clients that have been sold something by some other company and have been left afterwards as in the example above, is the total lack of asset management. Indeed, most of the low outcomes have been due to bad asset performance and not that much linked to the fees. My appologies, but those guys are not financial advisors but ordinary sales people.
On the Vision - it is a policy designed to be used long term, i.e. 15-20 years. This is why it has a Holiday option and its fees are collected in the earlier period. I have compared it to other offerings and they are all similar with the Vision and the OM MSA being very close and best of all. Here is something that many miss:
The fees are more expensive than what you can get online by buying an ETF. Most ETF`s are taxed at source and usually issued in the US, France and the UK where in the first two jurisdictions they`d be taxed at source ( usually at a rate of 30% ). However, if you can buy it at a serious discount to its NPV, which happens with ETFs, it may turn into a very good deal. They track an index and as such as usefull only if you are sure a specific trend is likely to continue. In a volatile market, they will not beat a mutual fund, we did a study on this last year. Indeed, almost all non-leveraged ETFs fall short of non-leveraged mutual funds, despite the higher fee of the funds with one exeption which turned out to be the bond market where ETFs outperform mutual funds and make the extra fund fee obsolete.
The problem comes when you need to dispose of it - it involves transaction costs and if you invested in mutual funds, they`d have either an initial charge in the 3-6% range or a deferred charge. Holding the same fund for 15 years may, or may not cover your expectations. If you buy a US large cap growth fund you may hold it for 3-4 years, but then either momentum could be lost or income funds may become more attractive, as in this year. If you do 5 switches through your entire pension saving, the transaction costs and initial fees may be more than what you pay on one of those standard endowment policies offered offshore. The main benefit of these is they grow tax free, they allow for better-flexible tax planning according to changes in tax legislation and tax bands in the specific country where benefits are taken and they have free fund switching. To get these three, a client pays extra fees and this is why bond providers are charging more. Also, if you use a much cheaper product, for example in the UK, you may need to pay for independent advice and this cost has to be added to the equation.
These products are in no means bad or too expensive, you get what you pay for. Problem is in the quality of advice and the massive conflict of interest - I see nothing wrong to disclose to my clients how my commission is formed ( well, not actual percentage but its dependency on contract leght, premium size and type of product ), when you go to a mechanic he tells you how much he charges for an hour and how many hours he would need, so I see nothing wrong with this. They won`t disclose the actual T&C to the client too which is worrying and do not put enough emphasis on the initial period specifics, surrender quotes by years and the risk the client is assuming with such long term contract. If the FA does good asset management, which is not hard as most of the companies that issue offshore bonds supply good quality research, those products are by no means bad.
My 2c on this.