Are you saying I should have remained with the Broker and accept the 1.25% fees on the additional €200,000 I will be adding for the new policy thereby losing out on the lower fee by going directly with Zurich?
You came to the site after you had taken advice. My understanding was that you wanted approval on whether the new AMC was competitive, for an advisory service, and if the funds made sense.
You didn't have to deal with the same broker at all, you can buy the product from whoever you want. Site regulars will know that buying directly from a provider is not always the lowest cost solution.
When you mentioned that you were closing one product to open another I questioned if you had received advice around the taxation implications of this. I doubt, now, that you did. So, it's the old money I have the issue with and the advice that went with that. Or, did you just decide yourself that you were moving to the lower AMC because you had no idea that it might affect the taxation?
The advisor you're now dealing with has to sign a declaration on the new application (s?) that states:
II hereby declare that in accordance with Regulation 6(1) of the Life Assurance (Provision of Information) Regulations, 2001, the applicant(s) has been provided with the information specified in Schedule 1 to those Regulations (the relevant Zurich Life Customer Guide) and that I have advised the client(s) as to the financial consequences of replacing an existing policy with this policy by cancellation or reduction, and of possible financial loss as a result of such replacement. I have also provided the relevant Key Information Document in the format that it was requested.
The construct of Life Assurance Exit Tax is such that it can have a financial consequence when you move from one product to another. If it's disclosed to you that this/that movement in value may result in a loss to you and you still want to go ahead to avail of a lower AMC, then that's fine. It's when it's not discussed and spelled out in a suitability letter that I'd have the issue with.
I know that this chopping and changing on savings/investment products happens all the time but I
personally wouldn't advise someone to do it unless they were at break-even (not including withdrawals/encashments) on their original investment or that the taxation regime is amended to where the movement from one company to another is not an exit tax chargable event. I'd avoid that kind of tranasaction rather that try to write a suitability letter that includes all the what ifs on movements in value after a transfer. I think that it would be difficult to explain it to the Regulator on an audit.
But, the Goverment could make this way more straightforward and easier if the will was there to address Exit Tax & Chargable Events on transfers.
Gerard
www.InvestAndSave.ie