Some General Mistakes That (potential) Execution Only Customers Make

G

GSheehy

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  • Not knowing the difference between a Standard PRSA and a Non-Standard PRSA
  • Not knowing the difference between a PRSA and an AVC PRSA
  • Not knowing that you can't transfer an occupational pension scheme or AVC of €10K or more to a PRSA / PRSA AVC without a CoBC
  • Valuing your own time but not anyone elses
  • Explicitly stating that you are looking for advice in a submission
  • Assuming that you'll get no help with maturing a pre-retirement pension if moving to an ARF or Vested PRSA
  • Overconfidence
  • Not being truthful with your information
  • Looking for an advisory service at execution only prices
  • Not reading the information on the website
  • Sending 3 emails and making 7 phone calls within an hour or two insisting that you want to buy the product 'right now'
  • Asking for a fund recommendation
  • Not understanding that some managed equity funds are perfectly good substitutes for index trackers
  • Requesting access to a fund on a product that isn't listed on the fund guide that you've read.
  • Asking why you can't buy the product cheaper from the product provider
  • Picking up the phone right after receiving the information to discuss the information that you haven't yet read
  • Assuming that the EO intermediary wants to do business with you
  • Not enough research done - has kind of an idea but brimming with confidence because some anonymous person online told them they'd be mad not to do the transaction on an execution only basis
  • Bringing zero respect for the proposition on offer, or intermediary, by assuming they have zero costs or are not in business to make money
  • Sending lengthy emails demanding what you want but ignoring all the specific information on the website (or in the documentation)
  • Submitting lengthy AI generate slop as 'research' as a 'show' of how much you know and won't be fooled
  • Submit a request for 'pension information' when there are 8 pension options available on the website
  • Not knowing the difference between a self-directed pension and an execution only one
  • Demanding that the intermediary research the entire market for you and supply you with pricing on all pension products, from all providers.
  • Looking for a lower AMC now, because your fund might be worth €1m in 30 years time
  • Assuming that you can never ask the intermediary for the transaction a question once the transaction is executed. Mainly, because an adviser who wants to sell you something more expensive tells you so.
  • Choosing 10 funds, because that's the max that's allowed.


Yes, of course some of these are tongue in cheek.
 
As an execution-only customer of pensions and investment products with various brokers and life/pension companies, I want to (respectfully and in the interest of educating myself!) debate two of the bullet points.

First is on managed vs index funds. I agree that they work perfectly fine as substitutes. But now that the market is expanding in Ireland and people have more options at competitive prices then I think it’s reasonable to switch to an index fund if it better matches one’s underlying investing philosophy (even as a peace of mind / don’t need to check performance thing) and although reasonable people can argue that it veers slightly into over-optimisation, I don’t think it’s necessarily futile or nitpicky (not saying you implied that! Just developing my thoughts.)

Second is on AMCs. I agree that fees don’t make a big difference for small pots but since I know I’ll likely be too lazy to switch later why not pick the cheapest option that otherwise suits me? Financial products have some of the lowest switching rates of all consumer services. And fees (and fund choice as above) are pretty much the only things within my control as a customer shopping around, unlike tax rates or market returns. Having run numbers through a calculator for my own relatively average(?) for this forum pension savings of about 1k a month, over the next 35+ years until I reach pension age a 0.5 ppt increase in AMC could affect long-term returns by a good chunk!
 
@qwerty-2023 Why not debate those points in a separate thread under a thread title/heading of your choice and link/reference/quote the bullet points you're talking about. Otherwise you're going way off topic here.
 
qwerty-2023 said:
Second is on AMCs. I agree that fees don’t make a big difference for small pots
Click to expand...
I don't think that @GSheehy asserted or implied that and I would argue that it's quite the opposite. Higher than necessary/possible AMCs have a huge drag effect on compounding returns over years no matter what size the pension pot is.
 
@GSheehy

With regards to your post (at number 6) above, what exactly is the proposed topic for discussion, here ?

You've raised lots of good points, in your initial post, but left it very open, in terms of where the discussion thread can go, as a result, imho.

I initially thought it read a bit like you were an intermediary who just wanted to vent, about all the things that annoy you.

Then, I moved on to thinking that turning the original post into a Q&A style post (by you adding helpful answers/comments to the points/questions that you've already raised) could evolve into a very useful sticky, for people considering execution only services to refer to.

Now, I'm just not sure where you were hoping to go with the discussion, when you stated the thread, sorry.
 
What potential execution only customers should do.

Do all your research and decide on what funds you want to invest into. Also check if you will be seeking a PRSA or an AVC PRSA. If necessary get paid advice.

Then fill out the relevant request box on the EO brokers website asking for an information pack on your chosen product to be emailed to you.

Read all the information and print the application forms.

Fill in the forms and sign the required sections. You can contact the broker if you need assistance with the forms.

It is probably best to communicate with the broker by email and be short and precise with your questions.

Scan or photograph the completed forms and email them back to the broker.

After your pension is set up you can email the broker if you want to change your funds or payment amounts. Alternatively you can directly contact the pension provider for these tasks.

You can contact the EO broker or the provider if you have technical questions about your pension. These questions cannot be related to fund choice or risk levels.

Short precise emails would be the preferable contact method.
 
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S class said:
What potential execution only customers should do.

...
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Do most or all execution only broker websites make this whole process clear?

E.g. this is potentially confusing in my opinion (emphasis is mine):

PRSA Ireland | PRSA.ie

Low Cost Pensions Ireland Zurich LIfe The Value Pension Website Execution Only PRSA AVC PRSA Pensions www.prsa.ie
www.prsa.ie www.prsa.ie

Service​

The pension products available through this website are for the investor who understands the relationship between risk and reward and are not looking for financial advice​

...

About​

I am a Financial Advisor who is authorised to provide broad based financial advice in relation to Personal Retirement Savings Accounts (PRSAs), Pensions and other Insured Investment Products
Click to expand...
 
Would be helpful to understand what an EO broker sees as part of the service offering as well as what is not. Investment advice is (personalised recommendation on which fund to invest in) clearly not in scope and I can understand that but what is? Are EO clients also expected to be masters on tax treatment of prsa, getting their avc contributions setup with Revenue or changing fund allocations?
 
I don't control the narrative here @MrEarl . You must have me confused with someone else.

It was a suggestion to @qwerty-2023 . If they don't want to take it that's fine but I just think that the points they want debated are going to get lost in here and those 'mistakes' will continue to be made by those who are potential EO candidates as this thread has the potential to go off in 30/40 different directions.
 
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Gushering said:
Would be helpful to understand what an EO broker sees as part of the service offering as well as what is not.
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Would be helpful to understand what a potential EO customer sees as being part of the service. I gave up reading people's minds, as to what they think or expect from a service like this, a few years ago. If you know/understand the exact provider, product and fund you want then we'd get along just fine. If you think/expect that I'll file a tax return for you then that's not going to work.

You can ask me anything here . Not saying I'll answer them all but will definitely answer the reasonable and fair questions.
 
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GSheehy said:
  • Not knowing the difference between a Standard PRSA and a Non-Standard PRSA
  • Not knowing the difference between a PRSA and an AVC PRSA
  • Not knowing that you can't transfer an occupational pension scheme or AVC of €10K or more to a PRSA / PRSA AVC without a CoBC
  • Valuing your own time but not anyone elses
  • Explicitly stating that you are looking for advice in a submission
  • Assuming that you'll get no help with maturing a pre-retirement pension if moving to an ARF or Vested PRSA
  • Overconfidence
  • Not being truthful with your information
  • Looking for an advisory service at execution only prices
  • Not reading the information on the website
  • Sending 3 emails and making 7 phone calls within an hour or two insisting that you want to buy the product 'right now'
  • Asking for a fund recommendation
  • Not understanding that some managed equity funds are perfectly good substitutes for index trackers
  • Requesting access to a fund on a product that isn't listed on the fund guide that you've read.
  • Asking why you can't buy the product cheaper from the product provider
  • Picking up the phone right after receiving the information to discuss the information that you haven't yet read
  • Assuming that the EO intermediary wants to do business with you
  • Not enough research done - has kind of an idea but brimming with confidence because some anonymous person online told them they'd be mad not to do the transaction on an execution only basis
  • Bringing zero respect for the proposition on offer, or intermediary, by assuming they have zero costs or are not in business to make money
  • Sending lengthy emails demanding what you want but ignoring all the specific information on the website (or in the documentation)
  • Submitting lengthy AI generate slop as 'research' as a 'show' of how much you know and won't be fooled
  • Submit a request for 'pension information' when there are 8 pension options available on the website
  • Not knowing the difference between a self-directed pension and an execution only one
  • Demanding that the intermediary research the entire market for you and supply you with pricing on all pension products, from all providers.
  • Looking for a lower AMC now, because your fund might be worth €1m in 30 years time
  • Assuming that you can never ask the intermediary for the transaction a question once the transaction is executed. Mainly, because an adviser who wants to sell you something more expensive tells you so.
  • Choosing 10 funds, because that's the max that's allowed.
Click to expand...
In fairness, any profession could write a long list of complaints against their customers / clients....
 
Colin4444 said:
In fairness, any profession could write a long list of complaints against their customers / clients....
Click to expand...

You've missed the point completely. They're not customers.

The incidences of them not being customers has increased dramatically (the 'Why?' is for another day). I don't know where they end up as buyers of these products. A helpful response would be 'Well, what can we do about them not making these mistakes?' Assuming there is any appetite for helping them at all.
 
As an aside - where and when does a non-financial person learn about all of this? But for working alongside a person who explained in lay mans terms I would be depending on the "experts" often tied-agents.

Is there anything to be said for a dummies guide to pensions book out there?
 
It’s interesting that there is no differentiation between the product ‘advice’ and the actual investment advice in the rules. Most people interested in execution only mean that they know what they want to be invested in and just want it setup and be left in control. What they don’t know is generally which providers have which options available and why some execution only providers only offer certain providers products. They need advice on setup and say closest fund from one provider to another (although this strays into investment advice)

The industry does like to have quite convoluted technical options around standard prsas, avc prsas, bobs etc and the various websites have quite a few things that force questions to be required. Eg only offering non standard prsas and avc prsas as execution only. Only listing minimum monthly payments rather than minimum lump sums etc. Or if you wanted to setup up say 3 PRSAs with 3 different providers and then to vest one of them and move the lump sum to a bond, you would need to go via at least 4 websites to access the different providers.

Having said that, it’s an invaluable service for a lot of people.
 
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