Why do insurers allow advisers to choose ARF commission rate?

[Dave Vanian]

I have had a quote from an ARF provider (direct team) for 100.5% allocation and 0.5% AMC. ARF value approx €1m.
Am I likely to get a better allocation and AMC with a broker/advisor or is this as good as it gets?

The 0.5% AMC is pretty good. You could get 0.35% AMC for passive funds with Aviva but the allocation rate would be lower. Or 0.4% for Vanguard funds with Standard Life but again the allocation rate would be lower.

At 0.5% AMC you could get 101% allocation from Zurich.

Talk to a broker.

 

[Barney Magoo]

I have had a quote from an ARF provider (direct team) for 100.5% allocation and 0.5% AMC. ARF value approx €1m.
Am I likely to get a better allocation and AMC with a broker/advisor or is this as good as it gets?

If you were comfortable with an execution only service you'd probably better it, at that level of fund. But, that type of service isn't suitable for everyone.

Gerard

www.prsa.ie

Is there any way of locating the best offers of allocation, AMC, TER, etc., apart from using a broker? Similarly there seems to be a lack of published actual returns and experiences of ARF customers.

Some fund providers obviously do not offer retail so a broker is a must for access to their particular suite of products (e.g. MCSI), even access to Vanguard must be through an intermediary (e.g Davy).

With all due respect to the frequent posters here who make their livings giving advice, I suspect there is a significant number of readers of this forum who do not wish to use a broker/financial advisor/planner. It seems that even the financially aware are restricted by the system in this country.

 

[Dave Vanian]

Is there any way of locating the best offers of allocation, AMC, TER, etc., apart from using a broker?

Good question. Quick answer - no.

There are a small number of brokers offering execution-only services - some of them post here on AAM. They'll generally be lower-cost than dealing directly with the product providers. But you need to have chosen your product and funds before you go to them as they won't / can't provide advice or tell you which product is most suitable for you. That said, an execution-only provider can tell you the charges of the products they provide.

Most of the product providers that deal with brokers offer brokers a wide range of charging structures to facilitate different brokers' different charging models. Like any profession, some brokers charge more than others. Some brokers charge trail commission to pay for ongoing service and reviews. Others don't. The choices a broker makes will affect allocation rates, TER, AMC etc. Providers won't publish all the available options because then you'd have customers looking for Rolls Royce advice and service but also wanting to pay the execution-only lowest end of the charging options.

I've had customers who have who have told me that they want execution-only discounted charges. But then asked me which product and funds I thought were best. Those two requirements contradict each other.

 

[kinnjohn]

I have seen advisors charging different rates for the same service the only difference is how well informed the person taking out the ARF was,

The line people who dealt with people down through the years know who to milk a bit extra from,

I would not be surprised if they were getting an extra bonus for doing so,
If you knew enough to go above the line people there was better rates to be got,

 

[Steven Barrett]

I have seen advisors charging different rates for the same service the only difference is how well informed the person taking out the ARF was,

Do solicitors, accountants, builders, plumbers, mechanics etc all charge the same rates? No, they don't, so I don't know why people expect financial advisors to all charge the same too. You are paying for advice, not just implementing the product.


Steven
www.bluewaterfp.ie

 

[Dave Vanian]

I would not be surprised if they were getting an extra bonus for doing so,

All regulated firms have a legal obligation to disclose any payment received down to the last cent, with the exception of a relevant seminar hosted by a provider or anything more than a cup of coffee bought by a sales rep from a provider company. That's how tightly regulated things are at the broker end these days. So this attempt to spread a rumour which has absolutely no foundation in fact is frankly a bit sad. If you don't know the actual facts, please don't share fictional opinions that are simply wrong - other people reading this might actually believe them.

Of course if you have any actual evidence of people being paid bonuses for milking a bit extra from unsuspecting consumers, please do the right thing and report it to the Central Bank of Ireland. Or bring your evidence to the press.