Zurich avc fees

Discussion in 'Public sector pensions' started by Bro Cass, 2 Apr 2019.

  1. Bro Cass

    Bro Cass Registered User

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    I rang Zurich last week to price an AVC. I was told that the fee is 1%. Which is grand....
    Plus 5% allocation. Which is not grand.

    Just to clarify, I asked "So if my investment makes 7% growth each year you're going to take 6%?"
    He said "Yes"

    Either he was misinformed, or he was the worst salesman in the world.

    Is this figure normal? What's the difference between allocation and fees?
    Thanks in advance.
     
  2. Conan

    Conan Frequent Poster

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    Not that simple.
    The Allocation rate might be 95% (5% charge) on every contribution. So every €1,000 you contribute, €950 gets invested.
    The 1% annual fund management charge is on the total fund value each year. So if the fund grows by a gross 5% then the net growth to you is 4%.
    That said, an allocation charge of 5% is too high. You can do better than that. I would be looking at an allocation charge of 1%.
    If this is an AVC then talk to the Pensions Consultancy who look after the main scheme. They should be able to get you a better deal and without any major broker fees.
     
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  3. Protocol

    Protocol Frequent Poster

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    By using a discount broker, you can buy an AVC with zero entry fees and 1% AMC.
     
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  4. Bro Cass

    Bro Cass Registered User

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    Can you give me some examples of discount brokers?
     
  5. Protocol

    Protocol Frequent Poster

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  6. Bro Cass

    Bro Cass Registered User

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    Thanks Protocol. So it's sometimes cheaper to go through a broker than direct to the provider?
     
  7. Protocol

    Protocol Frequent Poster

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    Last edited: 16 Apr 2019 at 10:24 AM
    Yes.

    Discount brokers are always cheaper than going direct.

    BUT

    Note that many discount brokers are execution-only, i.e. they don't provide advice.
     
    Last edited: 16 Apr 2019 at 10:24 AM
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  8. SBarrett

    SBarrett Frequent Poster

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    If you go direct to the insurance company, you deal with their direct sales team, known as a tied agent. They will advise you on the products from that company only and can only charge commission. With a lot of the direct sales teams, their income is wholly from the commission they earn.

    A discount broker is an execution only online broker who gives you no advice, which works out fine if you know what you want.



    Steven
    www.bluewaterfp.ie
     
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  9. Protocol

    Protocol Frequent Poster

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    Approx. 18-20 years ago, in my naivete, I went into a branch of Hibernian Insurance, thinking I would bypass the broker, and cut out the middleman.

    I signed up to a pension whereby the Hibernian branch staff member got 8% commission on each and every premium.

    Sure no wonder people are often disappointed with pension fund returns!!!!

    I am convinced now that they did not make the commission clear to me.

    I soon switched to MyAdviser, 0% commission, for a 200 euro fee.
     
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  10. Bro Cass

    Bro Cass Registered User

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    Thanks all, this is good news.
     
  11. North Star

    North Star Frequent Poster

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    There is an option for AVC PRSAs where the value is in excess of €100k to get a full 100% allocation rate and AMCs down as low as 0.65% for a global stock index fund. Can any PS posters check with HR to see if it possible to do a one off transfer of a balance in excess of €100k to a new low cost AVC PRSA and keep regular/annual contributions to their current AVC PRSA? I am curious to see if this might be a viable option.
    Thanks Vincent