Many people seeking to start a pension, may look to an execution only PRSA, zoning in on cost instead of value and not paying enough attention to risk, i.e. the funds level of diversification, as well as its track record in terms of both performance and volatility.
“ The right advice based Non-standard PRSA, can offer so much more in terms of asset and investment style diversification, to help weather all market conditions, easily negating any small saving in cost terms, plus you gain a lot more in terms of support and control over the long-term.”
Execution Only PRSA
Based on 100% allocation, you’re likely to find minimum base fund AMCs highlighted on certain broker web sites and even newspaper articles, but to discover their limitations and in my view where real value exists, you need to drill down to the nitty gritty and get beyond the base cost alone.
Below, I have focused on the three most common Execution-only PRSA fund providers that you tend to find promoted by financial brokers:
Royal London – Standard PRSA
- Min contribution: €250.00 PM
- 8 passive funds at 0.75% AMC
- Min contribution: €750.00 PM
- 8 passive funds at 0.65% AMC
Comments:
- The arranging broker is taking 0.25% PA but provides no investment advice.
- There are only 4 multi-asset funds made available all with Royal London fund managers.
- The Royal London multi-asset funds made available have no performance history.
- The choice of fund managers is limited to just two.
- There is no access made available to commodities, corporate bonds, or private equity.
- All 8 passive funds are BlackRock single asset funds not mult–asset.
- If opting for BlackRock over Royal London fund managers, you must design your own asset allocation (fund diversification model) as all fund offerings are passive and asset specific.
Standard Life – Standard PRSA
- Min contribution: €250.00 PM
- Vanguard Global Stock Index
- AMC is 1.15% until fund reaches €100,000 then it’s 0.70%
Comments:
- The arranging broker is taking 0.25% PA but provides no investment advice.
- There is a huge misconception that Vanguard Index Funds are cheap, but this is not the case when dealing with Standard Life Vanguard Funds.
- Inexperienced investors tend to get overly excited about Standard Life Vanguard US 500 Stock Index fund, but it to proves expensive at 1.15% and is only suited to high-risk investors and can leave you over exposed to downside risk.
Zurich – Standard PRSA
- Contribution below €350 PM
- 11 multi-asset funds at 1.00% AMC
- Contribution: €350 PM or more
- 11 multi-asset funds at 0.75% AMC
Comments:
- The arranging broker provides no investment advice.
- Zurich is one of a number of leading fund managers and offers 11 active multi-asset funds to choose from, but they hold the same underlying assets just different allocations amongst each asset class.
- Their own funds tend to invest in the same core equities which are traditionally growth orientated large cap, this can create extra downside in more volatile market conditions.
- For younger investors wanting to blend specific more popular funds such as the Indexed Top-Tech 100 and their Gold Fund offered under their Non-standard PRSA is not made available
PRSA – Cost Vs Value Consideration
In summary, with no investment advice (execution only), based on an average PRSA starting gross contribution of €500.00 PM (€300.00 net) the lowest AMC your going to achieve is 0.75% PA. However, if you go the traditional advice route (same 100% allocation) and pay 0.25% to 0.50% more dependent on regular contribution size, you’ll gain access to the entire insurer PRSA market, to include Aviva, New Ireland and Irish Life alongside those providers already mentioned, opening up a huge choice of leading fund managers an investment styles that can be blended and hedged.
But what this really means is unrestricted access the the top performing funds and fund managers on the Irish PRSA market as well as initial and long-term guidance.
Someone Else in Your Corner
The right advice-based PRSA can offer so much more in terms of diversification, to help weather all market conditions, easily negating any small saving in cost terms, plus you gain a lot more in terms of support and control over the long-term.
In fact, a well-chosen highly qualified financial broker, will:
- Help you in discerning your risk profile.
- Grant 100% investment allocation.
- Grant access to proven performance record.
- Offer expertise in hedging fund manager styles.
- Help you manage volatility.
- Provide regular market updates.
- Discuss and conduct annual reviews.
- Provide the ability to conduct same day fund-switching.
- Give speedy assistance with any changes, such as pauses, increases, or lump sum injections.
Free PRSA Consultation
To arrange a free initial 30-minute consultation by Phone, Teams, or Zoom, please contact us today. Contact: Ken O’Gorman – Managing Director – CB, QFA, RPA, SIA – One Quote Financial Brokers on: 01 845 0049 or email: ken@onequote.ie
Or enquire online and give us a quick outline of how we can help.
