Ultimate Guide to Lowest ARF Fees/ Charges

Ultimate Guide to Lowest ARF Fees/ Charges

To help you ensure the best ARF investment performance don’t just consider potential investment returns, but all related initial and recurring ARF charges or fees, especially the yearly investment fund management charge known as the AMC!
 
Below, we have put together a detailed guide on what to look for when seeking the best ARF advice, with minimum ARF charges, or in other words the best value ARF’s in Ireland.

There are 2 annual ARF client charges, one on the Fund Manager side and the second on the Financial Adviser side! The provider charge is the AMC (annual management charge) and the adviser charge is the ASC (annual service charge). When you get your policy documents however, these will be expressed as a single AMC charge!

ARF – Provider Charge

    The ARF product providers are the Fund Management companies the likes of Irish Life, Zurich, New Ireland, Aviva, Standard Life, Invesco, Davy, etc. They must be paid to manage your investment and this charge is known as the base annual fund management charge or AMC.
     

  • The AMC is expressed as an annual % charge against your ARF fund value and the annual adviser charge form part of it.

ARF – Financial Advisor Charge

    You and your chosen Financial Advisor should agree on the level of payment they receive and this should reflect both the initial and ongoing investment advice and administration support over the life of your AMRF/ARF investment. Some advisers will charge a total AMC of 1.5% made up of 1.00% base provider AMC and 0.5% annual adviser annual fee, so make sure all charges are fully discussed and transparent.

 

What is the best structure to minimize my ARF charges?

1. The base AMC will be influenced by your fund choice, risk approach and the size of your investment, however, it should never exceed 0.75% PA for most multi-asset funds and can be as low as 0.65% PA for passive funds or 0.5% PA for sums in excess of 500k.

2. The Allocation Rate should be at least 100% and can be higher for high-level investments (300k+), where some product providers may pay bonus allocation e.g. 101% investment allocation.

3. Financial Adviser Charge – Some advisers especially the big brand firms will charge 0.50 PA for their services on top of the based level AMC.

Don’t be afraid to ask questions, it’s your hard-earned pension pot after all! The key point is to minimise your base fund provider AMC and annual adviser fee, so when combined they never exceed 1.00% PA.

In our opinion, however, a fee of no more than 0.25% PA may be justifiable for ongoing investment advice regardless of fund size and for this, you should receive an annual review together with 24/7 online access with regular fund performance updates and financial adviser access.

We charge our clients a maximum annual charge of 0.25% of their ARF fund value levied directly from the ARF, to cover both initial and ongoing investment advice and bonus investment allocation may also apply, depending on the size of your ARF fund!

Your total annual charge, including the Annual Fund Management Charge (AMC), will never exceed 0.75% PA in total regardless of your ARF fund size and a total annual charge of 0.50% PA, may even apply for certain very large cases not requiring ongoing advice!

What About Fund Choice?

There are 5 main fund based providers in Ireland: New Ireland, Zurich, Standard Life, Irish Life, and Aviva. All of whom provide a wide range of multi-asset fund choices, through both their own and external fund managers.

New Ireland, Irish Life & Zurich offers both active and passive fund choice whilst Zurich also offers protected funds and ETF’s. All others offer active fund management. All providers offer funds to suit all investor types from low to medium and high-risk options!

Full Market Comparison

A good Financial Advisor should never promote just one particular provider, so you should seek a detailed comparison of allocation and charges across all the leading providers for which they hold an agency.

What Represents Best Value?

1. The charge for ongoing support is kept at 0.25% PA.
2. If your fund exceeds 499,999k a base AMC of 0.50% PA or otherwise no more than 0.65% PA – 0.75% PA, dependent on your fund choice.

Make sure that you choose appropriate funds to match your risk attitude, but also understand the difference between passive funds and active funds and ensure that there are no charges for future fund switches.

Don’t rush into signing paperwork or allow yourself to be pressured by your financial advisor for an immediate decision, always shop around and once you understand the charges then examine past investment performance.

Can I move my existing ARF for lower fees?

To avoid any penalties, you normally need to wait 5 years from the ARF start date, after which you can transfer your ARF to a new provider with a lower total ongoing charge.

Note:
Many people wonder how ARF providers can allow more than 100% allocation of your money and if you get higher where this money actually comes from? The answer is that the bigger your fund value the more the provider is willing to attract your business and they will pay for it with bonus allocation. They make their money back through their AMC overtime! However, always opt for a lower AMC over a once-off bonus allocation.

Here also is a very interesting Irish Times article on how typical provider and advisory ARF fees can suck the lifeblood out of your investment.

For more ARF information

Contact: Ken O’Gorman – Director – QFA – Pensions & Investment Specialist – One Quote Financial Brokers on: 01 845 0049 or call me directly on: 087 665 8516.

Or enquire online and give us a quick outline of how we can help.

Remember there is no charge for initial advice or quotes nor any obligation to proceed and our promise is to beat all competitor offers!

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