Tweak Your Biz » Finance » Knowledge Is The New Currency. Are you Cash Rich?

Knowledge Is The New Currency. Are you Cash Rich?

by Gerard Sheehy on February 22nd, 2010
6 Comments



The majority of folks that are in the market for Pension and Investment Products pay little regard to the costs associated with setting up these products. It’s understandable, as they will probably have a limited knowledge on the type of product that might suit them best or have any benchmark to gauge what the ‘typical’ cost would be.

The easiest thing in the world to do is to pass the ‘responsibility’ of selecting an appropriate Provider, Product and Investment Fund over to someone else, and pay them for taking this burden off your busy shoulders. If things go a bit pear shaped in the years ahead you can always blame the advisor for ‘his’ selections.

Seriously; it’s a two way street. You have to take some responsibility for your financial decisions and most advisors would agree that they are there ‘just to hold your hand’.

There are two types of service available from the majority of Pension & Investment Financial Advisors: ‘Advisory’ and ‘Execution Only’. The most cost effective is ‘Execution Only’ but this necessitates getting your hands dirty. It’s a simple trade off; you spend some time doing your own research, in order to gain knowledge, and you end up saving yourself a wagon-load of money*.

One of the better online resources for researching these types of products in Ireland is AskAboutMoney.com. So, whether you are a complete novice or have a basic understanding of what you need, this website should be on your radar. If you don’t see the answer to the question/s that you have, then just post your query. In matters of personal finance (where large savings can be made) there are no stupid questions, only stupid answers.

* ‘Advisory’ Service – A Company Director putting €1,000 per month into his/her (index linked at 3%) from the age of 30 to 65: the estimated retirement fund at 65 would be €1,472,823. This assumes that there is a 5% contribution charge on each payment made, the annual management charge is 1.5% and the fund grows at 6%pa.

‘Execution Only’ Service – Using the same details for contribution, term and growth rate, but having an annual management charge of 1% and no contribution charge, the estimated fund would be €1,673,568.

That’s over €200,000 in potential savings. Enough to pay for someone else’s retirement?



Category: Financial Planning

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The Author:

I am a Financial Advisor who is authorised to provide broad based financial advice in relation to PRSA's, Pensions, Life Insurance and other Insured Investment Products in Ireland. Special Focus: Low-Cost 'Execution Only' Financial Products http://www.investandsave.ie

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  • http://blog.myprojecttracker.com Barney Austen

    What a useful post Gerard – thanks! I suspect that many people are fearful of taking the decision themselves if they are not “money confident”. Even allowing for the fact that there is a considerable amount of information out there, many simply won’t make that critical step before approaching a company for advice. Also, if it goes wrong, there is someone else to blame (deflection I know!).

  • http://www.btbtraining.com/blog Niall Devitt

    Hi Gerard, Welcome back! We missed you. I agree with Barney when he says that many people are simply scared of taking the decisions themselves. But as you have demonstrated clearly here, the savings could be big so it’s definitely worth taking the time to do a little research. This is actually a really well timed post for me but that’s another story :)

  • Anonymous

    Guys, you can buy a hell of alot of ‘advice’ for €200/€300 in an hour once you have a bit of homework done. If you need further help down the line, just pay for another ‘session’.

    The BIG ‘No No’ is buying the product through a Bank as they don’t do ‘Fee Based Advice’. Their business model is purely commission based (or whatever, less revolting, word they are using for it these days).

  • http://bettercloser.com Bill Rice

    John,

    Great points. I think we in sales often forget that buyers and markets are moving targets. Things are always changing for them as they maneuver for success. Why wouldn’t we think we need to make the same adjustments.

    To you’re analogy if you are doing the regular maintenance–tuning is always the best route. But, I have walked into some neglected sales organizations and there was no option, but to buy a new car.

  • Anonymous

    Hi Bill

    For sure, sometimes there is no choice but to buy a new car. Some companies will just have to bite the bullet.

    I am just back from a conversation with a really experienced sales director this morning, the discussion focused on overlaying his customers buying process over his current sales process while he is fine tuning it.

    He plans to marry the best of buying with best of selling. Would be great if more people began to do the same.

    Cheers John

  • Anonymous

    Great post John,
    Many of us have been too complacent about the sales process over the past number of years. It is constantly evolving and by constantly talking to our customers and our potential market we can stay ahead of the competition. And do so without knee jerk reactions that can steer us off course.

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