Knowledge Is The New Currency. Are you Cash Rich?
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?