Advice please- older friend meeting financial planner

Hi all, long time lurker here, great website, thanks for saving my sanity at a time when there wasn’t/isn’t much around!. Anyway I am asking for advice on behalf of an older friend who has a meeting with his financial planner (who funnily enough has been very hard to get hold of the last while!) this week. Basically he has all of his pension in the IL&P and it matures in a couple of years. He wants to know what questions should he be asking his planner with regards his pension, savings etc, and if there is anything he can do at this stage in the game. I know it is hard to give advice without knowing the details but he is just looking for basic ideas. Any thoughts would be very welcome. Thanks.

  1. What exactly his pension is invested in - if other funds then what exactly are they invested in

  2. How many years exactly to retirement - the closer to retirement the more low risk fixed income like cash in the bank assets one should have

  • need to decide what risk to have each year closer to retirement. This is because there is less time to recover
  1. If was invested in some bombed out assets like irish banks then needs to decide if cut and run or if most of damage has been done and will leave some money to benefit from whatever recovery that comes
    typically small investors buy at the top and sell at the bottom - loss of nerve etc

4 tax on retirement

5 benefits of leaving it longer to retire

  1. income tax benefits of stuffing lots in the pension for the final few years - could do this and pick some safer asset classes then can get good tax benefits

just some ideas

What fees is he paying to both the financial planner and PTSB.

Also as far as I’m concerned you can tell a lot about your financial planner by when he contacts you. If he only contacts you when prices are going up, he’s probably simply a commission hound. If he talks to you when prices are going down, a good sign in my book.

Thanks very much for the quick response. He has alot to go on there and will be talking for the night I’d say!! All ideas very much appreciated.

If he is close to cashing it all out for an annuity I would personally @ 63 years old , switch it all to government bonds only . Preserving the lump is the most important thing for him.

Never mind the jargon and crap that Irish Life will try to confuse him with , he may also get an AVC( a topup pension ) also in bonds as it will be rather tax efficient at his age.

Tell him pay a good tax accountant €200 for a good hours analysis first and tell the accountant he wants to minimise risk and preserve capital for the next 2 years as a Priority #1 and Priority #2 .

My opinion: (I don’t have an Irish Life pension, but I used to)

I’ve had dealings with Irish Life sales people – they make it as difficult as possible for you to change out of their ‘consensus fund’. They start spouting well-rehearsed scare tactics to keep you in the fund that’s most profitable for them. Irish Life pensions are mediocre at best and there should be no room for below average performance in a smart investor’s portfolio.

Ring them up and start giving orders. If they try to get all schmoozy with you, ask to speak to the manager. If they get one whiff of you being a sheeple, they’ll sacrafice you on the altar. It’s getting to the stage now on the ISEQ where good money is being thrown after bad.

My opinion is that I’d sooner give my money to Tony Soprano than to an Irish Life salesman ( sorry is that a planner or advisor nowadays ?)

My advice is see a tax accountant who is not selling you a pension scam and pay €200 for timely advice !!!

Here are some of my ideas (some already covered above) without getting too complicated.

If very near retirement (i.e. within 12 months of being required to buy an annuity)

  • move into government bonds.
  • move any proportion they wish to take in a lump sum into “cash”

If further away from being required to buy an annuity retain a proportion in equities. A rule of thumb might be retain 20% in equities for each year away from retirement. e.g. withing 12 months 0%, 1-2 years 20% 2-3 years 40% etc. 5+years 80-100%.

Is your friend entitled to invest in an Approved Retirement Fund (ARF)? If so they would not be required to buy an annuity immediately and could retain a longer investment horizon and hence defer derisking (i.e. retain a higher investment in equities). But again, any proportion of the assets that your friend intends to take as a lump sum in the very near future (i.e. within 12 months) should be in “cash”.

If investing in an ARF, then they will need a higher yielding portfolio (i.e. it needs to pay income). So invest maybe 20% in corporate bonds and look for a high yield equity fund for the rest (most managers have them these days) that will pay income.

Make sure all the assets are invested “passively” to minimise cost.

Totally agree with comments about Irish Life - I’ve been screwed 3 times by Irish Life sales guys. I even went to the trouble to take out a pension with another company - who were then taken over by Irish Life! Avoid! Believe nothing they say. Ask their advice and do the opposite. If you’ve got “investments” with them already just accept that most of it has gone into the sales guys’ pockets and the “expert” managers’ bonuses and stop worrying about it - it’s gone.

As an broker I would advise that your friend seeks independent advice from an authorised advisor before or after meeting with the guy from ILAC, your friend may have to pay a fee but not for the first appointment.

At the first meeting your friend should make available all his/her details about existing pensions, life covers, savings and investments etc and importantly their hopes and plans for retirement.

Having done this he/she should then compare the advice giving by the independent advisor who should have no ties to any life company or bank to the advice given by the guy from ILAC taking into account charges, risk, past performance, where are funds invested, do the fund managers put their own money in these funds.

It is likely your friend will get two very different results from a tied agent(ILAC) and an independent advisor.

Also your friend should ring the Financial Regulators office to get the name and address of a local Authorised Adviosr.

Hi, great advice there, just wondering would the same thoughts you had regarding IL& P salesmen (and pensions- not the best) also be applicable to Standard Life?, not that I want to tar them all with the same brush but a dodgy commission salesman prob does not vary from one office to another!
edited by ARW - please avoid calling people names!*

Just to update the people who gave advice, my friend had the meeting with financial planner, he was very shifty and uncomfortable with all of the questioning. He left as quickly as he could. My friend is now going to follow through with the excellent advice from the pinsters, thanks very much for helping him and taking the time to type in some much needed info. It is very much appreciated.

Get advice from an Authorised Advisor and dont fall for this free lark from life companies, banks or tied agents. There is no such thing as a free lunch, you may have to pay a fee but you should end up with unbiased independent advice. Ring the Financial Regulator for your nearest independent advisor.