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Global Eye / PIC / DeVere / Acuma et al - Zurich Vista UAE

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Global Eye / PIC / DeVere / Acuma et al - Zurich Vista UAE

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Old 25th Mar 2017, 14:03
  #61 (permalink)  
 
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Originally Posted by BigGeordie View Post
Jet, if you are happy to give away 2% or so of your life savings every year in fees but won't consider paying $20 for a book that suggests an alternative (and easy) approach then you really do need some good financial advice!
Jesus - I do wish people would read what others actually post.

I have nothing at all against people going for cheap tracker funds rather than managed investments - I dont need yet another get rich quick book to tell me about them. What I was commenting on was this guys advice to walk away from a $39k investment with the 'expectation' that you are going to get a total return over the next 24 years of 8%.

But if you think this guy knows better that Warren Buffett perhaps you need to buy all his books.
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Old 25th Mar 2017, 14:07
  #62 (permalink)  
 
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Originally Posted by Dropp the Pilot View Post
Read one.

You will give him $20 and he will give you some advice .

If you have a million dollars with any of the pension firms you gave $25,000 to your account "manager" this year and received nothing in return.

You can play with your calculator a bit and see which of those is a better deal.
I retired at 55 and now live off my investments - funnily enough I did it without listening to guys trying to flog their books and telling me that returns of 8% were to be expected.

Now sitting on the beach drinking a Cerveza - where did it all go wrong..
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Old 26th Mar 2017, 10:08
  #63 (permalink)  
 
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Originally Posted by transport jock View Post
Simple question.. I signed up for a Zurich investment last year (25yr "saving" plan) before I found this thread or heard about their dealings....

Before I pull the plug based on what I have read here and from another source, has anyone had any postitive experience from them?

I emailed my "advisor" from Holborn and complained about the less than 2% growth in my product since I invested with him, and he blames a downturn in market forces...




I promised you a post about the Zurich Vista product and here it is, with apologies for the length of the post. This product (and others like it) are extremely complex, and they use a jargon that is not familiar to a lot of people. I have done my best to use plain language, but I’m not sure how successfully!

So, some background. Most people living in the Middle East are making a little more money than they would if they were at home, and with our parents’ words about thrift and saving for a rainy day ringing in our ears, we intuitively understand that we should be saving for that rainy day, or retirement, or university fees etc.

The fact that a person may be a successful pilot, or engineer or teacher etc., earning agood income, does not necessarily mean that their level of financial capability is any higher that their peers back in their country of origin. Study after study in the UK, the USA, Australia and other developed countries have shown that consumers have a lot of difficulty in understanding savings/investment/pension products.

We can of course simply let our money accumulate month after month in a bank account, but the temptation to upgrade the car or go to Hong Kong for the weekend can be difficult to resist and can disrupt the establishment of a regular savings habit. In addition, we also know that banks pay very little interest at the moment.

The solution that financial advisers often suggest is a regular contribution to a collective investment scheme.

A collective investment scheme is a type of financial product where the investments of a large number of people are pooled together. The rationale is that economies of scale can be brought to bear (thus, in theory at least, reducing investment costs) and also so that smaller investors can participate in opportunities that might otherwise be limited to larger investors.

There are three common legal frameworks used to create a collective investment scheme:
  • A unit trust;
  • A variable capital company; and
  • A unit-linked insurance policy.
Perhaps the key difference between unit-linked insurance policies and the other collective investment schemes is that the underlying assets of the unit-linked insurance policy are owned by the insurance company rather than by the investor, and the investor has no legal claim to those underlying assets.

The onlything that the investor owns is an insurance policy issued by an insurance company in the Isle of Man or the Channel Islands. The value of that policy may be linked to the performance of other assets (such as funds managed by Morgan Stanley, JP Morgan etc.), but those assets are owned by the insurance company.

This is an important distinction. These policies are often sold on the basis of the portfolio diversification benefits that they offer, but the truth is the opposite - if you buy a Zurich Vista policy you have a 100% counterparty exposure to a single company – Zurich International Life Limited, and if Zurich International Life Limited goes under those assets are available to meet the claims of all creditors.

Holborn Assets is authorised as an insurance broker by the Insurance Authority in the UAE, and I can find no evidence that it is authorised in any other capacity. That means that Holborn Assets can only sell insurance policies, and that any investment products that it sells are unit-linked insurance policies.

The history of these products is complicated, but suffice it to say that if you die while you own one of these products the insurance company will pay to your estate the value of your contributions to that point, plus a small margin, say 1%. That extra 1% makes these product, legally, insurance policies.

Now let us turn to the charges/costs of these policies. As the poster referenced Zurich I will look only at the Zurich Vista product, but others in the marketplace are broadly similar. Charges/costs fall under two broad headings – initial charges and ongoing charges.

The key documents containing most of the information on charges can be found here:
http://media.zurich.com/international/pdfs/MSP10238.pdf

https://www.zurich.com.sg/_/media/dbe/singapore/docs/life-solutions/savings-and-investments/msp10321-vista-product-summary-06-14.pdf?la=en&hash=A6B272D362C27C49F42FAA571937856270E082E4

https://www.zurich.com.sg/_/media/dbe/singapore/docs/life-solutions/savings-and-investments/msp10320-vista-technical-factsheet-06-14.pdf?la=en&hash=02BDF03DB000CA302AA4352CF5DC4348370C7D7B

Initial Charge. The first and most devastatingly expensive charge is made at the commencement of the savings plan. It is not called an initial charge, and you would really need to know your way around financial products to recognise if for what it is. It is called the “initial contribution period”, a period at the start of the savings plan (up to 18 months long) where your money is used to buy special units which have “no encashment value” (i.e. they are worthless).

Co-incidentally (not!) on the day you sign the application form Zurich will pay a commission to the selling broker of up to 18months’ worth of your savings!

Let us use the example (here and later) of a policy where you save $1,000 per month for 25 years – not an unusual scenario. That means that the day your broker lodges the application form with Zurich they get $18,000 in commission, cash, upfront!

It also means that after say 24 months, the value of your investment of $24,000 is just $6,000 (assuming no growth) because ofthe $18,000 in charges.

OngoingCharge. Sticking with the example of a $1,000 per month 25 year savings plan the ongoing charges (equally devastating for your financial health) are:
  • Policy Charge: $7.50 per month = 0.75%;
  • Policy management charge: 0.75 per annum;
  • Credit card payment charge: 1%;
  • Mirror fund charge: 0.75%
  • Average underlying fund charges: 1.5%
  • Underlying fund – other expenses: 0.5%
This gives us an ongoing charge rate of 5.25% per annum.

Now, the rate of return that can be expected from a balanced stock portfolio over the long term, adjusted for inflation, is generally accepted to be around 7%. If you are paying ongoing charges of 5.25% you haven’t a hope of achieving a 7% return.

Those ongoing charges are much more likely to result in poor investment performance than the “downturn in market forces” cited by your adviser.

Last edited by johnjonesnine; 26th Mar 2017 at 12:00. Reason: formatting
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Old 26th Mar 2017, 10:20
  #64 (permalink)  
 
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Originally Posted by Jet II View Post
I retired at 55 and now live off my investments - funnily enough I did it without listening to guys trying to flog their books and telling me that returns of 8% were to be expected.

Now sitting on the beach drinking a Cerveza - where did it all go wrong..


Clearly you do not think that it went wrong, but if after using the services of one of these advisers you are on a beach at 55 drinking Cerveza there is a good chance your adviser is in a 5-star hotel drinking champagne!


Cin Cin.


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Old 26th Mar 2017, 10:35
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Thanks for that detailed reply JJ. According to my advisor I will get just over 6000$ back now if I cancel the policy, out of 19000$ I paid in. I guess it will be better to cut my losses now and invest my monthly contributions elsewhere..
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Old 26th Mar 2017, 10:44
  #66 (permalink)  
 
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Originally Posted by transport jock View Post
Thanks for that detailed reply JJ. According to my advisor I will get just over 6000$ back now if I cancel the policy, out of 19000$ I paid in. I guess it will be better to cut my losses now and invest my monthly contributions elsewhere..


If you believe that the scale of the charges was not explained to you then you may have been mis-sold the product and you should make a formal complaint to the Insurance Authority in the UAE. You can submit that complaint via their website:
http://www.ia.gov.ae/en/Pages/default.aspx


As the person dealing with your complaint may not speak fluent English I would strongly recommend that you get a professional translation of the complaint into Arabic, and say that you are happy for them to respond in Arabic (i.e. make it easy for them).


Meanwhile, write to Zurich and tell them that you believe that you have been mis-sold the policy. Tell them that pending consideration of your complaint you wish to pause contributions without penalty, then cancel the bank instruction.


Perhaps you would keep the forum posted on how your complaint progresses?

Last edited by johnjonesnine; 26th Mar 2017 at 10:49. Reason: additional wording
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Old 26th Mar 2017, 10:53
  #67 (permalink)  
 
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Thanks. Still on holiday at the moment but will get the ball rolling once I get back in a weeks time
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Old 26th Mar 2017, 14:06
  #68 (permalink)  
 
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Originally Posted by johnjonesnine View Post
Clearly you do not think that it went wrong, but if after using the services of one of these advisers you are on a beach at 55 drinking Cerveza there is a good chance your adviser is in a 5-star hotel drinking champagne!


Cin Cin.


He would have a job as I dont have a financial advisor, I think they are all a bunch of crooks on a par with Real Estate agents - I self invest..

Besides, if these Investment Advisors are so good why are they not sitting on the beach with a Cerveza?

Chin Chin


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Old 26th Mar 2017, 17:13
  #69 (permalink)  
 
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Originally Posted by Jet II View Post
He would have a job as I dont have a financial advisor, I think they are all a bunch of crooks on a par with Real Estate agents - I self invest..

Besides, if these Investment Advisors are so good why are they not sitting on the beach with a Cerveza?

Chin Chin

Perhaps I have you wrong, but back at post 42 you said "I have had a QROPS with Deveres for almost 10 years" so I think its fair to assume that you are a DeVere customer, albeit not a regular savings plan customer. I do also applaud your self-investment approach, it takes a bit of work, but it is so worthwhile.

I hope that QROPS advice was suitable. DeVere is currently the subject of an investigation by the Financial Conduct Authority in the UK in relation to its pension transfer business:
https://www.moneymarketing.co.uk/fca...gation-devere/

It might be worth putting down that beer for a little while and dig out those old QROPS files. See if you can figure out how much DeVere made out of that transaction.
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Old 27th Mar 2017, 00:43
  #70 (permalink)  
 
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Originally Posted by johnjonesnine View Post
Perhaps I have you wrong, but back at post 42 you said "I have had a QROPS with Deveres for almost 10 years" so I think its fair to assume that you are a DeVere customer, albeit not a regular savings plan customer. I do also applaud your self-investment approach, it takes a bit of work, but it is so worthwhile.

I hope that QROPS advice was suitable. DeVere is currently the subject of an investigation by the Financial Conduct Authority in the UK in relation to its pension transfer business:
https://www.moneymarketing.co.uk/fca...gation-devere/

It might be worth putting down that beer for a little while and dig out those old QROPS files. See if you can figure out how much DeVere made out of that transaction.
I had Deveres set up a QROPS platform for me because at the time it was impractical to do it myself, I now self manage those funds through the holding company. Deveres made a decent amount out of setting up the QROPS platform but I rather doubt that any other financial advisor would have been significantly cheaper at the time.
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Old 27th Mar 2017, 05:42
  #71 (permalink)  
 
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Originally Posted by Jet II View Post
I had Deveres set up a QROPS platform for me because at the time it was impractical to do it myself, I now self manage those funds through the holding company. Deveres made a decent amount out of setting up the QROPS platform but I rather doubt that any other financial advisor would have been significantly cheaper at the time.


Bear in mind the DeVere did not set up a QROPS platform for you - they wouldn't know where to begin. They sold you an off-the-shelf product manufactured by someone else. The only expense that DeVere incurred was in the time spent by the salesman talking you into the transaction. How many hours did that take, and how much commission did they earn? Do you know?
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Old 27th Mar 2017, 06:42
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JJ9

You make some good points but you're also spouting some real BS. My QROPS is with DeVere, my product is actively managed and I make the final decision based on information and advice from my advisor via quarterly meetings or more frequently if needed.

I have no doubt there are some real sharks out there but don't tar all with the same brush.
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Old 27th Mar 2017, 07:41
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Originally Posted by MacSheikh View Post
JJ9

You make some good points but you're also spouting some real BS. My QROPS is with DeVere, my product is actively managed and I make the final decision based on information and advice from my advisor via quarterly meetings or more frequently if needed.

I have no doubt there are some real sharks out there but don't tar all with the same brush.


Let me ask you the same question, do you know how much DeVere took out of your pension pot when it was transferred?
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Old 27th Mar 2017, 14:56
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Originally Posted by johnjonesnine View Post
Bear in mind the DeVere did not set up a QROPS platform for you - they wouldn't know where to begin. They sold you an off-the-shelf product manufactured by someone else. The only expense that DeVere incurred was in the time spent by the salesman talking you into the transaction. How many hours did that take, and how much commission did they earn? Do you know?
Do you know of any financial advisors that dont take commission for setting up QROPS platforms?. Given the amount of work that Deveres did in contacting my previous company and getting a transfer figure, organising all the contract paperwork etc - I would certainly be interested in the name of any company that does all this for nothing.

As for the cost well I just checked and it came in at just under 2%.
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Old 27th Mar 2017, 16:51
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Originally Posted by Jet II View Post
Do you know of any financial advisors that dont take commission for setting up QROPS platforms?. Given the amount of work that Deveres did in contacting my previous company and getting a transfer figure, organising all the contract paperwork etc - I would certainly be interested in the name of any company that does all this for nothing.

As for the cost well I just checked and it came in at just under 2%.
Most of the more reputable advisers (and I appreciate that its not easy to tell the difference) will set up a QROPS on a fee basis rather than commission. They don't like to do it though, and they may not advertise it. They will probably frame the choice in terms of "either you can pay me X amount in cash now or else I can take a commission from the company and you don't pay anything". 99.9% opt for the latter, even though it is far more expensive.

You asked for an example, well just Googling "fee-based QROPS advice" throws up this FCA regulated firm on the first page:
Fee based advice on QROPS, UK Pension Transfers

(BTW, I have absolutely no connection to this firm, or any other financial adviser).

Regarding the amount of work involved, I would estimate the whole thing (excluding schmoozing with you) to come in at around two hours - max.

Now your average DeVere adviser has no (or at best very basic) financial qualifications. Compared to other occupations I would put them at or around the level of a regular mechanic or plumber. So I would value their time at no more than 75 pounds an hour. That means the value of the services provided to you by Devere is about 150 pounds.

You say that the transaction costs of your QROPS was 2%. I'm quite sure that 2% of your pension pot is a heck of a lot more than 150 pounds.

But the real kicker is that you didn't pay 2%. There is no commission-based QROPS in the market that only pays the broker 2%. 2% may be what they disclosed to you, They tend to start at 7% and go up from there:
Concerns raised over undisclosed QROPS transfer fees of up to 12%

Full commission disclosure is not required for QROPS anywhere in the GCC - so when I hear a pilot or a teacher or an engineer telling me that they know what they are paying I have to wonder how that could be.

Post a link to the specific product that you bought and let us all have a stab at estimating the true costs.
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Old 27th Mar 2017, 17:10
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Methinks he doth protest too much!
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Old 28th Mar 2017, 00:18
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Originally Posted by johnjonesnine View Post
Most of the more reputable advisers (and I appreciate that its not easy to tell the difference) will set up a QROPS on a fee basis rather than commission. They don't like to do it though, and they may not advertise it. They will probably frame the choice in terms of "either you can pay me X amount in cash now or else I can take a commission from the company and you don't pay anything". 99.9% opt for the latter, even though it is far more expensive.

You asked for an example, well just Googling "fee-based QROPS advice" throws up this FCA regulated firm on the first page:
Fee based advice on QROPS, UK Pension Transfers

(BTW, I have absolutely no connection to this firm, or any other financial adviser).

Regarding the amount of work involved, I would estimate the whole thing (excluding schmoozing with you) to come in at around two hours - max.

Now your average DeVere adviser has no (or at best very basic) financial qualifications. Compared to other occupations I would put them at or around the level of a regular mechanic or plumber. So I would value their time at no more than 75 pounds an hour. That means the value of the services provided to you by Devere is about 150 pounds.

You say that the transaction costs of your QROPS was 2%. I'm quite sure that 2% of your pension pot is a heck of a lot more than 150 pounds.
Well I checked out AES International (and I notice there is no shortage of complaints about their advice from disgruntled customers) and they show no prices for their services - in fact they seem more interested in managing your QROPS account rather than just setting it up - but I cant for the life of me believe that they will go to all the effort of setting up a QROPS account for 150 (or anywhere near that figure). If they were that cheap that would raise warning flags by itself.

What did strike me from reading about AES was this comment from one of their employees:

"After an initial 3 month training period you are immediately given levels of autonomy and responsibility found no where else in the financial services industry as a graduate."

so bearing in mind that their staff are paid on commission like the rest of the industry I somehow doubt that their advice will be any better/worse than Deveres.


Post a link to the specific product that you bought and let us all have a stab at estimating the true costs.
Well my QROPS account is with Sovereign in Guernsey, they charge a quarterly management fee of 96 and 15 for each buy/sell transaction.

https://www.sovereigngroup.com/pensions/guernsey/


I tend to keep a lot of cash in my QROPS account so the buy/sell fees are insignificant. As far as products go my priority for this account is capital preservation so that rules out tracker funds (I dont like to use managed open funds), therefore I went with Structured Notes. This is one of the first that I invested in, there is a 4% buy in with no management fee and this one happened to close early after 2 years with a 32% return. I still have some Notes but the returns are not as good as they were, the glory days are gone, but they still return around 8% with a 60% barrier against market falls.


https://www.dropbox.com/s/jsx22qkz1i...0Note.pdf?dl=0


I get that you dont like Deveres but in my experience they are no better or worse than any other Financial Advisor in the business - after all if these guys were any good they would have made their millions and would be retired to the Bahamas.
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Old 28th Mar 2017, 05:34
  #79 (permalink)  
 
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Hi Jet II

Thank you for your response.

I will do some research and revert. But one question, what did you transfer out of? A Defined Benefit or a Defined Contribution scheme?

You say "I get that you dont like Deveres but in my experience they are no better or worse than any other Financial Advisor in the business". I think were really in agreement here.

I don't dislike Deveres any more or less than any other financial advisory firm in the GCC. They are all poorly qualified salesmen/women, selling high-commission poor-value toxic financial products (products that would be illegal in the UK) in an unregulated market. If you deal with any of them you have little or no come-back as a consumer.

Devere are just bigger (and thus I assume better at it) than anyone else.


Regards
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Old 28th Mar 2017, 10:21
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jet II,

What you leave out of your criticism of Andrew Hallam, is compounding.

8% compounded over 25 years works out to a lot more than 8% profit. And it will be a lot more than any managed fund or average IFA can do.

That is Warren Buffetts advice too, if I believe AH.

My 300k invested in Generali over 8 years has made a whopping 1%. Don't go anywhere near the likes of Generali/FP/zurich even as recommended by nice trustable UK trained/qualified/experienced IFA. Nice blokes. Bad maths.
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