Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

cur­rent bro­ker is rec­om­mend­ing an in­vest­ment plat­form, with a selec­tion of funds he has cho­sen him­self. Should I con­sider this ser­vice, or just use an offthe-shelf in­vest­ment port­fo­lio that the life as­sur­ance com­pa­nies of­fer? James, Naas, Co Kil­dare. WE have started to see some growth in the in­vest­ment plat­form mar­ket in Ire­land in the past five years. It is a very fast grow­ing sec­tor in the UK, and is start­ing to dom­i­nate the mar­ket there. Plat­forms of­fer you an easy to use ser­vice which gives a wide range of in­vest­ments across mul­ti­ple in­vest­ment providers. This gives in­vestors more choice and flex­i­bil­ity than the tra­di­tional in­vest­ment with a sin­gle life as­sur­ance com­pany, who may of­fer 20 of their own funds and a very lim­ited range of ex­ter­nal, third party in­vest­ment man­agers. Some bro­kers will re­search the wider mar­ket and de­sign their own model port­fo­lios within th­ese plat­forms.

Be­fore ac­tu­ally in­vest­ing in one of th­ese port­fo­lios, I would ask the bro­ker to ex­plain how he se­lected the funds, and also how he will man­age those port­fo­lios on an on­go­ing ba­sis. The main prob­lem I see with th­ese self-se­lected port­fo­lios is on­go­ing man­age­ment. There is sig­nif­i­cant ad­min­is­tra­tion re­quire­ments to make sure th­ese port­fo­lios are ef­fi­ciently re­bal­anced ev­ery year and the strate­gic and tac­ti­cal as­set al­lo­ca­tion is re­viewed.

There are also some po­ten­tial tax pit­falls with us­ing a plat­form. Life as­sur­ance com­pa­nies of­fer a ‘wrap­per’ ser­vice, which al­lows fund switch­ing with­out any tax charge. In plat­forms, I have seen port­fo­lios where each in­di­vid­ual fund within the port­fo­lio is taxed sep­a­rately and this can be very in­ef­fi­cient. A full ser­vice of­fer­ing with a bro­ker/plat­form can be ex­pen­sive, and the life as­sur­ance com­pa­nies provider sim­i­lar port­fo­lios, of­ten for sig­nif­i­cantly less cost.

I like the plat­form ser­vices, and they can of­fer very cost ef­fec­tive and trans­par­ent ac­cess to global port­fo­lios, there is just more scope for prob­lems so the investor needs to spend some time un­der­stand­ing the pro­posal. If they don’t have time to do this, I would rec­om­mend con­sid­er­ing an off-the-shelf so­lu­tion model port­fo­lio ser­vice with the life as­sur­ance com­pa­nies.

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