In this week’s article, I’m going to share some of the ‘best investments Ireland has to offer’.

Investing in Ireland can be like staring into a fog at the best of times, until now of course! You have stumbled upon the oracle which will clear that fog for you! In short, in this article, you will learn:

• The ‘best investments’ Ireland offers
• How you can get your hands on them!
• Why all of this may be utter nonsense!

The best investments Ireland offers:

Imagine an investment that offers a somewhat ropey capital protection on the amount you invest.

Imagine that same investment also offering you a meagre chance at actually making any real returns!

Imagine an investment that is so hopelessly complicated that the provider needs to create a ‘Broker Training Guide’ to help ‘advisors’ to explain it to people, even remotely clearly!

Imagine an investment that has an Initial Fee of 10% of the amount you invest! Approximately half goes to the ‘advisor’ that sold it to you, and the other half goes to the provider that built the product?

Imagine an investment that has delivered an average 5-year total return of +7% overall 5-year rolling periods in the past decade! That’s 1.3% per year – that was the average this best investment Ireland has to offer delivered to investors apparently!

One must assume that that is after the fee was deducted, otherwise the average outcome would have seen investors lose 3% on average over the course of the 5 years. Yikes. You’d have been far better off investing even in the ‘dangerous middle‘ we wrote about previously.

Imagine an investment that exists purely to generate commission for your ‘advisor’, and fees for the company that produces it.

Imagine an investment that discourages you from investing in low-cost and productive assets which have a proven track record of delivering long-term returns for investors.

Imagine an investment that preys on people’s fear of market volatility, and capitalises on it by encouraging them to take their money and invest it in the ‘best investments Ireland has to offer’.

As you may be recognising, these ‘opportunities’ are not my definition of the ‘best investments Ireland has to offer’ but seemingly, it is the definition according to some less than scrupulous ‘advisors’ out there.

How you can get your hands on them!

Let me share a brief story.

A relative of mine recently sent me an email she received out of the blue from her ‘advisor’. Previous to this email, she hadn’t heard from them in 2+ years. She was suspicious of his intent, so she asked me to sense-check it.

I was hoping it wouldn’t be, but it was yet another case of the ‘advisor’ trying to get her to take €200k of her pension assets that she had with him, and invest it into a ‘wonderful opportunity’ that he had for her.

Apparently, this was not to be missed! The closing date was fast approaching, and this was one of the ‘best investments Ireland has to offer’ apparently. Turns out, the ‘advisor’ was pitching a structured ‘Investment Bond’ product which ticked all of the unsavory boxes above.

When I investigated it for her, I found that the ‘Capital Protection’ aspect of it was ropey at best, the equity participation unlikely to lead to any real returns over the 5-year term, terrible past performance, and the fees were bonkers for what it was.

It was being promoted to her as a way to avoid ‘the massive volatility in the markets right now’. She is not an experienced investor, and so the mention of this ‘massive volatility’ struck fear into her.

When I tracked-down the Key Investor Document (KID), it seemed the ‘advisor’s’ chief priority was the 5% initial commission (€10,000) that he would receive from the product provider if my relative simply filled in and returned the application form, which he sent her in that same email!

If you want to access this type of best investment Ireland has to offer, you simply need to use a Broker or Advisor that sells this stuff! Most Financial Advisors that I interact with (I interact with quite a few) wouldn’t touch this stuff – they recognise it for what it is – short-sighted, mostly poor performing, dangerous and usually not in clients’ interests.

I’ve said it before, and I’ll say it again…

The majority of financial advisors in Ireland do a decent job for their clients. Their intent is positive, and they are not out to rip them off (which is the bare minimum standard one would expect of a professional service I guess!)

PD

Read our article on the best ways to find Financial Advice in Ireland here.

However, there is a seemingly large grey area where these products are being pushed hard. You can see why ‘advisors’ would do it – they can make a lot of very quick and very easy money.

Simply get their existing clients, who trust them, to take a lump of their invested assets and put it into a ‘capital protected’ structured product for a few years. And they can probably convince themselves that they are really ‘helping’ their clients in the process!

Would you do it if you were them? Speaking personally, it’s not something we do at Informed Decisions – it is totally counter to our approach to serving clients, and counter to how we operate as a transparent and client-focused business who prioritises client outcomes.

Speaking of outcomes, some of these products work out, of course, but some don’t. The potential poor returns and potential loss of capital is prominent. The downside is far too high, in my view. Generally, there is only one clear winner in these products – and it isn’t the investor!

As a client of a financial advice firm, I believe you should not mistake proactive ‘advice’ like this as productivity, or as action in your best interests. I believe that one of our most important roles in serving clients of Informed Decisions Financial Planning (proudly regulated by Central Bank of Ireland!) is ensuring they avoid such dangerous nonsense.

I hope this piece helps you or a loved-one avoid a potentially costly mistake, or at least to go into something with your eyes wide open, and the fog somewhat lifted!

Paddy.