When it comes to investing your hard-earned money, whether through a pension, savings plan, or investment bond most people focus on growth and returns. And while that’s important, there’s another factor that can quietly eat away at your wealth over time. The elephant in the room in our view are charges.
These charges often go unnoticed, but their long-term impact can be substantial especially when you’re saving for the future. At our firm, we’re committed to full transparency and helping clients understand how to keep more of what they earn by managing costs carefully.
Not All Costs Are Obvious – But They All Matter
There are several types of charges built into most financial products in Ireland which are offered to retail clients. Some are clear and upfront. Others are buried in the small print. Understanding them puts you in control.
Annual Management Charge (AMC) vs. Ongoing Charges Figure (OCF)
- AMC (Annual Management Charge) is the fee you pay the fund manager for looking after your money. It’s often quoted as a percentage (e.g. 1% per year).
- OCF (Ongoing Charges Figure) includes the AMC plus other hidden or additional costs like admin, marketing, or custody fees. It gives a more complete picture of what you’re paying.
The way we explain this to clients is to think of it like this: if the AMC is the ticket price, the OCF is the total cost of going to the show, including booking fees, snacks/drinks and parking. You want to know the full price, not just the headline!
In an Irish sense the large companies are not good at disclosing all the costs! We don’t get the OCF figure from the Irish based Insurance Companies currently so its very hard as advisors to give clients an understanding on costs. We do however have some technology in-house that can get us close to understanding the “actual” costs.
If you have a large amount of money to invest, the difference between the AMC and the OCF would be easily a deposit for a house or a very fine car in savings every few years so “advice” is important!!!
How Costs Affect Your Long-Term Wealth
The long-term nature of pensions and investment bonds means that even small fees can have a big impact on your final fund value.
Let’s say you invest €100,000 over 20 years with an average return of 6% per year:
- With annual costs of 0.5%, your fund grows to around €212,000
- With annual costs of 1.5%, your fund only grows to around €174,000
That’s a difference of €38,000 – just from fees alone.
And if your costs are higher again say 2% or more you’re handing over tens of thousands of euros in charges that could have stayed in your pocket.
It’s not just what you earn - it’s what you keep. Even small fees can quietly drain thousands from your future wealth.
The Impact of “Allocation Rates”
Another often-overlooked cost is your allocation rate—this tells you how much of your money actually gets invested when you make a contribution.
- A 100% allocation means every cent of your money goes to work immediately.
- A 95% allocation means only €95 of every €100 gets invested; the other €5 goes to charges or commissions.
Over time, reduced allocations mean your money starts off with a handicap. You’re effectively paying a fee before your money even hits the market.
If you’re contributing monthly into a pension or savings bond, and only 95% of it is invested each time, the difference can really add up and lower your long-term returns.
Why Transparency Matters
At our firm, we believe you deserve to know exactly what you’re paying. Too many people find out too late that their charges were higher than expected, and their fund growth suffered as a result. We take pride in offering:
- Clear pricing with no hidden fees
- Access to cost-efficient funds with low OCFs
- No reduced allocations – your full contribution goes to work
- Regular reviews to ensure your charges stay competitive
Our goal is simple: to help you keep more of your money working for you, not for someone else.
The Bottom Line: Lower Costs = Better Outcomes
When you reduce unnecessary costs, more of your money stays invested and the compounding effect over time is huge.
It’s like walking up a hill with a heavy backpack. If we can remove even some of the weight (costs), you’ll reach your summit (your financial goals) faster and with less strain.
Want to See the Impact for Yourself?
We use technology and clear visuals to show you how fees affect your individual plan, we can easily do a simple “reduction in yield” illustration for you when reviewing existing plans under our Second Opinion service.
A small tweak in charges today can mean a significantly better outcome tomorrow.
Curious What You’re Really Paying in Fees?
Book a free second opinion review today and uncover hidden charges in your current financial plans. Let’s start a plan that’s fully transparent so you can keep more of what you earn.