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the dirty invoice for unit-linked fees

by archyw

What is the difference in fees between traditional unit-linked funds and so-called clean-share funds, transparent on fees and without retrocessions? 1%! Yes, 1% less annual performance, according to the detailed analysis of Good value for money. Explanations.

Life insurance is a layer of fees: installment fees, annual contract management fees, arbitration fees, pilot management fees, annuity fees, etc. And again, this list only relates to the fees collected by the insurer managing the contract! However, each unit of account (UC) support incorporates its own layers of costs. Of course, from the point of view of the saver, the internal fees of UC funds are invisible since fund managers report performance net of fees. It does not prevent: these fees levied by asset managers (fund managers) exist and sometimes reach staggering levels. Depending on the management methods (active or passive), the asset class (stocks, bonds, etc.) and other parameters, these costs may vary between 0.20% and 3.50% per year, apprend-t-on sur Good value for money.

This contract prescriber site has been calculating the average fees for CUs over the past few years and this year adds a valuable additional element of comparison: the average fees on so-called funds. clean share, a range of UC in full development which limits costs and refrains from paying a part to insurers and distributors of contracts (current practice of retrocession of life insurance costs). This comparison highlights the overlay of costs on certain UC media.

The surcharge for the saver linked to the fact that his insurer chooses traditional shares giving rise to retrocessions rather than shares clean share without retrocessions appears on average 1% less annual performance, notes Goodvalueformoney.eu (GVFM). Unfortunately for savers, funds clean share are not available everywhere, but many brokers or savings associations or wealth management networks are currently adding them to their contracts.

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Lower fees on CPUs

Precision of importance: the average costs here calculated by GVFM are the real fresh, actually taken. They are over fixed costs announced by the management companies since they add additional layers: transaction fees and performance fees.

This comparison with the funds clean share thus shows to what extent certain overly burdensome tariff policies can weigh on the interest of a UA fund. The trend is all the same downward, as noted by Good value for money: The competitive pressure combined with the increased obligations of transparency on fees have led management companies to lower current management fees by around [0,02 0,07 point] according to the asset class in 2021 compared to the measures carried out in 2020 by Good value for money.

Life insurance: the comparison of offers

Indirect costs that add to those of the insurer

All these indirect costs, lower for funds such as trackers (ETF), all the more heavily as they add, indirectly, those taken by the insurer. An example cited by GVFM in its newsletter: A saver who invested in a UC actions in a life insurance contract will therefore be deducted on average annually: 0,90% on average in terms of management fees on UC of the contract (fees on UC of the life insurance contract), 2,01% on average for ongoing management costs internal to the support, i.e. 2.91% overall.

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Result: It is therefore necessary that the manager of the support in which the client has invested a performance of at least 2.9% [bruts, avant frais, NDLR] on the exercise for the saver to obtain a performance of 0%. To do as well as the euro fund, the manager must perform on average 4% per year, which is high.

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