Publication by the Good Value for Money site of its 2022 benchmark of the costs borne by savers within their units of account

  • Insurance contract analysis
  • Good Value for Money

A saver who invests in units of account in a multi-support contract annually bears at least the following two types of costs which add up:

  • them life insurance policy management fees applicable to unit-linked units:
    • These fees are valued by Good Value for Money in 2022 at 0.80% per year on average ;
    • They may vary depending on the nature of the supportsin particular on SCPI-type real estate vehicles for which they are significantly higher;
    • Their samplingtest made by the life insurer; it gives rise to a reduction in the number of shares of each of the units of account held by the customer on his contract; according to the contracts, the debit of management fees on UC can be annual, quarterly, monthly, or even daily ;
  • them unit-linked management fees:
    • These costs include several elements:
      • the remuneration of the asset manager for the management of the financial supports (UC) for which he is responsible in compliance with the support specifications (for example: moderate profiled management with a performance tunnel of + 5% to – 5%), this remuneration integrating research and development work that the management company carries out,
      • retrocessions paid by the asset manager to the distributor of the contract and/or to the life insurance companyknowing that information on the level of retrocessions thus returned to distribution is now communicated by insurers and their distributors,
      • any financial “outperformance” fees of the management company, being aware that the notion of “outperformance” sometimes has a somewhat baroque character,
      • the margin of the management company.
    • “Basic” fixed costs collected by the asset manager are indicated in the legal documents (KIID) of each medium. But in reality, the charges actually debited, i.e. the ongoing charges are almost always higher than fixed costs due to transaction costs on the one hand, as well as so-called “outperformance” fees.

Be careful, because the “true costs” borne by the saver in his multi-support life insurance contract within its units of account are the ongoing management fees. These feesyet very real are in practice not very visible to the customerbecause they act on the lower valuation of units of account.

Note, moreover, that for the same unit of accountfor example a “France Large Cap Equities” support, your life insurer has the choice between three types of shares :

  • a share of heritage:
    • Those are the the most common shares in life insurance.
    • Their running costs include the repayment of a retrocession to your life insurer and/or its distributor. The greater the desired retrocession, the higher the ongoing costs charged.
    • Those are the units bearing the highest ongoing charges.
  • a share “without retrocession”also called “clean share”:
    • This type of share is starting to appear in certain life insurance contracts.
    • In order to avoid any conflict of interest on the part of the distributor, these shares do not provide for any retrocession payment.
    • These shares are logically less charged in fees than equity shares.
  • an index share:
    • The index shares are appeared with the rise of trackersor ETF.
    • The principle of these shares is that they operate at 100% passive management; it is a computer that places orders in real time on the financial markets to replicate an index.
    • Due to the attraction of savers for this type of units, these have developed strongly. Good Value for Money draws the reader’s attention to the fact thatthere are now index units that are more loaded than simple trackers.
    • The index units are the least charged in fees for savers.

here is a extract from the benchmark produced by the Good Value for Money site in 2022 :

  • France Large Cap Equities
    • “Classic” shares
      • Average internal fixed management fee: 1.65%
      • Average internal ongoing management fee: 1.86%
    • Shares without retrocession called “clean share”
      • Average internal fixed management fee: 0.94%
      • Average internal ongoing management fee: 1.02%
    • Index units, including trackers or ETFs
      • Average internal fixed management fee: 0.31%
      • Average internal ongoing management fee: 0.35%
  • European Medium-Long Term Bonds
    • “Classic” shares
      • Average internal fixed management fee: 0.95%
      • Average internal ongoing management fee: 1.04%
    • Shares without retrocession called “clean share”
      • Average internal fixed management fee: 0.51%
      • Average internal ongoing management fee: 0.56%
    • Index units, including trackers or ETFs
      • Average internal fixed management fee: 0.14%
      • Average internal ongoing management fee: 0.16%
  • Profiled management Moderate International
    • “Classic” shares
      • Average internal fixed management fee: 1.48%
      • Average internal ongoing management fee: 1.96%
    • Shares without retrocession called “clean share”
      • Average internal fixed management fees: 0.73%
      • Average internal ongoing management fee: 0.99%

To access the full fees depending on the asset class of the units of account and the nature of the shares subscribed, we invite you to click on the following URL link :

https://www.goodvalueformoney.eu/documentary-space/frais-factures-au-sein-des-supports-financiers-uc

All property and distribution rights reserved to Good Value for Money.


Discover the other analyzes of Good Value for Money through the following themes:

Leave a Comment