Question:
How would i obtain a lower reduction in yield ?
Answer:
Anthony, The reduction in yield is an estimate of the long-term impact of costs on your policy's investment return. The estimate would factor in the expected return and fees. The fees would include entry and exit fees, performance fees, standard adviser fees, trading costs and investment management fees. The key then is to invest in products that eliminate or minimise these fees. One way to do this is to avoid expensive policy-based products that mandate these charges (such as advisor fees, high investment management fees etc) and instead invest in products (offered by asset managers rather than life insurance companies) that are likely to deliver a similar or better return, but at a lower cost. Such products, may, for example use low cast passive investing that have much lower trading costs and exclude advisor, performance and entry fees. This could comfortably reduce your annual reduction in yield by 1 to 1,5% pa.
