Financial Advice
Effective financial planning means engaging on a one-to-one basis, eye-to-eye with an advisor.
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Revenge against rip-off repubilic
Although there are many good companies that offer great deals and still turn a profit, Irish people are still being outrageously overcharged in countless ways. Eddie Hobbs and Claire Byrne show you how to unleash the power of the consumer and turn the tables on the rip-off merchants.
Estate of the nation
Perhaps
the softest money ever made in the history of the Republic was made by
Irish auctioneers and estate agents in the past 10 years as property
prices rocketed.
Typically, selling fees were up to 2 per cent,
with slightly lower rates charged in Dublin because of the premium
prices paid in the capital. While a good selling agent is invaluable in
shifting a difficult property, it's a fact that in a bullish market
shifting properties was child's play - they sold themselves. So
whatever you do, never agree to pay a percentage on the sale of a
property. Instead, agree a flat fee, maybe with an extra bonus built in
if the agent shifts it within an agreed time period and price range.
Our learned friends
Conveyancing, the legal finalising of a property sale, is still the exclusive domain of solicitors by law. While it's true that good conveyancing solicitors are worth their weight in gold when dealing with a tricky property, a lot of it is little more than basic administrative work, especially for new properties. Consequently, paying a solicitor a percentage (usually one per cent) of the value of the house, especially after property prices have rocketed, is nuts. Many solicitors, well aware of how their conveyancing fees have mushroomed over the past decade or so, are now content to charge a more realistic fee and still make a decent profit. So if you're selling your house, find a solicitor who will charge you half the usual rate. Negotiate until you get your way, or find another solicitor. Under Law Society rules a solicitor must give you an estimate on fees. Insist on getting this in writing before you take them on. While there are guidelines on fees for most transactions, for some legal jobs there aren't, so you're open to a nasty surprise when you're billed. The Small Claims Court and Ombudsman schemes are useful in resolving consumer complaints without going to the Courts, which costs you several years and bring spiralling fees. Only engage in the legal process as a last resort. When you do, use a solicitor with a good reputation for speedy resolution.
Building a Commission
Even architects are in on the percentage game. Be wary of firms charging fees as a percentage of the estimated building costs, even if you never decide to build. Some take a slice of the costs for completing the architectural drawings, for getting planning permission, and for managing the build itself. A percentage in this game can be lethal, since the higher the construction cost the more money the architect will get. So, yet again, make sure to negotiate flat fees.
Those little extras
Watch out for insurance scams, especially those that involve selling you extended warranty cover for purchases like washing machines, fridge freezers, mobile phones - even the mouse for your new computer. In many cases the retailer is making more money out of the sale of these highly questionable insurance covers than they are from the product itself.
The Mortgage trap
Hidden extras are also rampant in the mortgage game, with borrowers slickly sold dubious mortgage repayment insurance, which will repay your mortgage for you for a year or two in the event of sickness, accident or redundancy. Redundancy cover, which is of questionable value in an era of high employment (and entirely useless if you're self-employed) makes up about two-thirds of the cost of this insurance.
Pay now, pain tomorrow
Magazines of catalogue companies festooned with photographs of desirable goods at seemingly great prices are hugely attractive. But these companies can effectively be high interest money lenders. A read through the small print reveals annual interest ranging from 25 to 40 per cent for the best known brands. So read that small print!
Raw deals on wheels
Selling financial products along with cars lets car sales people make huge commissions at the expense of the buyer. Read the small print on 'easy repayment' schemes and you'll find annual interest in the high double digits. Avoid hire purchase and leasing schemes, which usually cost more than ordinary loans. Rollover leases are a particular problem. The lease, a rental agreement, only lets you buy out the car with the very last payment. Until then, it's owned by the leasing company. Often, it'll need to be replaced before the lease ends, resulting in a fresh lease. Overall, this racket will cost you a fortune.
Expensive information
The financial services market gives financial advice using commission payments. But you need to understand how they work. Whether you're talking to an investment intermediary, insurance broker, tied agent or direct sales rep from one of the banks or life insurance companies, ask for a plain English statement of the sales commission they propose to charge you, not as a percentage but in hard cash terms. Commissions are always negotiable; but if you can't see them you can't negotiate!
Taking stock of bad advice
There's much anecdotal evidence that stockbrokers unload unpopular stocks from their large corporate clients to their small private ones, trousering a commission on both sides of the deal. The trick is as old as stockbroking itself. Protect yourself, buying or selling, by being extremely wary of advice from a broker about any shares you haven't investigated yourself.
Fuel for thought
It sounds obvious, but few of us compare our petrol prices when we go to fill up the car. The cost per litre can be as high as 165c near the Four Courts in Dublin to as little as 100c in Mitchelstown, county Cork. These vast price differences are always growing, so locate the cheaper petrol stations along your route. Plan your refill in advance rather than buying fuel spontaneously. And think per litre, not per euro.
The currency
Look out for banks who charge a percentage of the money you transfer from an Irish bank account to one in another currency. Ask for the total cost before you give your bank the go-ahead, and, as always, phone around for the best prices. Three or four calls can protect you from being royally screwed.