In his life insurance contract, the saver has the option of choosing pilot management, that is, giving a manager a hand to distribute his money on different supports. But this choice incurs costs and does not guarantee higher performance. While financial markets have fallen sharply since the start of the year, is discretionary management a good or bad idea?
Very few life insurance contracts today do not offer a pilot control option. In your bank, with your insurance company or with your online broker, you can thus choose management under mandate from the opening or later. But is it really a coup?
Pilot management under mandate, what is it?
Management under mandate consists of delegate an external speaker (therefore different from your insurance company or the distributor of your contract) the distribution and arbitration between the various support points in a life insurance contract. The sign to which you entrust the management of your savings is very often the insurance company that administers your contract. But in practice, it is portfolio management companies (Rothschild Gestion, Lazard Frres Gestion, Oddo BHF AM, Carmignac, La Financire de l’Echiquier, etc.) that manage this management and tell your insurance company which funds to invest.
Some life insurance contracts offer pilot management as standard, such as Yomoni Vie. For others, you must request it. Access to pilot management depends on your insurance company and often on the amount paid into your contract. Each insurance company defines its own conditions.
When the option is active, the manager gives the mandate conducts arbitration according to developments in the financial markets.
who is it for?
In order to obtain a higher benefit on your life insurance contract, the insurance company will pressure you diversify your savings and therefore invest in non-guaranteed support, i.e. to buy units of account (UA). This requires sorting through dozens or even hundreds of assets depending on the contract. How?
On the one hand, free control. You manage your contract alone. It is up to you to choose the investments, diversify the share families, the types of funds, etc. Arbitrage is also done according to the risk level of each fund (measured by SRRI, which ranges from 1 to 7). A tedious operation that takes time.
On the other hand is pilot management has the biggest advantage of making your life easier. For investors who are not familiar with financial products or simply who Don’t want to spend time manage their life insurance, pilot management is thus an alternative to opening up on the stock market. The choice of mandate will then depend on the degree of risk you want to take.
Life insurance: is pilot management worth the price?
By choosing mandated management of your investments, your insurance company will ask you several questions to define your profile: cautious, balanced, dynamic or even offensive. Each profile provides one different level of distribution of savings between funds in euros and funds invested in shares.
Opting for pilot control allows you to remove the mental burden
Opting for pilot control allows you to remove the mental strain. Making a financial investment requires that you know yourself well, know what will be his reaction which saves is faced with developments in the financial markets. This is the first basic question. Then it’s also about measuring your financial culture, explains Stellane Cohen, chairman of Altaprofits. Once this information is obtained, the insurer is able to define the appropriate pilot management profile.
For Stellane Cohen, the pilot management is aimed at people who want to take a little more risk on part of their savings and want to include their project in a long-term investment horizon. A life insurance contract is not a tool to act and compensate for the decline in purchasing power. He will respond to a project such as to finance an acquisition or studies of the children and foresee the transfer of his inheritance. That definition of horizon investment is basic to optimize the return/risk ratio.
To know. The chosen profile is not set in stone. The saver can, whenever he wishes, take out a subscription, stop pilot management, or even change profile Management. All these changes can be, however bills.
What are the pilot’s administration fees?
Most often, the choice of pilot management is the reason an increase in unit-linked fund management fees. This depends on your insurance company. Fees may also be charged for completed arbitration proceedings. The manager may also decide to be remunerated as a percentage of the performance achieved if it is positive (but this remains rare). Finally, some contracts are not collected no supplement compared to free steering.
To help you navigate the cost landscape, a table summarizing the costs associated with your life insurance contract and each asset has been available since 1 June.
Life insurance: the true cost of unit-linked management fees
According to a recent study by Good Value for Money, fees for executive profiles have fallen this year. Depending on the selected profile, the drop is an average of 0.1 points. In detail, for cautious profilecurrent management fees fell by an average of 1.62% in 2021 1.52% this year. To the profile balancedthey increase on average 1.91%, against 1.98% last year. On the side of the profile dynamicGood Value For Money estimated these fees at 2.30% in 2021 compared to 2.19% in 2022.
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Is performance in pilot management better?
Finally, is pilot management synonymous with better performance? This is a key question as more and more savers choose this management method. 31% of payments were made under pilot management in 2021, compared to 18% in 2019, according to the latest data from France Assureurs.
However, pilot control does not always offer higher performance. That better yieldby choosing an offensive management, has exceeded 20% in 2021. An exceptional performance when we look at Euro funds (1.30% on average in 2021). We can mention, for example, We Save Patrimoine, whose return for its most risky profile reached 20.98% or Yomonie Vie and its performance of 22.7% for its most offensive profile in 2021.
However, it must be remembered that most dynamic or offensive profiles have achieved between 10% and 20% growth during 2021. Moderate or balanced profiles offered returns from 5% to 8%. For moderate risk taking, the return on Boursorama life increased in 2021, for example 5.79% and 8.48% for Altaprofits Life. A few very defensive profiles (mainly invested in the fund in euros) remained below 2%.
Savers often compare the performance of their contracts with the CAC 40. It should be remembered that the flagship index on the Paris Stock Exchange had a very good year in 2021: +28.85% after a slight decrease the previous year ( -7%). In this context, a look at 2020’s performance is rich in lessons: it makes it possible to point to the contracts that have performed better against headwinds. Thus, in an unfavorable context, the offensive profile of Darjeeling or the dynamism of Croissance Avenir managed to outperform by 10% during the year 2020. In order to judge a pilot management, it is therefore necessary always try to look at performance over several yearsand not just the photograph from the previous year.
This advice will still be valid for this year 2022 characterized by strong upheavals in the financial markets with in particular a drop of more than 10% of the CAC 40 since the beginning of the year. In this context, pilot management should not perform miracles.
Pilot control, good or bad idea?
Pilot management is a good alternative to managing your savings in life insurance, expect higher returns than the fund in euros and this, without taking the lead. But this choice involves medium and long-term investments. So you have to be patient with the performance. Furthermore, pilot management means having trust in the manager (and your insurance company) and therefore no longer having control over the investment choices.
An advice: diversify your investments. Instead of a single contract, open several with separate dates with different insurance companies, distributors and managers. Some insurance companies also allow pilot management of the share in units of account and to link it with an investment in property products such as an SCI or SCPI.
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