In his life insurance contract, the saver has the possibility of opting for pilot management, that is to say giving a manager the hand to distribute his money over different supports. But this choice incurs costs and does not guarantee higher performance. While the financial markets have fallen sharply since the start of the year, is discretionary management a good idea or a bad idea?
Very few life insurance contracts today do not offer a pilot management option. Thus, in your bank, with your insurer or with your online broker, you can from the opening or later opt for management under mandate. But is it really a bargain?
Pilot management under mandate, what is it?
Management under mandate consists of delegate an external speaker (therefore different from your insurer or the distributor of your contract) the distribution and arbitration between the various supports of a life insurance contract. The sign that you entrust with the management of your savings is very often the insurer that manages 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 steer this management and tell your insurer which funds to use. must invest.
Some life insurance contracts offer pilot management by default, such as Yomoni Vie. For others, you have to request it. Access to pilot management depends on your insurer and often on the amount paid into your contract. Each insurance company defines its own conditions.
Once the option is active, the manager mandates carries out arbitrations according to the evolution of the financial markets.
who is it for?
To obtain higher performance on your life insurance contract, the insurer will push you diversify your savings and therefore invest in non-guaranteed supports, ie to buy units of account (UA). This requires sorting out between tens or even hundreds of assets depending on the contract. How?
On the one hand, free management. You manage your contract alone. It’s up to you to choose the investments, diversify the families of stocks, the types of funds, etc. Arbitrations are also made according to the level of risk of each fund (measured by the SRRI, which goes from 1 to 7). A tedious operation that takes time.
On the other side, the pilot management has the main advantage of making your life easier. For investors who are unfamiliar with financial products or, simply, who don’t want to spend time manage their life insurance, pilot management is thus an alternative for opening up to the equity market. The choice of mandate will then depend on the degree of risk you wish to take.
Life insurance: is pilot management worth the cost?
By opting for the management under mandate of your investments, your insurer will ask you several questions in order to define your profile: prudent, balanced, dynamic or even offensive. Each profile gives a different level of distribution of savings between funds in euros and funds invested in equities.
Opting for pilot management allows you to remove the mental burden
Opting for pilot management allows you to remove the mental load. Making a financial investment requires knowing yourself well, knowing what will be his reaction as a saver facing the evolution of the financial markets. This is the first fundamental question. Then it is also to measure its financial culture, explains Stellane Cohen, president of Altaprofits. Once this information has been obtained, the insurer is able to define the appropriate pilot management profile.
For Stellane Cohen, pilot management is aimed at people who, on part of their savings, will take a little more risk and will include their project in a long-term investment horizon. A life insurance contract is not a tool for trading and compensating for the decline in purchasing power. He will respond to a project such as financing an acquisition or the studies of the children, anticipating the transmission of his heritage. The horizon definition investment is fundamental to optimize the return/risk ratio.
To know. The chosen profile is not set in stone. The saver can, when he wishes, subscribe, stop pilot management, or even change profile Management. All these changes can however be invoices.
What are the pilot management fees?
Most often, the choice of pilot management causes an increase in unit-linked fund management fees. This will depend on your insurer. Fees may also be charged for arbitrations carried out. The manager can also decide to be remunerated as a percentage of the performance achieved if it is positive (but this remains rare). Finally, some contracts do not charge no surcharge compared to free management.
To find your way around the maquis of costs more easily, a table summarizing the costs linked to 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 management profiles have dropped this year. Depending on the chosen profile, the drop is on average 0.1 point. In detail, for the cautious profilecurrent management fees fell by an average of 1.62% in 2021 1.52% this year. For the profile balancedthey rise 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.
Professionals: cheapest online deals for limit your bank charges
Is performance in pilot management better?
Finally, is pilot management synonymous with better performance? This is a central question as more and more savers are choosing this method of management. 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 management does not always offer higher performance. The better yieldsby choosing an offensive management, have exceeded the 20% mark in 2021. An exceptional performance when we look at that of funds in euros (1.30% on average in 2021). We can cite, 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.
It should all the same be kept in mind that most dynamic or offensive profiles have obtained between 10% and 20% growth over the year 2021. Moderate or balanced profiles offered returns from 5% to 8%. For moderate risk taking, the return on Boursorama Life rose for example in 2021 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 that of the CAC 40. It should be remembered that the flagship index of the Paris Stock Exchange had a very good year in 2021: +28.85% after a slight decline the previous year ( -7%). In this context, a look at the performance of the year 2020 is rich in lessons: it makes it possible to point out the contracts that have fared better in the face of headwinds. In an unfavorable context, the offensive profile of Darjeeling or the dynamic of Croissance Avenir thus succeeded in doing better by 10% over the year 2020. To judge a pilot management, it is thus necessary always try to look at performance over several yearsand not just the photograph of the previous year.
This advice will still be valid for this year 2022 marked by strong upheavals on the financial markets with in particular a decline of more than 10% of the CAC 40 since the beginning of the year. In this context, pilot management should not work miracles.
Pilot management, good or bad idea?
Pilot management is a good alternative for 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 performance. Furthermore, pilot management means trusting the manager (and your insurer) and therefore no longer having control over the investment choices.
An advice: diversify your investments. Instead of a single contract, open several with spaced dates, with different insurers, distributors and managers. Some insurers also allow pilot management of the share in units of account and to associate it with an investment in real estate products such as an SCI or SCPI.
Compare the best life insurance contracts