Zurich International and Friends Provident: Variable Annuity Mysteries

If you invest with Zurich International or Friends Provident, you might own a Variable Annuity product. 

zurich warningPopular with salespeople, they are sold prolifically through South East Asia.  But I want to read a balanced report on such products:  something indicating that they’re a good deal for investors.  

For the breakdown of a product sample, check out my post, Zurich International and Friends Provident, Should You Invest With Them?  And help me find a published report suggesting they’re fair. In the comments section below, please show me sources indicating such products make sense for the investor–and not just the salesperson.  Negativity about such products is rampant.  Let’s find a counter argument.

Three Reasons To Buy An Annuity–The Motley Fool

Nine Reasons You Need To Avoid Variable AnnuitiesForbes

Variable Annuities, Buyer Beware – CNN Money

Variable Annuities, Greed At Work – USA News

Variable Annuities Are A Bad Deal – Scott Burns, Dallas News

Five Reasons to Avoid Variable Annuities – Larry Swedroe, CBS MarketWatch

What’s Wrong With Variable Annuities? – SmartMoney.com (SmartMoney Magazine)

Variable Annuities Don’t Belong in Retirement Plans – Forbes Magazine

Variable Annuities—Lifelong Income, High Cost – Businessweek Magazine

Stay Away From Variable Annuities–Suze Orman (youtube)

Are Variable Annuities A Good Investment? – The Wall Street Journal

Can something balanced, with academic sources, be found?

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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13 Responses

  1. sm says:

    Hi Andrew,

    First of all, great book. I've learned a lot through reading your book, as well as some of the books you recommend by Bogle, and now I'm about to put my knowledge of index funds/etfs into real-life use.

    I will be purchasing 25% Canadian short term bonds in my particular portfolio. I've narrowed it down to two, they are:

    CLF – Ishares 1-5 yr laddered gov bond mer ~ 0.17%, yield 3.77%


    XSB – Ishares DEX short term bond index mer ~0.28%, yield 2.97%

    I would like to point out that with my account at Scotia itrade, CLF can be traded commission free, which makes the decision harder. Let me know what you think.


    • Hi SM,

      I wouldn't let the current interest yield sway your decision because indexed bond yields aren't constant–unlike individual bond yields. The yields will always change.

      Either option would work. However, I prefer VSB myself because it's a short term government bond index with half the expense ratio of XSB. It doesn't make sense to choose XSB when you can get it for half the cost.

  2. Paulo says:

    Hi Andrew,

    I recently finished your book and found extremely helpful, THANK YOU and CONGRATULATIONS!

    I'm from Brazil and I have to confess I fell for the Financial Advisor's trick purchasing a Friends Provident product. I already invested 30,000 USD in a 25 year product at the Isle of Mann and have over 20 years left. I see your articles and information about avoiding such products and I'm already passing the information along, however what's your recommendation in a case like mine?

    For now, I already reduced my monthly payments to the minimum amount possible (150USD with 95% Allocation) and re-allocated my funds to hold three products with the lowest possible administration fees. Two stock index funds (US and UK) and one bond Index.

    Thanks a lot,


  3. Kelvin Wong says:

    Hi Andrew,

    This is Kelvin who is a Chinese in Hong Kong.

    I read your book(in chinese version) your idea is great!

    A bad new for you is that i also got a fund investment plan from Zurich 3 years ago.

    So i will withdraw some of the money out now.

    I am trying to start a fresh, new, low cost portfolio again…..but questions again:

    1) i can't find some similar index funds in Hong Kong or China. Do you know where i can have some channels to get it?

    I can't buy Vanguard 's index fund in hong kong i think. (i have checked their website but only Singapore, Australia and Japan)

    2)Is Tracker Fund of Hong Kong same as the index fund you mentioned in your book?


    I think it is the most similar things i can find now.

    Am i correct?

    Thanks for your great teaching again! it is really helpful to me^^

    Best Wishes,


    • Hi Kelvin,

      Would you be interested in sharing your story with the South China Morning Post? It would help a lot of people. They are looking for first-hand experiences with ILAS firms. If so, let me know and I will pass your name and contact info forward.



  4. esteban ulate says:

    hi…i was offered the generalli vision plan and almost accepted it…i read this post and obviously rejected it.

    i am from costa rica and would like to know how to do index investing from my country.

    is it possible??

    a sales person approached me and wanted to sale me this product
    seems to me its a VA….

    thanks for you help


  5. Liam OToole says:

    Hello Andrew,

    I started my teaching overseas stint in Turkey and they offered us a retirement scheme with ABG, which has since been taken over by La Mondiale. When I worked there the school was matching the amount I was putting in which was great, now that I have moved schools I still have this actively managed fund with no contributions but what I put in. I am at a loss as to what to do. Have you any experience with this? Here is a run down of what I can see…

    They charge between $5-15GBP a month to actively manage my portfolio according to my fees. Every year there is a 1.5% charge on the total amount of your investment. You can move it to certain countries retirement schemes, but since I now work in HK I am not sure I can move it to my new scheme. I am a kiwi but since I am now out of the country it doesn't seem like I can open a retirement scheme in NZ now, which is an option if I had it, to move these funds to. I have asked for clarification from La Mondiale but it seems like trying to get the money out, I have to wait 10 years from my initial investment to withdraw it and the fees can range from 25% to 1.5% at withdrawal depending on how long I continue to put money into it.

    It seemed like a good idea at the time as the school was giving me money to help retire, the fees didn't seem to matter at that point, or they didn't send a warning sign to the amount of fees until I read your book, and now I am wondering what to do?!

    Does this ring any bells to you or your readers?

    Thanks for your help!


    • Hi Liam,

      Can you withdraw any of it, without paying a fee? You may be able to redeem some. If the company is charging 1.5% to manage this money, and the fund expense ratios are another 1.5-1.75%, the total cost would be more than 3%. Can I assume that this is correct?

      • Liam OToole says:

        Hi Andrew, thanks for your reply.

        Yes, I have 2 policies within the account, one of the policies I have has 1.5% management on top of the annual fee, the other one is up to 4% as they have an ongoing charge every 3 months added as well? So that ends up to 3% in one and 5.5% in the other! The performances since the accounts were started have equated to 5.3% and 3.8% respectively.

        I have been in contact with them, they can only switch into another retirement programme that they deem appropriate or I have to leave it in there until I am 55, that's it they tell me. I asked about their non actively managed accounts as a worst case scenario…

        My retirement at my HK school is a Manulife account that we put into but there doesn't seem to be any growth on the account I'm in, a higher risk one, it seems like just a place we save our money essentially. I can't see any fees associated with it either. They will accept transfers in but I have to see if La Mondiale accept it as an appropriate retirement fund. If I can move it into this one then I believe when the time comes to move we can withdraw all the funds on departure.

        So that's the current situation right now. I'm hoping that the switch across to Manulife is a possibility but either way I'm not feeling like either is a great retirement option.

        Thanks for your help,


        • Hi Liam,

          I know that you could build a low cost portfolio of exchange traded funds through Hong Kong's Saxo Bank brokerage: http://hk.saxomarkets.com/en/why-saxo/

          A guy named Boris has been very helpful in setting up accounts for my other Hong Kong based readers. Once you have done so, please show other teachers at your school how to do it. I also have a seminar link that shows international teachers whether they are saving enough money. Please share this too: http://andrewhallam.com/2013/04/international-tea

          If possible, sell what you can from those other firms. The costs sound prohibitive. Please keep me posted.


  6. Liam OToole says:

    Hi Andrew,

    There is no chance to get this out before 55 unless I move somewhere in the future to a school/country with an appropriate retirement scheme.

    Interesting information is that every time you contribute they take 5% as a fee but luckily there is no penalty to stop contributions as of now which I have done. The fees equate to about 3% but the current growth of the account has been 8% over the last 5 years. At least that's something right?

    So I have to keep it in for now and hopefully the growth continues. Any future funds I have to invest will be in the ETF's or Vanguard as you pointed out, hopefully as soon as possible!

    Thanks for your help,


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