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    • RADDERS
    • By RADDERS 7th Jun 17, 7:59 PM
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    RADDERS
    MetLife being recommended by IFA
    • #1
    • 7th Jun 17, 7:59 PM
    MetLife being recommended by IFA 7th Jun 17 at 7:59 PM
    Quick background, hubby has retired with a DB pension that we are managing our day to day living expenses with and I finished work with a deferred DB pension.
    I am 54 and have no intention of further work as have enough savings to draw down for any large expenses and will get my state pension at 67.
    I have been to see an IFA who has recommended the MetLife Guaranteed Income to transfer my pension to (approx £200 K) I have a very cautious attitude to risk and I understand why she has done this. If I understand it correctly as long as I do not touch the pension (which at the present time we have no need to) the capital grows at a minimum of 3% per annum and there is a daily lockout on this product. The IFA charges an initial 1.5% charge and an annual charge of 0.5% going forward and there is a charge from MetLife but I have forgotten what it was but was under 1%.

    I have googled and looked at this forum for reviews on this company but they are all a few years ago and not that flattering and I was wondering if there has been any changes to people's thoughts.
    Thanks for any advice that anyone can offer.
Page 2
    • dunstonh
    • By dunstonh 9th Jun 17, 12:03 PM
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    dunstonh
    Fire the IFA. You received bad advice once so don't compound the mistake.
    How was the advice bad?

    If you want to avoid risk then the DB pension sounds just right and 3% minimum return is pretty good with no risk.
    Did you not read the comment about death benefits?

    but if you are worried about that I like the option of buying some straight no frills life insurance.
    That option would already have been costed and compared as part of the pension transfer process.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • bostonerimus
    • By bostonerimus 9th Jun 17, 1:16 PM
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    bostonerimus


    Did you not read the comment about death benefits?
    Originally posted by dunstonh
    Yes, but mis-read and then went back and altered my comment

    That option would already have been costed and compared as part of the pension transfer process.
    It would be good to see those costs...the OP did not mention that option had been evaluated and rejected. The OP has 200k to transfer so what are the incomes tom the DB and the MetLife plan, when will they start, are they index linked etc?
    Misanthrope in search of similar for mutual loathing
    • dunstonh
    • By dunstonh 9th Jun 17, 1:42 PM
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    dunstonh
    It still doesnt make it bad advice.

    The IFA failed in getting the client to understand investment risk in context with other risks. However, that happens. Some people just cannot grasp it or do not want to grasp it. In those cases, the IFA has to recommend what is suitable and if that means using a product/investment like this, then so be it. That is why this niche options exist.

    I have put plenty of people into investments and products over the years that I would never use personally. Advisers have to do that. You cannot allow you own risk profile and views to cloud advice decisions on what is right for the individual based on their risk profile, capacity for loss, knowledge and behaviour. The OP has explained her position and the product fits. I may not like the product but I can see why it was used.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • RADDERS
    • By RADDERS 9th Jun 17, 2:07 PM
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    RADDERS
    It still doesnt make it bad advice.

    The IFA failed in getting the client to understand investment risk in context with other risks. However, that happens. Some people just cannot grasp it or do not want to grasp it. In those cases, the IFA has to recommend what is suitable and if that means using a product/investment like this, then so be it. That is why this niche options exist.

    I have put plenty of people into investments and products over the years that I would never use personally. Advisers have to do that. You cannot allow you own risk profile and views to cloud advice decisions on what is right for the individual based on their risk profile, capacity for loss, knowledge and behaviour. The OP has explained her position and the product fits. I may not like the product but I can see why it was used.
    Originally posted by dunstonh
    Thank you for your honest reply dunstonh I know it is my own ignorance that is holding me back,

    The IFA has said that we can change the product going forward but as I do not need to touch the funds for a number of years a guaranteed 3% less costs is more than I am getting on my cash accounts.
    • bostonerimus
    • By bostonerimus 9th Jun 17, 6:06 PM
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    bostonerimus
    Thank you for your honest reply dunstonh I know it is my own ignorance that is holding me back,

    The IFA has said that we can change the product going forward but as I do not need to touch the funds for a number of years a guaranteed 3% less costs is more than I am getting on my cash accounts.
    Originally posted by RADDERS
    Yes, but how does that compare to your DB pension? What is the income projection for the DB pension vs the MetLife product......to me in the US the MetLife product sounds like a variable annuity with a rider. These are often complex and expensive.
    Last edited by bostonerimus; 09-06-2017 at 6:13 PM.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 9th Jun 17, 6:09 PM
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    bostonerimus
    It still doesnt make it bad advice.

    The IFA failed in getting the client to understand investment risk in context with other risks. However, that happens. Some people just cannot grasp it or do not want to grasp it. In those cases, the IFA has to recommend what is suitable and if that means using a product/investment like this, then so be it. That is why this niche options exist.

    I have put plenty of people into investments and products over the years that I would never use personally. Advisers have to do that. You cannot allow you own risk profile and views to cloud advice decisions on what is right for the individual based on their risk profile, capacity for loss, knowledge and behaviour. The OP has explained her position and the product fits. I may not like the product but I can see why it was used.
    Originally posted by dunstonh
    If the OP is risk intolerant why are they transferring out of the DB pension? Do they have to? If death benefits are a worry was the option for some life insurance explained?
    Misanthrope in search of similar for mutual loathing
    • RADDERS
    • By RADDERS 9th Jun 17, 6:47 PM
    • 135 Posts
    • 121 Thanks
    RADDERS
    Yes, but how does that compare to your DB pension? What is the income projection for the DB pension vs the MetLife product......to me in the US the MetLife product sounds like a variable annuity with a rider. These are often complex and expensive.
    Originally posted by bostonerimus
    The point of me doing the transfer is that the pension is not needed as hubby has a very good pension, so as the death benefits are pretty poor was hoping to be able to pass the pot on to either hubby or kids on my demise.
    • bostonerimus
    • By bostonerimus 9th Jun 17, 7:19 PM
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    bostonerimus
    The point of me doing the transfer is that the pension is not needed as hubby has a very good pension, so as the death benefits are pretty poor was hoping to be able to pass the pot on to either hubby or kids on my demise.
    Originally posted by RADDERS
    If you don't need the income from the DB pension to live and want to pass the cash value plus some gains onto heirs did the IFA talk about the option of taking a bit more risk so that you have the chance to leave a larger amount?
    Misanthrope in search of similar for mutual loathing
    • dunstonh
    • By dunstonh 9th Jun 17, 7:36 PM
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    dunstonh
    .to me in the US the MetLife product sounds like a variable annuity with a rider. These are often complex and expensive.
    It isnt that in the UK. A few US providers have tried over the years to enter the UK market with that type of product but fell flat on their face and most returned to the US closing their UK arms.

    If the OP is risk intolerant why are they transferring out of the DB pension? Do they have to? If death benefits are a worry was the option for some life insurance explained?
    Life assurance would be priced and compared by the IFA in their research when the recommendation is based on death benefits. Its one of the standard things done on pension transfers.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • RADDERS
    • By RADDERS 9th Jun 17, 7:37 PM
    • 135 Posts
    • 121 Thanks
    RADDERS
    If you don't need the income from the DB pension to live and want to pass the cash value plus some gains onto heirs did the IFA talk about the option of taking a bit more risk so that you have the chance to leave a larger amount?
    Originally posted by bostonerimus
    When I went for the initial meeting she went through different scenarios, showed me graphs etc but I really am risk adverse I understand that I could do better but I know I could not cope with getting a statement showing a 20% or 30% loss of funds.
    As I have said before all our savings are held in cash ( Santander, regular savers etc) and they are more than the DB pot but am thinking of opening an S&S ISA this tax year.😱
    • Neasy
    • By Neasy 9th Jun 17, 8:09 PM
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    Neasy
    Hi there. I would say that I'm pretty risk averse myself but surely if you're just holding cash you're taking a risk (which is pretty much a certainty) that the capital value will be eroded by inflation, whereas holding a diversified portfolio is less risky than holding cash; that way you'r mitigating all your risks including the inflation risk.
    • bostonerimus
    • By bostonerimus 10th Jun 17, 2:43 AM
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    bostonerimus
    It isnt that in the UK. A few US providers have tried over the years to enter the UK market with that type of product but fell flat on their face and most returned to the US closing their UK arms.
    Originally posted by dunstonh
    So what is it?

    I have a US TIAA-Traditional deferred annuity that pays 3% minimum and is currently paying 4.85%...these numbers are all after fees. In fact they don't even publish the fees. Something like that would be good for the OP.

    After all the fees are taken out what is the minimum and projected annual accrual rate and what capital amount might you pass onto heirs. Take a look at the contract. If there is anything in it that you don't understand then don't sign it. There will be lots of clauses and legalize and I challenge you....or the IFA....to fully understand it.

    Has it been compared to a bond or saving ladder? Those would give a better net minimum return.
    Last edited by bostonerimus; 10-06-2017 at 3:46 AM.
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 10th Jun 17, 7:31 AM
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    Linton
    .....

    Has it been compared to a bond or saving ladder? Those would give a better net minimum return.
    Originally posted by bostonerimus
    Can you suggest some savings products that will provide better than 3% return on £200K?
    • dunstonh
    • By dunstonh 10th Jun 17, 11:26 AM
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    dunstonh
    So what is it?
    Unit Linked funds with capital security able to be added (at cost).

    In fact they don't even publish the fees.
    UK is unbundled on pricing. So, fees are disclosed. It also tends to make the product charges lower than the US as they are not factoring in sales/advice charges.

    There will be lots of clauses and legalize and I challenge you....or the IFA....to fully understand it.
    It's a bit rich you saying that when you don't know the product yourself.

    Has it been compared to a bond or saving ladder? Those would give a better net minimum return.
    You say bond but what you do mean by bond?
    Corporate bond
    Strategic bond
    Onshore investment bond
    offshore investment bond
    NS&I investment bond
    premium bond
    and many more.

    Savings ladder is not a phrase used in the UK.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • xylophone
    • By xylophone 10th Jun 17, 12:00 PM
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    xylophone
    Savings ladder is not a phrase used in the UK.
    "Bond Ladder" here.

    http://www.telegraph.co.uk/finance/investor/11789970/The-Bond-Ladder-The-pros-trick-to-turn-your-savings-into-a-reliable-low-risk-income.html
    • bostonerimus
    • By bostonerimus 10th Jun 17, 2:07 PM
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    • 253 Thanks
    bostonerimus
    Unit Linked funds with capital security able to be added (at cost).
    Originally posted by dunstonh
    With this sort of Guaranteed Investment Contact you have to pay for the insurance. Everything hinges on the price you pay and the advisor fees. It would be interesting to compare the MetLife product after all fees and expenses with a high quality corporate bond ladder held to maturity.

    But as the OP doesn't need this money for income and is interested in passing money on then I think they are over emphasizing principal preservation and would be better in a low cost equity and bond fund portfolio where there would be some volatility with a significant chance of growth.
    Last edited by bostonerimus; 10-06-2017 at 2:53 PM.
    Misanthrope in search of similar for mutual loathing
    • dunstonh
    • By dunstonh 10th Jun 17, 3:02 PM
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    dunstonh
    Everything hinges on the price you pay and the advisor fees.
    No it doesnt.

    It would be interesting to compare the MetLife product after all fees and expenses with a high quality corporate bond ladder held to maturity.
    The fact they are not comparable would be an issue.

    But as the OP doesn't need this money for income and is interested in passing money on then I think they are over emphasizing principal preservation and would be better in a low cost equity and bond fund portfolio where there would be some volatility with a significant chance of growth.
    But the OP has made it clear what their objective is. If they cannot be persuaded otherwise, then it doesnt matter really what any of us think. The OP is the one that has to sleep at night knowing the investments are the way they want them to be. Even if others feel greater risk is more sensible.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • RADDERS
    • By RADDERS 10th Jun 17, 3:10 PM
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    RADDERS
    No it doesnt.


    The fact they are not comparable would be an issue.



    But the OP has made it clear what their objective is. If they cannot be persuaded otherwise, then it doesnt matter really what any of us think. The OP is the one that has to sleep at night knowing the investments are the way they want them to be. Even if others feel greater risk is more sensible.
    Originally posted by dunstonh
    Again thank you dunstonh I know I could possibly do better but as you say it is me that has to sleep at night and I don't have to worry about the capital fluctuating.
    I realise that we are very lucky but we have worked and saved hard to be in the financial position that we are in for a long and happy retirement.
    • bostonerimus
    • By bostonerimus 10th Jun 17, 3:20 PM
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    bostonerimus
    Again thank you dunstonh I know I could possibly do better but as you say it is me that has to sleep at night and I don't have to worry about the capital fluctuating.
    I realise that we are very lucky but we have worked and saved hard to be in the financial position that we are in for a long and happy retirement.
    Originally posted by RADDERS
    You don't have to put everything into a single product. Why not put half in some laddered savings accounts where you'll get 2% interest. That will guarantee your principal and get you some growth. The rest could go into a conservative lifestrategy fund that will fluctuate, but you can reinvest all the income so even with a bond fund heavy portfolio you'll work through interest rate increases.
    Last edited by bostonerimus; 10-06-2017 at 3:30 PM.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 10th Jun 17, 3:27 PM
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    bostonerimus
    No it doesnt.
    Originally posted by dunstonh
    The IFA fees will come off the top

    The fact they are not comparable would be an issue.
    Just take the account values net of all fess at the end of each year. You can compare apples to oranges. Over say 10 or 20 years how would the MetLife portfolio with the cost of the insurance and other fees stack up against a savings account ladder with out fees?


    But the OP has made it clear what their objective is. If they cannot be persuaded otherwise, then it doesnt matter really what any of us think. The OP is the one that has to sleep at night knowing the investments are the way they want them to be. Even if others feel greater risk is more sensible.
    Yes, I have the luxury of not being an IFA.
    Misanthrope in search of similar for mutual loathing
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