£100k for an annuity, what rate should I look for?

Cautious_Investor_3

feesarefare wrote: »

would it be possible for you to expand on this comment?

Sure.

As we all know there are a whole range of retirement options available, from a simple lifetime annuity, through enhanced annuities, fixed term annuities, investment linked annuities, drawdown and phased retirement (I'm sure I'll have missed some out). In my experience there are a number of IFAs out there who, for whatever reason, don't consider all the options available to the client. A fixed term annuity is probably the most obvious example, over the past couple of years I have seen examples where the discussion between the client has been simply annuity v drawdown and other alternatives have not been considered.

Possible reasons could be a lack of generic knowledge, lack of product knowledge or a dislike of the products.

I've also seen it with PLAs where a client wants no tax free cash and just income. The good adviser will consider whether the tax free cash should indeed be taken but a PLA bought with it.

What's your experience?

The Cautious Investor

ajw1100

Quote:
Originally Posted by ajw1100
I just am not sure what to do:(


feesarefare wrote:
Which is a real shame given that you have been to an IFA.

Your not meant to know what to do before you go to an adviser, not after !:o

I must admit that I am getting more practical help here, I did have a meeting with my IFA who filled my head with abbreviations, IFA Tech phrases, said he was playing Devils Advocate and that I needed to make a decision. He then emailed a couple of Money Made Clear leaflets, gave me a few rates except for the highest as he 'did not know them (The Company)' Has ignored some emailed questions then emailed me my policy values and said the Ball was in my court. I appreciate it is my decision which to go for but I thought the clue was in his title....

Cautious Investor wrote:

I have seen examples where the discussion between the client has been simply annuity v drawdown and other alternatives have not been considered.

I can vouch for that! The other options did not get a look in but perhaps he thought they would go straight over my head....

Cautious_Investor_3

ajw1100 wrote: »

He then emailed a couple of Money Made Clear leaflets, gave me a few rates except for the highest as he 'did not know them (The Company)' Has ignored some emailed questions then emailed me my policy values and said the Ball was in my court. I appreciate it is my decision which to go for but I thought the clue was in his title....

Cautious Investor wrote:
I can vouch for that! The other options did not get a look in but perhaps he thought they would go straight over my head....

1. it's his job to know them

2. why are you still using him if he is ignoring emails? That is simply unacceptable

3. He should make a recommendation after assessing your circumstances

4. It's his job to make sure they don't go over your head!

I'd look elsewhere

The Cautious Investor

feesarefare

Cautious_Investor wrote: »

What's your experience?

The Cautious Investor

Havent got any direct experience as my clients tend not to have been anywhere else first.

What I have noticed more and more on these forums is people looking for advice after they have seen a IFA, which doesnt really say much for the sector as a whole.

feesarefare

ajw1100 wrote: »

said he was playing Devils Advocate and that I needed to make a decision

No you dont. He is meant to advise you of the best option having taken into your circumstances and needs. If hes unsure ask him what the A in IFA stands for!!

. He then emailed a couple of Money Made Clear leaflets

Why?

I appreciate it is my decision which to go for but I thought the clue was in his title....

See above

I can vouch for that! The other options did not get a look in but perhaps he thought they would go straight over my head

Thats irrelevant, would a car dealer decide not to sell someone the latest high efficiency engine because they think the buyer wouldnt understand how it works? You just need to undersatnd the outcome not the mechanics

feesarefare

[

I'd look elsewhere

Agreed

dunstonh

An element of what is best is based on making a judgement call. It is impossible to say which option will be the best until time has gone by. All you can do is eliminate the obvious ones, cover the pros and cons and risk profile and then make a judgement call which may or may not turn out to be best. However, it will be an option you chose with your eyes wide open.

feesarefare

dunstonh wrote: »

However, it will be an option you chose with your eyes wide open.

I see you use the phrase "you chose" , so your clients decide you dont advise them?

What do you think the A in IFA stands for?

sixtysomething

feesarefare wrote: »

What do you think the A in IFA stands for?

'Ambivalent', -- in my experience.

Loughton_Monkey

Back to OP's dilemma, I'll stick my own oar in.

Reading all the above tells me that you are not realistically in the market for drawdown. So let's rule that out for the moment.

You seem to have done a lot of reading, and boning up on these matters. At the end of the day you will see that even when you stick to the annuity option, there are an awful lot of choices.

My advice would be to use the 'quotation web sites' already given, and study them hard as to the best rate on a level annuity, best on 3% escalating, RPI excalating. Consider whether you want guarantee of 5 or 10 years, widows pension etc. Just get the best quote for each. That will be near enough for now.

Do more calculations - exactly the same - but assuming you just defer the whole thing for a few years. Eventually, I think you could come down with the best option that suits your own needs. All the different annuity rates will be reasonably 'fair deals' - in other words, you can assume that the 'mathematics' add up. You are not being 'conned' simply because you choose 3% escalating, for example. The lower starting annuity rate will be an 'honest' calculation of the true cost.

The only exception, I would say, is the full "RPI" version. These are a bit of a gamble since no-one has a crystal ball. Personally I would avoid it like the plague - because I have assumed that they have to make such 'wild and pessimistic' assumptions to cater for the unknown. [Of course if 1970's rampant inflation ever returns, then my opinion gives me a lot of egg on face!]

Anyway. Once you have a pretty good idea on what you want, then it's simply down, as has been said, to 'negotiation'. You will already have rates from the web sites. Basically ask your IFA to 'better' it. This is what I did. I knew what I wanted. I knew what rate I could get by lifting a phone direct with a company. I went to a commission-based IFA and asked for a quote - and got one. It wasn't much of an improvement, so I went to another one, who scoured the market quickly and came up with an even better quote. By all means ask the IFA to 'guide' you on the flavour of annuity. They can tell you facts and pro's and cons. But it's your own decision really.