Shopping around for an annuity

SallyG

Last time I tried the IFA wanted £500 as an up front fee to get me an annuity quote.
What does getting an annuity quote involve for an IFA ?

dunstonh

SallyG wrote: »

Last time I tried the IFA wanted £500 as an up front fee to get me an annuity quote.
What does getting an annuity quote involve for an IFA ?

A quote on standard terms on execution only basis doesnt take much if that is all you are asking. If you are going through the advice process then it will be factfind, needs analysis, research and quotation with report.

£500 sounds very good for advice process (assuming that its nil commission). However, if it was quote only then its possible that the IFA quoted you £500 didnt want to do it and gave the fee like that to put you off.

CannySaver_2

Hi

As dunstonh says it depends on what the IFA was doing for that.

If all the IFA was doing was a quick quote then you can do that yourself using an online penson annuity calculator such as this one. Its worth doing your own quotes anyway just to see the difference between adding in the various options, e.g. what does a 50% spouse's pension cost compared to 100% etc.

However for £500 I'd expect a lot more! What was included in the fee?

I'd expect the IFA to go a long way down the route of completing the Annuity process having looked at my needs and goals, assessed my situation including my attitude to risk, reviewed all the retirement options for me and not just looked at an Annuity. When it came to an Annuity I would have expected the IFA to search all the providers, consider an Enhanced Annuity and if the fund size allowed haggle for the best rates.

If I was going down the Annuity route I would expect a significant commission reduction, possibly down to zero.

There are IFAs out there who will do the research for free and hope they earn something when you sign up, there are also other firms who clearly charge an upfront fee (seems there are more of these creeping into the market). I can understand why an IFA will charge an upfront fee, it at least means they cover their costs, however you can probably still get this work done contingently. After all you could end up paying the IFA this fee but he could be useless and lead to a lower Annuity rate than an IFA who takes nothing upfront but works harder on your behalf and haggles better.

The Canny Saver

atush

An annuity will generally pay a comission if you go direct or thru an advisor. So, unless your pot is very small I would imagine this is one case that a commison would be better than a fee?

CannySaver_2

atush wrote: »

An annuity will generally pay a comission if you go direct or thru an advisor. So, unless your pot is very small I would imagine this is one case that a commison would be better than a fee?

Perhaps not on a larger fund where an hourly rate with all the commission rebated may be preferable?

Of course if the purchase of the Annuity did not want to pay am explicit fee the IFA could take commission up to an agreed level i.e. equivalent to the fee, and then rebate the balance.

The Canny Saver