Annuity providers

sanfly

I am currently looking to purchase an annuity and having checked out annuity supermarkets online, at the Annuity bureau and Hargreaves landsdown, AEGON Scottish Equitable, followed by Canada life come out best.
My questions are:-
1)As these figures are payable for life is there anywhere to check out the long term financial stability of these companies, or is one of the above better than the other?
2)Is there a guarantee system in operation for annuity payments the same as provided by the banks for your money?
3)Advice here also seems to indicate that a IFA could get you a better rate than these big advisors, is this really the case?
Thanks

EdInvestor

sanfly wrote: »

I am currently looking to purchase an annuity and having checked out annuity supermarkets online, at the Annuity bureau and Hargreaves landsdown, AEGON Scottish Equitable, followed by Canada life come out best.

Have a look at this thread, more checks would be sensible IMHO:

http://forums.moneysavingexpert.com/showthread.html?t=413105

My questions are:-
1)As these figures are payable for life is there anywhere to check out the long term financial stability of these companies, or is one of the above better than the other?

Both are large insurers subject to capital adequacy and solvency requirements.There is no case of a conventional annuity provider going bust and failing to pay out.With profits annuities are a different matter.

2)Is there a guarantee system in operation for annuity payments the same as provided by the banks for your money?

Not an explicit one but see above.

3)Advice here also seems to indicate that a IFA could get you a better rate than these big advisors, is this really the case?
Thanks

It's not clear.

dunstonh

3)Advice here also seems to indicate that a IFA could get you a better rate than these big advisors, is this really the case?

Ed is anti IFA so would never admit it.

The answer to your question is yes for network members. The online firms all tend to be directly authorised firms and get the buying power of just themselves. IFAs that are network members get bulk buying power and get improved terms.

I and a few others have compared real quotes against companies that are often mentioned here on like for like terms and we come in with better figures. On the annuity thread posted last week where HL was mentioned, I went to their site and put some figures in. I then went and got some figures and was able to beat them. The same has happened with Cavendish with life cover and investment bonds. The largest UK IFA network has over 5000 IFAs as members. Thats a lot of buying power and a lot of clout.

Financial services products are just like other retail products. The retailer (IFA in this case) gets them on different terms to other retailers (IFAs) depedning on their wholesale buying power. Sometimes this will be in the form of increased commission (which would only benefit you if there is a rebate involved. The increased commission does not come from increased charges) or improved charges/terms (which do directly benefit you).

With annuities, some providers up the commision to 1.3% or 1.5% when their default is 1%. Others improve the terms.

EdInvestor

Ed is anti IFA

Not so: I said it is not clear they get better deals.

It is possible that ordinary IFAs do, but it would be nice to see independent evidence rather than just assertions.Anyone who can post helpful info on this issue is urged to do so.

As far as buying power is concerned, the specialist annuity providers probably have some as well.

dunstonh

It is possible that ordinary IFAs do, but it would be nice to see independent evidence rather than just assertions.Anyone who can post helpful info on this issue is urged to do so.

we had that poster a few weeks ago posting that their local IFA was able to beat the annuity bureau.

Plus its not exactly secret knowledge that the big networks get the best deals.

sanfly

Thanks for the replys EdInvestor & dunstonh , been interesting to see your points of view throughout this forum, not just the answers for me, there is obviously a friendly difference between you on independant IFA's.

As you say Ed it would be interesting to see some actual figures to back up the IFA preference that dunstonh has. Anybody got comparison figures they can post, or as you already have some comparison figures dunstonh can you post an example here?

The network of IFA's, who are the big ones, you mention Sesame are they the biggest?

cheers

dunstonh

I didnt keep them as it was just to check against.
From memory, Prus figures were virtually the same (no surprise as Pru are one of the providers that tends to alter commission rather than premium). NU was better, Canada Life didnt even appear on their list.

The biggest differences come on poor health or smokers. I was speaking with my Just Retirement Rep a few weeks back on a case where GE Life and Just Retirement were coming out close and asked him if he could squeeze some more income and he did. They have discretion to pay more if the size of the fund is worth it for them. You arent going to get that with execution only basis.

Plus, to get real figures on poor health/smoker you need to speak with the provider to get those figures. The figures they give on the quote portals are examples only. I had a guy just a few weeks ago that completed a list of medical issues for me to get quotes. I got them but noticed that one of the medications was for high cholesterol. I questioned him on it as he hadnt mentioned it. I then went back to the provider and they upped the annuity because it is one of the things that allows increased annuity rates. Had he gone execution only, that wouldnt have happened.

The other thing to remember is that these sites are IFAs themselves. So, there is no difference in authorisation levels between getting someone local out or getting them to do it. It just comes down to the terms on offer. I could stick a website up if I wanted. Indeed, if I Selestia had a website plugin and white labelled their products, I would do because I can undercut HL's pricing with pensions. However, they don't have a plugin and I dont have the time. It could be quite funny if I did as Ed could be listing my site as a low cost option but saying dont use IFAs.

The network of IFA's, who are the big ones, you mention Sesame are they the biggest?

Sesame are by far the biggest. There isnt one close to them in size. They are known as super network and were formed by the merger of 5 other networks. Personal Touch are another network but I wouldnt bother with them. I act as a consultant to a firm with two Personal Touch IFAs on investment cases and the commissions and terms are generally lower in insurance company contracts than what I get being a Sesame member. I dont have much experience with the other networks. So cannot comment on what terms they have negotiated.

Sanfly, you have got quotes from different sources so you should be able to see some differences. That is of course assuming they are real quotes and not using the data that the quote portals (assureweb/webline/exchange) provide.