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IFA`s Commission
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bigmatt1174 wrote: »If he is a true IFA he should have given you the option to pay by fee - this is a requirement of being an IFA - they cannot state that they only receive commission
The OP previously said that the IFA would normally charge a £2k fee but was willing to settle for less by taking commission of £900.0 -
bigmatt1174 wrote: »In all honesty the transaction for an annuity is probably one of most simple transactions for an IFA, i.e. not too many hours!
If he is a true IFA he should have given you the option to pay by fee - this is a requirement of being an IFA - they cannot state that they only receive commission - but their fees have to be clear and you have to know what they are before any chargeable work is undertaken. If a fee is charged then you should be presented with a fee agreement. Have you received either a Service and Costs Disclosure Document (SCDD) or a Menu or a Client Agreement which documents exactly what is chargeable and when?
Without knowing why you have gone for an enhanced annuity you cannot say what the increase will be - have you disclosed medical/smoker status details to the advisor so he can determine what enhancement he can get you??
Enhanced Annuity is based on smoker and cancer[now clear].0 -
Solely using hours spent as a basis for charging is crude, and focuses on the input from the adviser rather than the output (value) to the client.
In simple terms, the value of annuity advice is the increase in income above what could have been achieved had you not utilised those services. Unlike a lot of advice charges imposed by IFAs, there is actually a guaranteed quantifiable benefit to the client at the end of it.
When considering whether the service is value for money, consider what you are actually getting as a result. £900 for a £18,000 enhanced annuity is too high, and well in excess of typical industry commission (around 3%). On the other hand, £900 for a £180,000 enhanced annuity would likely be commercial suicide unless it is part of a wider service being provided (and paid for).
Paying by £2000 fee would be done on a nil commission basis, and the OP could ask to see illustrations of both that and £900 commission to see the difference the commission has on the income.I work for a financial services intermediary specialising in the at-retirement market. I am not a financial adviser, and any comments represent my opinion only and should not be construed as advice or a recommendation0 -
It is difficult to price by the hour as it is the sort of work that doesnt have fixed time periods. You will have lots of small chunks of time over a week dealing with phone calls, faxes, emails etc whilst you get the best rate.
I wouldnt put the total at 12 hours but all in all it is probably around 5-6 if done correctly.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thanks again Dunstonh and bmm78 for your advice,also the other posters.Mistake I made here,is,I did not shop around.I am going to phone other local IFA`s to try and get some comparative figures.The next meeting I have with my IFA the room temp. is going to be decidely frosty.I wonder if he visits this Forum?.0
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Why not shop around on the net for a non advised annuity? You know what you want so it doesn't seem like advice is needed and you get a better commission deal and better annuity. A quick google search found two companies that search the whole of the market and their commission is £400. They do exactly the same as an IFA except they don't lable the transaction as advice and provide a suitability letter telling you what you already know (you need an annuity) hence the cheaper commission.
Bigger transactions and more complicated cases I think do need an IFAs input but for a small pot like yours maximising income I assume is the priority so have a look online and get some more quotes.0 -
Why not shop around on the net for a non advised annuity?
We have seen consistent posts that local IFAs have come in with better terms than those given by the internet sites. Especially on enhanced annuities.They do exactly the same as an IFA except they don't lable the transaction as advice and provide a suitability letter telling you what you already know (you need an annuity) hence the cheaper commission.
They dont do exactly the same. Electronic quotations do not have the benefit of an IFA haggling the figures which can raise the final outcome by as much as 10%.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
We have seen consistent posts that local IFAs have come in with better terms than those given by the internet sites. Especially on enhanced annuities.
They dont do exactly the same. Electronic quotations do not have the benefit of an IFA haggling the figures which can raise the final outcome by as much as 10%.
They can haggle and in many cases are able to haggle a lot harder due to their enhanced commission terms. Many IFAs get a standard commission rate of say 1.5 -2% on enhanced annuities were as I have seen many internet non advised firms get a standard 3% which when rebated back to 1.5% enhances the annuity.
Like I said in my previous post I believe that using an IFA for larger pots and more complicated cases is the best route to go down. But for smaller pots where an annuity is the best option the non advised internet companies will give most IFAs a run for their money.
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They can haggle and in many cases are able to haggle a lot harder due to their enhanced commission terms. Many IFAs get a standard commission rate of say 1.5 -2% on enhanced annuities were as I have seen many internet non advised firms get a standard 3% which when rebated back to 1.5% enhances the annuity.
Like I said in my previous post I believe that using an IFA for larger pots and more complicated cases is the best route to go down. But for smaller pots where an annuity is the best option the non advised internet companies will give most IFAs a run for their money.
Small pots may find the internet useful. However, given that we have seen so many posters come back and say their IFA beats the usual online annuity providers, that it would be silly for a medium pot or larger to rule out an IFA.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It also comes down to service standards, if you want to do it yourself and screw it up then it is your fault. If you contract an adviser to do it and they screw it up then you get redress. We're pretty much the only profession that has an ombudsman that provides a free litigation service for our ex-clients!
And, on the service level, £1,000 is pretty average for a normal annuity - How much do you pay in fees to buy a house?0
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