Options to take on my pension, help/advice welcome

zagfles

dunstonh wrote: »

They dont have to justify it.

No wonder people are cynical about the financial services industry!

Anyway, it seems it's fairly easy to get an execution-only type deal on annuities, just like it is with unit trusts etc, where the commission is part rebated. Here are a couple of examples:

http://www.click4annuities.co.uk/commission-free-annuities-pay-the-highest-rates/

http://www.annuitydiscount.co.uk

jem16

zagfles wrote: »

No wonder people are cynical about the financial services industry!

Anyway, it seems it's fairly easy to get an execution-only type deal on annuities, just like it is with unit trusts etc, where the commission is part rebated. Here are a couple of examples:

http://www.click4annuities.co.uk/commission-free-annuities-pay-the-highest-rates/

http://www.annuitydiscount.co.uk

By all means check out what is being offered by execution-only brokers for annuities.

However there have been quite a few threads on here already where the local IFA has been able to get better terms and still be paid a fee.

dunstonh

No wonder people are cynical about the financial services industry!

I dont understand why? I don't see other retailers having to justify their prices.

Anyway, it seems it's fairly easy to get an execution-only type deal on annuities, just like it is with unit trusts etc, where the commission is part rebated. Here are a couple of examples:

Rebates can be against HMRC rules depending on the level. When the word rebate is used with pensions, it means it is not taken from the plan and the annuity rate is adjusted. A firm paying the money back to you is putting you at risk of an authorised payment tax charge of upto 55%. This will be more of an issue after RDR as the providers move to fee based contracts. They cant levy a fee and then rebate some of it back. The fee will have to be explicit.

The first one is doing it for a fixed fee on non-advice basis. A fee that is very similar to the level many IFAs charge for doing small annuities. The second one is only part rebating and an IFA should be able to improve on those. For medium to larger sized pots it is actually quite expensive for a non-advice service. Neither site gives any indication of price haggling which is where IFAs can really make their money (typically you see jumps in enhanced rates of 10-15% after haggling).

If you want to use those then fine. However, posters on this board have said that their local IFAs have come in with higher rates than the internet based annuity sites.

Why dont you ask these sites to justify their charges when they are carrying virtually no liability as you get virtually no consumer protection, they get you to do all the work and yet they take amounts which are not too dissimilar to advice levels or higher and probably come in with lower annuity rates than advised ones.

zagfles

dunstonh wrote: »

I dont understand why? I don't see other retailers having to justify their prices.

Maybe you need to look a bit harder then.

Rebates can be against HMRC rules depending on the level. When the word rebate is used with pensions, it means it is not taken from the plan and the annuity rate is adjusted. A firm paying the money back to you is putting you at risk of an authorised payment tax charge of upto 55%.

Not if they pay it into the annuity pot.

The first one is doing it for a fixed fee on non-advice basis. A fee that is very similar to the level many IFAs charge for doing small annuities.

£395 compared with the £1000-1500 you were quoting earlier? That's not "similar" is it?

The second one is only part rebating and an IFA should be able to improve on those. For medium to larger sized pots it is actually quite expensive for a non-advice service.

But cheaper than everyone was saying earlier in this thread, ie the company pockets ALL the commission if you don't use an IFA. Not so, is it?

Neither site gives any indication of price haggling which is where IFAs can really make their money (typically you see jumps in enhanced rates of 10-15% after haggling).

If you want to use those then fine. However, posters on this board have said that their local IFAs have come in with higher rates than the internet based annuity sites.

So get quotes off several IFAs and off several execution-only brokers then. Don't just consult one IFA, or one discount broker. That would be silly. Shop around, nothing wrong with that, is there?

Why dont you ask these sites to justify their charges when they are carrying virtually no liability as you get virtually no consumer protection, they get you to do all the work and yet they take amounts which are not too dissimilar to advice levels or higher and probably come in with lower annuity rates than advised ones.

You seemed to think charging the same fee for non-advised sales as advised needs no justification, now you're saying charging £395 instead of £1000-1500 needs justification?

dunstonh

Not if they pay it into the annuity pot.

Which is what I said.

£395 compared with the £1000-1500 you were quoting earlier? That's not "similar" is it?

£1000-£1500 is fair range but £500 upwards is possible.

But cheaper than everyone was saying earlier in this thread, ie the company pockets ALL the commission if you don't use an IFA. Not so, is it?

That company can earn far more than an advised case with it's scale.

So get quotes off several IFAs and off several execution-only brokers then. Don't just consult one IFA, or one discount broker. That would be silly. Shop around, nothing wrong with that, is there?

Nothing wrong with that and people have done it and posted on this site to say the IFA came in with the best figure.

You seemed to think charging the same fee for non-advised sales as advised needs no justification, now you're saying charging £395 instead of £1000-1500 needs justification?

I never said that but you seem to think its normal. So, I put the question to you. You seem happy to get advisers to justify their charges but not other businesses.

You dont have to use an adviser. the choice is yours. You clearly dont want to and no-one is going to lose any sleep over that. However, dont assume that non-advice is going to give a better result. It frequently doesnt.

jem16

zagfles wrote: »

Not if they pay it into the annuity pot.

Yet their website states;

"We offer a fixed priced service of £395 to arrange an annuity*. This means you can choose to recieve a higher annuity for life (the commission free annuity) or you can recieve a cashback on completion of the commission paid on a standard annuity."

zagfles

dunstonh wrote: »

£1000-£1500 is fair range but £500 upwards is possible.

The power of competition! It gets lower when the other options start being pointed out!

That company can earn far more than an advised case with it's scale.

It's a fixed £395. The other one had a scale.

Nothing wrong with that and people have done it and posted on this site to say the IFA came in with the best figure.

Every single time? Why is the advice always "see an IFA" rather than "see several IFAs, get several quotes, and compare with execution-only brokers".

I never said that but you seem to think its normal. So, I put the question to you. You seem happy to get advisers to justify their charges but not other businesses.

Erm, no. Point out where I have asked advisers to justify their charges. I haven't. It's non-advice commission of similar levels to advice charges that I have a problem with. I don't want advice so I don't expect to pay for it, and couldn't care less what advisers charge.

In any case, I wouldn't touch an annuity with a bargepole in the current market, drawdown is a no-brainer. Hopefully flexible drawdown by the time I retire

dunstonh

It is also worth noting that whilst commission is still technically allowed on non-advice cases, these "discount broker" style sites are actually retailing the advice product on non-advice basis. So, there will be no commission on these products in just over a months time. They will have to move to fee basis.

The power of competition! It gets lower when the other options start being pointed out!

Not really. I did one for £500 recently that was an easy case. However, most people have multiple pots and cant use OMO but have to use IVPPP and the options get more important and diverse the larger the pot you have.

Every single time? Why is the advice always "see an IFA" rather than "see several IFAs, get several quotes, and compare with execution-only brokers".

Put this way, we have seen people post their IFA got the best quote but we have yet to see anyone post that the internet site got the best quote. Seeing multiple IFAs is an option but most people don't as they have better things to do with their time.

t's non-advice commission of similar levels to advice charges that I have a problem with. I don't want advice so I don't expect to pay for it.

For those it is the cost of retail. They have a right to retail a product at a charge they decide. If you dont like it then you can shop around.

zagfles

jem16 wrote: »

Yet their website states;

"We offer a fixed priced service of £395 to arrange an annuity*. This means you can choose to recieve a higher annuity for life (the commission free annuity) or you can recieve a cashback on completion of the commission paid on a standard annuity."

I would imagine that would be if they didn't take the full 25% tax free lump sum. Otherwise, it'd have to enhance the annuity (or 75% of it would).

zagfles

dunstonh wrote: »

It is also worth noting that whilst commission is still technically allowed on non-advice cases, these "discount broker" style sites are actually retailing the advice product on non-advice basis. So, there will be no commission on these products in just over a months time. They will have to move to fee basis.

Right - so no real difference to now then. They'd sell the "advice" product at the better (no commission) rate with their £395 fee added on, whereas an IFA would sell the same product with a £1000-1500 fee added on.

Put this way, we have seen people post their IFA got the best quote but we have yet to see anyone post that the internet site got the best quote. Seeing multiple IFAs is an option but most people don't as they have better things to do with their time.

Surely shopping round for a major financial decision like an annuity is worth spending time on?

For those it is the cost of retail. They have a right to retail a product at a charge they decide. If you dont like it then you can shop around.

Indeed I can. And it's not taken me long to find out that you get execution-only deals on annuities. But if I were ever to buy one (unlikely) I might ask a few IFAs to give me a quote. Provided they will give a quote on a specific product rather than want to pry into my entire financial life.