Annuity commission

ineedalabotomy

Hi, Wondered if anyone would know if 4% commission for a direct non advised Annuity quote/purchase is the going rate ? and would this be negotiable ?........ Would appreciate any input.

atush

I don't know about the rate, but i do knwo that annuity commissions are paid if you get advice or not.

So there is no reason to NOT get advice, esp as a good adviser can get you more annual cash for your pot than you can on your own.

So why bite your own nose off only to spite your face?

dunstonh

Hi, Wondered if anyone would know if 4% commission for a direct non advised Annuity quote/purchase is the going rate ?

Not even close. Non advised is typically 1 to 1.5%. Advised will be fee basis but collected via the commission system. So, think of the 4% as a fee as it has the same impact.

As IFAs tend to get the best annuity rates, even if the fee is higher than commission, it is rarely a good idea to go non-advised basis.

zagfles

Like with most products you can get brokers who'll rebate part of the commission eg:

http://www.click4annuities.co.uk/com...highest-rates/

http://www.annuitydiscount.co.uk

I know nothing about these particular companies, just found them from a google.

But as above an IFA might get you a better deal - suggest you check the best rate you can get yourself and challenge an IFA to beat it (obviously on a no-fee basis if they fail).

bmm78

zagfles wrote: »

Like with most products you can get brokers who'll rebate part of the commission eg:

http://www.click4annuities.co.uk/com...highest-rates/

http://www.annuitydiscount.co.uk

I know nothing about these particular companies, just found them from a google.

But as above an IFA might get you a better deal - suggest you check the best rate you can get yourself and challenge an IFA to beat it (obviously on a no-fee basis if they fail).

A crucial difference with an IFA is that you will actually receive advice, whereas commission-rebating brokers cannot do this and will only research the highest annuity based on the options you choose.

There's a lot more to the retirement market than just annuities, and the highest rate in the wrong product is still a bad outcome. Like everything in life you get what you pay for, and it's worth getting professional advice from someone qualified and experienced to give it. For peace of mind it is best to speak to an adviser with significant knowledge in the at-retirement market.

Although commission rebates appear to be within HMRC rules providing that the broker does it on commercial rates, I wouldn't be entirely comfortable receiving payments from pension schemes in excess of 25% (or whatever is allowed for by the scheme).

redbuzzard

ineedalabotomy wrote: »

Hi, Wondered if anyone would know if 4% commission for a direct non advised Annuity quote/purchase is the going rate ? and would this be negotiable ?........ Would appreciate any input.

Sounds high. HL have just received 1.8% from Canada Life on my residual AVCs I had to annuitise, which seemed OK on c. £6000; I wouldn't really expect them to do the faffing and compliance for less than £100, which is about what it was.

If yours is substantially bigger then you might reasonably expect a lower percentage. Sounds that way judging by dunstonh's response.

tony4147

dunstonh wrote: »

Not even close. Non advised is typically 1 to 1.5%. Advised will be fee basis but collected via the commission system. So, think of the 4% as a fee as it has the same impact.

As IFAs tend to get the best annuity rates, even if the fee is higher than commission, it is rarely a good idea to go non-advised basis.

So if I have a £300K pot, I could be looking at £12K?, to me that's extortionate.

dunstonh

tony4147 wrote: »

So if I have a £300K pot, I could be looking at £12K?, to me that's extortionate.

1.5% would be £4500. That is the sort of figure you would be looking at with online commission based providers. An IFA would be closer to £1500-£2000 on fee basis.

The 4% figure mentioned by the OP may be due to fund size. However, if it is a DIY arranged plan and taking 4% then that is extortionate when you think the IFA option would be vastly cheaper, give better consumer protection and come in with better rates.

zagfles

bmm78 wrote: »

A crucial difference with an IFA is that you will actually receive advice, whereas commission-rebating brokers cannot do this and will only research the highest annuity based on the options you choose.

Which is what the OP wants, he was after non-advised. What makes some people think we all need financial advice shoving down our throats?

There's a lot more to the retirement market than just annuities, and the highest rate in the wrong product is still a bad outcome. Like everything in life you get what you pay for, and it's worth getting professional advice from someone qualified and experienced to give it. For peace of mind it is best to speak to an adviser with significant knowledge in the at-retirement market.

If you really got "what you pay for" there'd be no need for MSE! You rarely "get what you pay for" in life. But it's a myth that allows companies to sell overpriced products to mugs (this applied to virtually every product or service).

Although commission rebates appear to be within HMRC rules providing that the broker does it on commercial rates, I wouldn't be entirely comfortable receiving payments from pension schemes in excess of 25% (or whatever is allowed for by the scheme).

You wouldn't be comfortable getting something allowed by HMRC? Why not?

tony4147

dunstonh wrote: »

1.5% would be £4500. That is the sort of figure you would be looking at with online commission based providers. An IFA would be closer to £1500-£2000 on fee basis.

The 4% figure mentioned by the OP may be due to fund size. However, if it is a DIY arranged plan and taking 4% then that is extortionate when you think the IFA option would be vastly cheaper, give better consumer protection and come in with better rates.

The £1500/2000 would be far more reasonable.

dunstonh

You wouldn't be comfortable getting something allowed by HMRC? Why not?

HMRC never used to allow commission rebates. It is a relatively new thing.

However, with RDR killing off commission and making it an explicit charge which is deducted from the pension pot, that may not be acceptable to HMRC if that was refunded to a client.