Annuity commission

zagfles

jem16 wrote: »

What does "would appreciate any input" mean to you?

That he would would appreciate any input into what he asked about, ie non-advised annuities.

I think we've done this issue to death now...but I'm still interested in how IFAs would react to someone shopping round via different IFAs and independantly - would that really work? Or would all the IFAs want a fee even if they didn't get the business?

zagfles

jem16 wrote: »

And you're complaining of patronising attitude ..........

Yes, like telling us that discount brokers take a fee. Duh, really?

jem16

zagfles wrote: »

That he would would appreciate any input into what he asked about, ie non-advised annuities.

If you really thought that to be the case, you wouldn't have mentioned seeing an IFA yourself.

zagfles wrote: »

Yes, like telling us that discount brokers take a fee. Duh, really?

My comment was factual with no attitude, implied or otherwise. Your sarcastic comments and the use of "duh" to anyone who has disagreed with you certainly comes across as patronising in my opinion.

zagfles

jem16 wrote: »

If you really thought that to be the case, you wouldn't have mentioned seeing an IFA yourself.

Why not? If what is constantly claimed is true - ie that an IFA can get a better deal than shopping around using discount brokers, then why not get quotes from IFAs, even if they come with unnecessary advice? My issue was with the assumption that the OP needs advice, when he was asking about non advised.

My comment was factual with no attitude, implied or otherwise. Your sarcastic comments and the use of "duh" to anyone who has disagreed with you certainly comes across as patronising in my opinion.

Your comment was stating the bleeding obvious, that was patronising. My reply was sarcastic, if you want patronising then how about "no, dear, I suggest you consult a dictionary"

GhIFA

zagfles wrote: »

That he would would appreciate any input into what he asked about, ie non-advised annuities.

I think we've done this issue to death now...but I'm still interested in how IFAs would react to someone shopping round via different IFAs and independantly - would that really work? Or would all the IFAs want a fee even if they didn't get the business?

So people shouldn't point out where he might get better value out of his money?

You're "doing it to death" by constantly making an issue out of something that wasn't an issue to start with.

And in answer to your question, I wouldn't have an issue with someone using me as part of an initial "shopping around" process.

bmm78

zagfles wrote: »

So you see lots of people who have decided to buy non-advised annuities? In what capacity do you see their purchases?

I supervise and monitor sales for a financial services intermediary, which includes a large number of annuities sold on both an advised and non-advised basis.

I am not an IFA. Roughly half the revenue that pays my salary actually comes from non-advised sales. From a financial perspective I have no axe to grind with non-advised or any agenda to push people towards IFAs.

On the non-advised side there is a significantly greater proportion of "unsuitable" sales (quotation marks used as suitability is normally used in an advised context). People using their full fund to purchase an annuity without considering a Purchased Life Annuity. Married annuitants not building in any guarantee period or spousal benefits. I could go on, and this is without even considering whether an annuity was actually the right product in the first place.

As non-advised sales grow, this is becoming a bigger and bigger issue. This is something that should concern us all because:

1) More and more people are making poor decisions which will financially affect them for the rest of their lives.

2) When the proverbial hits the fan, it is future generations that will be expected to foot the bill.

It's actually rather alarming what you see at the old coalface :eek:

zagfles wrote: »

Obviously if people come to you for advice, they aren't necessarily going to understand these things, which is why they want advice!

Very few people come looking for advice or non-advice. The vast majority just want help with sorting their annuity out. The customer who says at outset "I want advice" or "I do not want advice" is a very rare animal indeed.

If you read reviews of non-advised annuity services, you'll see lots of references to "advice" and "adviser". These are financial services terms that quite rightly mean ****** all to most people.

The key thing is giving people the right level of help to make good decisions, regardless of what regulatory term is given to this. At the moment, this level of help is far more likely to come from advised rather than non-advised, and this is where people should be directed as the default position.

It's worth pointing out that many of the non-advised desks are from an IFA background anyway, and have chosen (or had no option) to provide non-advised services.

zagfles wrote: »

A simple spreadsheet will show the effects of inflation, it's not rocket science.

How do you define inflation in relation to spending power in retirement?

How do you effectively combat inflation in retirement?

Knowing what CPI is and putting some figures into a spreadsheet will not answer these questions.

zagfles wrote: »

In the 90's I took out two mortgages, several "advisors" tried to convince me that buying an endowment was a good idea. Luckily I wasn't stupid enough to believe them. I researched the product and decided they were a total rip-off, and totally inflexible. I ignored their "advice" and got repayment/IO mortgages.

Yes, there were a lot of crap advisers out there. There are still some out there, but to nowhere near the same extent. When taking advice it's important to still do your own research and be in control of what you're doing. Fair play for doing that at a time when most people weren't :beer:

Far more recent than the endowment scandal is the interest-only timebomb, which we probably won't see the full effects of for many years. When you break it down, the main issue causing this was that people weren't getting quality advice. Emphasis on quality. This is also the conclusion the FSA came to, although it took them many years after the horse had bolted to realise it.

zagfles wrote: »

Such as?

Many fixed-term annuities, investment-linked and asset-backed annuities, variable annuities, drawdown with guaranteed underpins, drawdown with lock-ins, etc etc etc.

There are more and more products coming onto the market, which are essentially designed to address one or more of the obvious problems with annuities. They may or may not be a better fit than annuities, but if they're not even being considered you are reducing your chances of getting the best deal in retirement.

zagfles wrote: »

Well clearly. The same applies to any product or service. I can't sue my car dealer because I bought a Focus whereas a Mondeo suited my motoring needs better. I know far less about cars than I do about financial products, so perhaps I need an Independant Car Advisor next time I buy a car

The lack of recourse to the Financial Ombudsman Service is not a trivial matter. There is a massive difference in the level of protection the customer has if they choose to go non-advised. The tail shouldn't wag the dog, but people need to be aware of that if they are considering non-advised services.

zagfles

GhIFA wrote: »

So people shouldn't point out where he might get better value out of his money?

You're "doing it to death" by constantly making an issue out of something that wasn't an issue to start with.

Right then - I'll say no more about it - let's stick to OP's issue...which I'm sure will be useful for others shopping round for annuities...

And in answer to your question, I wouldn't have an issue with someone using me as part of an initial "shopping around" process.

Would you provide quotes for a specific product for free, only charging a fee if you turn out to be the cheapest?

Eg if the OP came to you defining exactly the annuity he wants, details of any health conditions etc, telling you he's going to 6 other IFAs plus getting quotes from several online annuity brokers, and will take the best deal net of fees.

PS I'm not trying to make a point here, I'm genuinely interested in the answer, whether most IFAs would think it was worthwhile given the low likelyhood of getting paid? Unless they were confident they could undercut the brokers and other IFAs?

If not, then what about if he only used one other IFA and the discount brokers? Or just the discount brokers?

zagfles

bmm78 wrote: »

I supervise and monitor sales for a financial services intermediary, which includes a large number of annuities sold on both an advised and non-advised basis.

I am not an IFA. Roughly half the revenue that pays my salary actually comes from non-advised sales. From a financial perspective I have no axe to grind with non-advised or any agenda to push people towards IFAs.

On the non-advised side there is a significantly greater proportion of "unsuitable" sales (quotation marks used as suitability is normally used in an advised context). People using their full fund to purchase an annuity without considering a Purchased Life Annuity. Married annuitants not building in any guarantee period or spousal benefits. I could go on, and this is without even considering whether an annuity was actually the right product in the first place.

But if the sales were non-advised, how do you know they were "unsuitable"? Why is a guarantee period necessarily needed? How would you know what other arrangements a married annuitant may have made? They may have other annuities, their spouse may have a far bigger annuity, they may have drawdown funds etc... if it's non-advised how would you know?

As non-advised sales grow, this is becoming a bigger and bigger issue. This is something that should concern us all because:

1) More and more people are making poor decisions which will financially affect them for the rest of their lives.

2) When the proverbial hits the fan, it is future generations that will be expected to foot the bill.

It's actually rather alarming what you see at the old coalface :eek:

What do you see? If it's non-advised, how do you know what was suitable and what wasn't? Or do you get come-back when there are problems - clearly you won't get come-back if there are no problems - so do you get a skewed picture?

Very few people come looking for advice or non-advice. The vast majority just want help with sorting their annuity out. The customer who says at outset "I want advice" or "I do not want advice" is a very rare animal indeed.

If you read reviews of non-advised annuity services, you'll see lots of references to "advice" and "adviser". These are financial services terms that quite rightly mean ****** all to most people.

The key thing is giving people the right level of help to make good decisions, regardless of what regulatory term is given to this. At the moment, this level of help is far more likely to come from advised rather than non-advised, and this is where people should be directed as the default position.

It's worth pointing out that many of the non-advised desks are from an IFA background anyway, and have chosen (or had no option) to provide non-advised services.



How do you define inflation in relation to spending power in retirement?

By using the various indices out there, some supposedly measure "pensioner inflation" but I don't think they're very accurate. Let's face it - it's all guesswork anyway - nobody can predict future inflation, even IFAs, we can only make a best guess and make illustrations based on that guess. A bit like pension statements with the different assumptions about investment growth and inflation.

How do you effectively combat inflation in retirement?

Well the obvious way is to get an index-linked annuity - various other ways would provide some protection without guarantees.

Knowing what CPI is and putting some figures into a spreadsheet will not answer these questions.

Nor with anything other than a crystal ball.

Yes, there were a lot of crap advisers out there. There are still some out there, but to nowhere near the same extent. When taking advice it's important to still do your own research and be in control of what you're doing. Fair play for doing that at a time when most people weren't :beer:

Thanks

Far more recent than the endowment scandal is the interest-only timebomb, which we probably won't see the full effects of for many years. When you break it down, the main issue causing this was that people weren't getting quality advice. Emphasis on quality. This is also the conclusion the FSA came to, although it took them many years after the horse had bolted to realise it.

I have an interest only mortgage. My paperwork when I first took it out and every annual mortgage statement makes it crystal clear in big bold lettering that it's my responsibility to make sure an investment vehicle is in place to pay off the capital. (In fact I don't bother and just make overpayments when I feel like it - but I know the score).

I think if people get too "nannied" with anything, they won't bother to understand them and make decisions for themselves, this applies to financial products as well as anything else.

Many fixed-term annuities, investment-linked and asset-backed annuities, variable annuities, drawdown with guaranteed underpins, drawdown with lock-ins, etc etc etc.

There are more and more products coming onto the market, which are essentially designed to address one or more of the obvious problems with annuities. They may or may not be a better fit than annuities, but if they're not even being considered you are reducing your chances of getting the best deal in retirement.

They might be considered, just because someone is not buying one doesn't mean they've not considered (and dismissed) those sorts of options. I've certainly heard of most of them, even though I've not done any research, which I certainly would have if I was considering buying an annuity.

The lack of recourse to the Financial Ombudsman Service is not a trivial matter. There is a massive difference in the level of protection the customer has if they choose to go non-advised. The tail shouldn't wag the dog, but people need to be aware of that if they are considering non-advised services.

Indeed.

GhIFA

Right then - I'll say no more about it - let's stick to OP's issue...which I'm sure will be useful for others shopping round for annuities...

What?? You do realise you're the one that has been berating others for offering information wider than the query you decided the OP was asking, don't you?

Would you provide quotes for a specific product for free, only charging a fee if you turn out to be the cheapest?

Eg if the OP came to you defining exactly the annuity he wants, details of any health conditions etc, telling you he's going to 6 other IFAs plus getting quotes from several online annuity brokers, and will take the best deal net of fees.

PS I'm not trying to make a point here, I'm genuinely interested in the answer, whether most IFAs would think it was worthwhile given the low likelyhood of getting paid? Unless they were confident they could undercut the brokers and other IFAs?

If not, then what about if he only used one other IFA and the discount brokers? Or just the discount brokers?

Despite your claim that you're "not trying to make a point" I would imagine that this is precisely where you are heading. I am more than happy to work with clients on an exploratory basis in a situation such as this at the outset, providing quotes etc. but there would come a point where they would need to commit to the process or it starts becoming inefficient.

zagfles

GhIFA wrote: »

Despite your claim that you're "not trying to make a point" I would imagine that this is precisely where you are heading.

Not at all, if I was trying to make a point I'd need to to know the answer to the question I was asking, which I don't. I have no idea how IFAs would react to the scenario I described.

I am more than happy to work with clients on an exploratory basis in a situation such as this at the outset, providing quotes etc. but there would come a point where they would need to commit to the process or it starts becoming inefficient.

Right - so you can provide a firm quote, net of fees, for a specific product, before the client commits? Sounds fair enough.

So for someone who knows exactly what annuity they want, getting quotes from annuity discount brokers and a few IFAs seems to be the sensible way to go. Agreed?