Annuity commission

SallyG

https://www.moneyadviceservice.org.uk/en/articles/how-to-shop-around-for-an-annuity
"Do you need a financial adviser?
Using a financial adviser to recommend an annuity
A financial adviser will assess your needs and circumstances, explain all the options and recommend the most suitable product for you. This advice can cost in the region of £750.
In addition, advisers can also complete much of the paperwork for you, though will usually charge for this service."

"Using a specialist annuity broker for information and support
You can also use a specialist annuity company to find the best deals on the market rather than providing you with financial advice. The cost of this help is built into the rates you’ll be quoted, so it’s easy to make comparisons..........Finding a specialist annuity broker isn’t as straightforward as there are no directories that list them."

So how would I get say 4 whole of market enhanced annuity quotes lined up to compare simultaneously - so as not to miss use by dates - and without the risk of them being later withdrawn because of various different medical condition standards applied by providers?

dunstonh

So how would I get say 4 whole of market enhanced annuity quotes lined up to compare simultaneously - so as not to miss use by dates - and without the risk of them being later withdrawn because of various different medical condition standards applied by providers?

Either by DIY or use an IFA. IFAs have streamlined processes, such as the common quotation form which allow submission of one form across the board. The IFA should be a better form filler than the average person and ask questions more thoroughly. This is important as a declaration of a health issue requires the information given, often in detail to get the enhanced rate. If half info is given or boxes are not answered (as is very often the case on consumer filled in forms) the enhanced terms will not be offered.

The IFA may need a few more days than the DIY option as there is some margin to haggle the rate upwards with a number of providers. The last one I did where someone obtained a quote via HL as well found that the first price I got came back a little less than HL but the haggle stage took it 10% higher than HL.

I have only ever had one annuity reduced post sale. That person blatantly lied both to me and the provider.

nchunt34

There are two variables: the rate given by the annuity provider and the commission taken by the IFA. If you know what you want, I would suggest doing what I've just done: Get quotes from the IFA charging 4% and another charging 1%, say, on the same basis...play each off against the other until the best annuity rate is achieved , then go to an IFA who charges a fixed fee and rebates you the commission. They should be able to get the same quote as the best commission charging IFAs. I pitted a 1.8% IFA against a 1% one until I had the best return (the 1.8% IFA dropped their expectations to 1%), then ditched them both & went off to a fixed rate IFA. Even got a slightly improved rate at 1% commission and have been rebated a tidy sum. Of course the fixed fee has to be considerably less than the commission for this to be worth while. I think it's important to have the best quote before going to the fixed fee IFA...my experience has been that their initial "0% commission best quotes" were far worse than the commission charging IFAs and only improved when I "put them on the spot". It's a shark baiting feeding frenzy out there! :-)

bmm78

nchunt34 wrote: »

There are two variables: the rate given by the annuity provider and the commission taken by the IFA. If you know what you want, I would suggest doing what I've just done: Get quotes from the IFA charging 4% and another charging 1%, say, on the same basis...play each off against the other until the best annuity rate is achieved , then go to an IFA who charges a fixed fee and rebates you the commission. They should be able to get the same quote as the best commission charging IFAs. I pitted a 1.8% IFA against a 1% one until I had the best return (the 1.8% IFA dropped their expectations to 1%), then ditched them both & went off to a fixed rate IFA. Even got a slightly improved rate at 1% commission and have been rebated a tidy sum. Of course the fixed fee has to be considerably less than the commission for this to be worth while. I think it's important to have the best quote before going to the fixed fee IFA...my experience has been that their initial "0% commission best quotes" were far worse than the commission charging IFAs and only improved when I "put them on the spot". It's a shark baiting feeding frenzy out there! :-)

An IFA is unable to take commission on any new business conducted from the end of 2012. By "IFA" are you referring to non-advised annuity services?

doughnutmachine

bmm78 wrote: »

An IFA is unable to take commission on any new business conducted from the end of 2012. By "IFA" are you referring to non-advised annuity services?

I believe the IFAs get around the "no commission" rule by calling it a "fee".

bmm78

doughnutmachine wrote: »

I believe the IFAs get around the "no commission" rule by calling it a "fee".

It's not really "getting around" the rules. Pre-agreed charges facilitated by the product provider are RDR-compliant.

What they certainly can't do is rebate any commission, as commission should not exist with an advised sale.

Although on the surface there isn't much difference between commission and provider-facilitated adviser charges, it isn't just a semantic difference. Adviser Charges are an explicit agreement between the adviser and the client, whereas commission is set by the product provider (although it can be amended).

From the wording of the email, it seems to be referring to the practices of non-advised desks due to the rates used, existence of rebates, and the wording "if you know what you want".

SallyG

Just reading this:
http://www.ifaonline.co.uk/ifaonline/news/2286983/fca-annuity-market-selfregulation-could-fail
"The FCA said: "Many of the consumer groups' responses, and a number of industry responses, made clear that the process of buying an annuity can be difficult for consumers. They agreed that greater transparency could help. However, other industry responses were less keen, preferring to focus on consumer inertia and identifying education as the solution."

About this - "Get quotes from the IFA charging 4% and another charging 1%, say, on the same basis...play each off against the other until the best annuity rate is achieved , then go to an IFA who charges a fixed fee and rebates you the commission."
When I asked an IFA for an annuity quote the fee quoted for getting the annuity quote was £500 - as far as I could tell the IFA was looking for that fee up-front before embarking on his quest for my annuity ...... ie no upfront fee no quote -
did you pay for the quotes you got nchunt34?

doughnutmachine

SallyG wrote: »

About this - "Get quotes from the IFA charging 4% and another charging 1%, say, on the same basis...play each off against the other until the best annuity rate is achieved , then go to an IFA who charges a fixed fee and rebates you the commission."
When I asked an IFA for an annuity quote the fee quoted for getting the annuity quote was £500 - as far as I could tell the IFA was looking for that fee up-front before embarking on his quest for my annuity ...... ie no upfront fee no quote -
did you pay for the quotes you got nchunt34?

I have to admit that in the days of getting car insurance via online comparison sites I think paying 1% plus to arrange an annuity is extortionate.

Daniel54

doughnutmachine wrote: »

I have to admit that in the days of getting car insurance via online comparison sites I think paying 1% plus to arrange an annuity is extortionate.

Buying a lifetime annuity with a very large part of your life savings is radically different from buying an annual,commoditised motor policy,and the consequences of makling a poor decision are exponentially greater.I cannot see why anyone would not wish to seek best,independent advice in these circumstances.

doughnutmachine

Daniel54 wrote: »

Buying a lifetime annuity with a very large part of your life savings is radically different from buying an annual,commoditised motor policy,and the consequences of makling a poor decision are exponentially greater.I cannot see why anyone would not wish to seek best,independent advice in these circumstances.

do you not think annuities are commoditised as well? you think an actuary will give a bespoke quote for each person that wants an annuity?

The one person I know that consulted an annuity paid £500 an hour for the privilege... would there be enough actuaries to provide quotes for each person want an annuity....