How to find a good annuity

Telegraph_Sam

For the benefit of late arrivals to this thread (from a parallel one which I started) are there any general tips you can pass on re oranizing the DIY approach? If (if??) you didn't use an online search engine was it a week's pin-in-the-Yellow-Pages affair plus a lot of direct telephoning to call centres?

I am always a wee bit bemused by the recommendation to seek out a "good IFA", implying that as with plumbers there are separate sections in Yellow Pages for "good" and "bad" respectively! Pls forgive my cynicism.

atush

I don't use an IFA currently, but buying an annuity would be the one case where I would do so.

As for 'good'/ 'bad' best to get a referral from a satisfied customer- that is the most reliable way to find 'good'. If not, unbiased.co.uk, see ort talk to a few and choose the one you feel you have the best rapour/understanding with.

dunstonh

I am always a wee bit bemused by the recommendation to seek out a "good IFA", implying that as with plumbers there are separate sections in Yellow Pages for "good" and "bad" respectively! Pls forgive my cynicism.

Thankfully, the stats show that the vast majority of IFAs are good. They only account for 1% of complaints at the FOS. However, they dominate distribution in many areas (over 70% in pensions for example). As no-one knows good or bad from an entry in yellow pages!, you would have to be pretty unlucky to find a bad one.

dunstonh

zagfles wrote: »

Thanks for the update - it's good to know that it's not just IFAs who can haggle!

£45 is nice but its not really haggle territory. 5-10% increases are what you expect on haggle. Plus, if its a direct to provider case then chances are the annuity rate is lower than the default IFA rate. So, they would have had margin to play with.

zagfles

dunstonh wrote: »

£45 is nice but its not really haggle territory. 5-10% increases are what you expect on haggle.

The OP only had a small pot, £15k after the TFLS. He was talking about quotes in the range of £52-68 per month. So £45pa will likely be in the 5-10% range. Not bad for (it seems) a complete beginner!

Plus, if its a direct to provider case then chances are the annuity rate is lower than the default IFA rate. So, they would have had margin to play with.

And no advice fees.

zagfles

dunstonh wrote: »

Thankfully, the stats show that the vast majority of IFAs are good. They only account for 1% of complaints at the FOS. However, they dominate distribution in many areas (over 70% in pensions for example). As no-one knows good or bad from an entry in yellow pages!, you would have to be pretty unlucky to find a bad one.

Plenty of "greedy" ones though - as you yourself have said several times. That's where getting the best DIY quote yourself would likely be useful even if you're using an IFA.

dunstonh

zagfles wrote: »

The OP only had a small pot, £15k after the TFLS. He was talking about quotes in the range of £52-68 per month. So £45pa will likely be in the 5-10% range. Not bad for (it seems) a complete beginner!And no advice fees.

But commission instead and no guarantee that it was on economy of scale pricing but in house pricing.

Plenty of "greedy" ones though - as you yourself have said several times. That's where getting the best DIY quote yourself would likely be useful even if you're using an IFA.

Small pots are not best suited for advisers anyway. So, a DIY option for them is sensible. In this case, I am not entirely sure an IFA would have offered much more, if any more. On an enhanced case maybe but with non-enhanced there isnt much scope (sometimes not scope).

jem16

zagfles wrote: »

The OP only had a small pot, £15k after the TFLS. He was talking about quotes in the range of £52-68 per month. So £45pa will likely be in the 5-10% range. Not bad for (it seems) a complete beginner!And no advice fees.

Unfortunately we're all whistling in the dark as the OP has not chosen to let us know what was achieved, despite being asked a few times. This would have been really helpful to everyone reading this thread.

dunstonh wrote: »

In this case, I am not entirely sure an IFA would have offered much more, if any more. On an enhanced case maybe but with non-enhanced there isnt much scope (sometimes not scope).

It was apparently an enhanced case.

dunstonh

It was apparently an enhanced case.

In which case, a £45 increase is peanuts. Enhanced annuity providers are the real hagglers. Plus, with decent communication with the underwriters and the sales rep of the provider, you can get a lot more. A recent case I did got over 20% increase on starting price.

"Even should you proceed immediate towards the supplier, fee continues to be payable because it is already a part of the actual price. These people simply maintain this with regard to on their own. inches
---- that is nevertheless "lawful" after that? : even though RDR prohibited fee in order to IFAs, DIYers/direct product sales clients nevertheless pay/forgo the actual fee?

Advisers cannot be paid commission. The pricing of the product will be on nil commission basis (plus any enhanced terms for that distribution channel). The fee can be taken from the pension pot though.

DIY/direct can still be paid commission. The commission is factored into the annuity rate in much the same way a fee would.

Increasingly, you are seeing IFAs do annuity business on fixed cost basis but the DIY provider work on percentage basis. So, even quite small pots (say over £25k) can actually be better value via an IFA or FA with no restriction in annuities than DIY.

zagfles

jem16 wrote: »

Unfortunately we're all whistling in the dark as the OP has not chosen to let us know what was achieved, despite being asked a few times. This would have been really helpful to everyone reading this thread

Not quite "in the dark". He quoted the range of his initial quotes and the "haggling" discount, which seems to be in the range IFAs can supposedly get.

At least it buries the myth that DIY = no haggling.