Agency commission

peaksoft

I'm due to retire on May 31, so I've been shopping around for an enhanced annuity.
One agency produced the best offer, but when I looked at the details, I was horrified to discover that over 3% of my £200,000+ pot would be paid to the agent as commission.
This is on the basis of them doing five minutes of online search that I'd already done myself, but which I couldn't progress because the insurer won't deal direct.
Isn't there anyway of bypassing these parasites?

grey_gym_sock

not by going direct. for that big a pot, better to go via an IFA, who will charge, but not nearly as much as £6k (or if they do try to, find a less greedy IFA).

kidmugsy

An IFA might even be able to haggle you a bigger annuity.

mania112

he might be talking about an IFA when he says 'agency' - i'm not sure?

But an IFA will go to the lengths of recommending the best shape of annuity for your needs and circumstances. As well as subsequent negotiations of prices.

Some IFA's might charges 3% on £200k - but most decent IFAs won't.

bmm78

peaksoft wrote: »

I'm due to retire on May 31, so I've been shopping around for an enhanced annuity.
One agency produced the best offer, but when I looked at the details, I was horrified to discover that over 3% of my £200,000+ pot would be paid to the agent as commission.
This is on the basis of them doing five minutes of online search that I'd already done myself, but which I couldn't progress because the insurer won't deal direct.
Isn't there anyway of bypassing these parasites?

Most IFAs would do it for less, with the added bonus of giving advice. You have a good sized pot, and if you haven't already done so it is certainly worth considering some form of alternative to a conventional annuity. The full range of alternatives are generally only available through a whole of market adviser.

The work the agent does isn't a 5 minute job, but it certainly isn't worth £6,000. A word of caution though is not to cut off your nose to spite your face. If the broker secured the rate before a rate drop, or managed to squeeze a bit extra out of the provider on a given day, it may be possible that another broker/IFA quoting on a different day can't get that rate (even with a reduced commission/charge). A lower charge with another broker in most cases should result in a better rate, but it doesn't always out like that for a variety of strange reasons...:undecided

Best to get a comparison quote from an IFA, agree a (lower) fixed charge, and see what figures they come back with.

Thrugelmir

peaksoft wrote: »

Isn't there anyway of bypassing these parasites?

Seems a throw back to a bygone age.

Just like the hidden fees within managed funds.

dunstonh

IFAs cannot take commission. Non-advised can. So, a 3% commission must be a non-advised service. An IFA charge is almost certainly got to be much lower than the commission plus the IFA can haggle the annuity rate. (IFA will be closer to £1000-£1500).

peaksoft

Thanks for this input.
When I said "agency" I was referring to one of the comparison websites, which don't offer advice.
They just trawl through the annuity providers (just as I can do myself) but the providers won't deal direct with me.
In this particular case, the best offer is with Just Retirement, for an enhanced annuity.
My inclination now is to approach a local IFA.

zagfles

peaksoft wrote: »

Thanks for this input.
When I said "agency" I was referring to one of the comparison websites, which don't offer advice.
They just trawl through the annuity providers (just as I can do myself) but the providers won't deal direct with me.
In this particular case, the best offer is with Just Retirement, for an enhanced annuity.
My inclination now is to approach a local IFA.

It's worth shopping around youself at the same time, perhaps giving the IFA something to beat. See
http://www.telegraph.co.uk/finance/personalfinance/pensions/10614359/Rip-off-commissions-exposed-by-100-annuity-broker.html

http://www.theguardian.com/money/2013/dec/14/buying-an-annuity-top-tips

peaksoft

Thanks for that Zagfles. I do wish I'd seen those two articles weeks ago. That's extraordinarily useful information.

I do have the advantage of knowing the annuity rates that have been quoted to me by several agencies, so I shall be able to compare those with quotes from the firm mentioned in the article.

The whole experience has been frustrating so far. The biggest part of my pension pot is with the Prudential. All of the material I have received from them has been geared towards persuading me to call them on a premium rate telephone number. When I eventually succumbed, I was immediately put on hold for more than 25 minutes before I gave up, at goodness knows how much expense. (There was no alternative number listed on saynoto0870.com).

The Pru did offer the alternative of emailing them, so I did that, and I haven't had so much as an acknowledgement.

jem16

peaksoft wrote: »

Thanks for that Zagfles. I do wish I'd seen those two articles weeks ago. That's extraordinarily useful information.

I do have the advantage of knowing the annuity rates that have been quoted to me by several agencies, so I shall be able to compare those with quotes from the firm mentioned in the article.

Do let us know what Cavendish quote you as it will help others.

However be aware that the article does say this;

Savers with £100,000 or more should talk to a financial adviser, who can assess whether an annuity is necessary and if it is the right time to buy.