Annuity - commission sacrifice website

DavidLaGuardia

Yaffles wrote: »

I've saved over a grand which I will put towards a holiday I didn't think I could afford.

I don't think this is the case. The rebated commission will increase the annuity income which will take some time to represent an extra grand net.

jamesd

Yaffles, since the site you mentioned is advertising on Google at the moment it's entirely reasonable that you would have found it that way, so don't be concerned about people naturally wondering if you were one of the spammers who sadly to post here quite often.

dunstonh

David, I concur. I did some figures on a 220k lifetime annuity using canada life (only because their quote system is quick and allows easy edits. The difference between 47% commission taken and 100% commission taken was just £50 a year.

What actually appears to be happening here is that the company is doing it on fee basis and putting the annuity through on 100% commission and then rebating 57%. So, a transaction that would be about £500-£600 on advice basis and around £300 on execution only (the site operates on exection only) has actually cost the OP £2046 assuming 1.5% commission was received or £946 if 1% was received.

The other IFA that didnt want to do it and get paid £946-2046 clearly didnt want the money. Or it is possible that the size of the fund was too big for them to do it. A lot of networks have a limit on the size of the fund where a non G60 authorised adviser cannot do the transaction.

Its good to see an IFA firm discounting but then it is execution only and you expect discounting with execution only. However, with large funds, you are better off on fee basis.

Yaffles

Re: "The other IFA that didnt want to do it and get paid £946-2046 clearly didnt want the money." - well you could have fooled me- he was on the phone constantly telling me how much I really "needed" his advice.

As for this £300 figure dunstonh used to assess the price of an execution only annuity- where is it from? I contacted about 10 companies and no one offered this. I also don't follow when you use a figure of £500 - £600 for an advised sale when the IFA wanted full commission.

Neither do I know what a G60 qualified person is.

I looked on the illustration from the web site and rather than the £2046 figure you mentioned, it states £946. A good saving by all accounts. It would be nice if they could pay you this as a lump sup, but I was told it had to be annuitised otherwise it could exceed 25% tax free cash, which is the maximum.

I do get the impression IFAs like to bamboozle you with science- when all you need to do is compare it on a like for like basis and find the best deal. Surely no need to overcomplicate it all with FSA comparison tables when they don't offer annuities themselves. Just get a load of quotes and see who pays the most. Isn't that what IFA's do anyway?

EdInvestor

Yaffles wrote: »

I do get the impression IFAs like to bamboozle you with science- when all you need to do is compare it on a like for like basis and find the best deal. Surely no need to overcomplicate it all with FSA comparison tables when they don't offer annuities themselves. Just get a load of quotes and see who pays the most. Isn't that what IFA's do anyway?

Yes this is what normally happens.The FSA site is useful as a quick guide as to what to expect.

Sadly, I thought you were pointing us in the direction of an execution-only annuity broker.One of these would be welcome.But it would appear not.

dunstonh

As for this £300 figure dunstonh used to assess the price of an execution only annuity- where is it from? I contacted about 10 companies and no one offered this.

Did you ask them for execution only? Its not something you get offered. Were you phoning salesforce IFAs or independent IFAs? I can imagine salesforces would say no as they often have no ability to negotiate commissions. Employed IFAs often get a very small chunk of the commission as well so also dont have the scope to reduce. The independent IFAs getting the full amount of the commission have the scope to negotiate.

I also don't follow when you use a figure of £500 - £600 for an advised sale when the IFA wanted full commission.

All IFAs have to offer a fee based option. The fee cannot match the commission. It can be a fixed charge or by the hour. A simple open market option could easily cost around £600. Indeed, £650 as someone quoted the other day.

I looked on the illustration from the web site and rather than the £2046 figure you mentioned, it states £946. A good saving by all accounts.

I mentioned £946 as well. £946 is the 1% commission figure. £2046 is the 1.5% commission figure. Providers like Pru, NU, Just Retirement, GE Life etc can all enhance the 1% to 1.3/1.5% typically.

It would be nice if they could pay you this as a lump sup, but I was told it had to be annuitised otherwise it could exceed 25% tax free cash, which is the maximum.

You mean all they did was increase the annuity as if they had only taken 43% entitlement of commission.

I do get the impression IFAs like to bamboozle you with science- when all you need to do is compare it on a like for like basis and find the best deal. Surely no need to overcomplicate it all with FSA comparison tables when they don't offer annuities themselves.

Ed is not an IFA. She posts the tables on threads like this which as you say can complicate it when you realise the tables are often using obsolete or limited data. They are a handy starting point but you wouldnt base your decision on them.

Just get a load of quotes and see who pays the most. Isn't that what IFA's do anyway

Yes. You decide whether you need increasing/level, with or without proportion, arrears or advance, guarantee or no guarantee, capital buy back or not etc then once you know what is needed you phone round the companies to get the best quote. Many of the annuity providers dont have an online quoting system and many do not appear on the quote portals. So, you need get them manually. If you use an online site to purchase, you will only really be working from a limited panel rather than whole of market. Some of the best providers wouldnt appear in the table or would only give an example figure (mainly those that underwrite on smoker, health or occupation).

Sadly, I thought you were pointing us in the direction of an execution-only annuity broker.One of these would be welcome.But it would appear not.

They are but I get your point. They are doing execution only but not really discounting as much as you would expect for the size of the funds they are looking at.

Yaffles

Once again it looks as if the jargon is flowing freely. This difference between a "Saleforce" IFA and "Independent IFA" strikes me as nonsensicle. An IFA's job is to sell financial services. They are salespeople- who's job it is to earn as much as they can from you.

I see their relationship with Life Offices as monopolistic. I would have gone directly to the Life Office once I knew who paid the best rate- only to find that if you try to cut out the middle man, the Life office keeps the commission for themselves. This is a very cosy relationship and anti consumer.

As such a site which brokers a deal and gives you most of the commission appeals to me.

This reminds me of the relationship car dealerships have with their main dealers. You have to go to a website like jamjar.com who will broker a deal- as opposed to going dirent to the manufacturer......because they are "in bed" with their distributers.

And before anyone starts- no i do not work for jamjar.com.

This discussion is really starting to annoy me- all the IFA's lurking on the forum seem to jump out and shout "ha ha, you've been ripped off, you mug"- when I found a much better deal than anything they would offer.

dunstonh

Once again it looks as if the jargon is flowing freely. This difference between a "Saleforce" IFA and "Independent IFA" strikes me as nonsensicle. An IFA's job is to sell financial services. They are salespeople- who's job it is to earn as much as they can from you.

You clearly dont understand the differences and dont want to. The way the different business models operate is significant.

As such a site which brokers a deal and gives you most of the commission appeals to me.

A site who are IFAs themselves.

This discussion is really starting to annoy me- all the IFA's lurking on the forum seem to jump out and shout "ha ha, you've been ripped off, you mug"- when I found a much better deal than anything they would offer.

I'm the only IFA contributing on this thread and yes I would have been cheaper on execution only (but not advice). The others are not IFAs but consumers and have spotted the same flaws that you choose to disregard.

At the end of the day you have purchased an execution only service which has given you a discount over maximum terms but could have been cheaper when you look at the fund values involved.

jamesd

Yaffles, it's standard business practice for manufacturers to price direct sales so that they don't undercut their retail distribution chain. The financial services industry is no different.

dunstonh

The providers that do sell direct usually offer lower terms than those given to IFAs who then decide their margin in top. Just like any other retail business.