Annuity - commission sacrifice website

Yaffles

Re: "I'm the only IFA contributing on this thread and yes I would have been cheaper on execution only (but not advice)."

Quite- my point entirely- you don't need an IFA to give you advice- you just need to do your own research. Then you save a huge amount.

You can dress IFA's up in whatever guise- they are still salespeople and that's all there is to it. As far as annuities are concerned, I believe they occupy a middle ground which should not exist. Particularly when they are paid thousands to perform a job which should take about a day at most.

dunstonh

Quite- my point entirely- you don't need an IFA to give you advice- you just need to do your own research. Then you save a huge amount.

You can dress IFA's up in whatever guise- they are still salespeople and that's all there is to it. As far as annuities are concerned, I believe they occupy a middle ground which should not exist. Particularly when they are paid thousands to perform a job which should take about a day at most.

So why did you pay an IFA so much if you did your own research?

A lot of manufacturers insist you can only buy their products through retailers and not direct. Even if you can buy direct,the cost is often identical or more expensive than using a retailer. Financial services products are exactly the same.

DavidLaGuardia

Yaffles wrote: »

Quite- my point entirely- you don't need an IFA to give you advice- you just need to do your own research. Then you save a huge amount.

You can dress IFA's up in whatever guise- they are still salespeople and that's all there is to it. As far as annuities are concerned, I believe they occupy a middle ground which should not exist. Particularly when they are paid thousands to perform a job which should take about a day at most.

1. An IFA can advise on all apects and options before an individual chooses an annuity and it is the reward for this advice that he/she is paid
2. The commission on annuities is low in percentage terms.
3. If no advivce is given the remuneration to the IFA is forgone by the life company as a marketing allowance. Instead of spending money on advertising, the product is promoted via an IFA and their own advertising and the cut is given. Sometimes the retailer offers a better deal then direct thorugh changing the margin. Thios priinciple applies in many areas including hotel booking agencies. You would not walk into a hotel and ask for a discount because you had come directly. The hotel would assume you were there as a result of their own efforts rather than a third party and they would keep that part of the margin.

Yaffles

"So why did you pay an IFA so much if you did your own research?"

Rather than let the Life Office keep the commission, or an IFA keep it, I preferred to have the majority of the commission paid to me.

Whilst the commissions may seem low in percentage points, they are of a large amount which it took me 40 years to accumulate. £2000 plus for a couple of hours work seems like a very large amount to pay to an intermediary.

DavidLaGuardia

Yaffles wrote: »

Whilst the commissions may seem low in percentage points, they are of a large amount which it took me 40 years to accumulate. £2000 plus for a couple of hours work seems like a very large amount to pay to an intermediary.

Costs are linked to risk which are linked to size of premium. Many professionals have high insurance and practce fees and business contingency plans that are linked to the value of the business.

Furthermore, the cost of someones knowledge, ability and positions comes with due consideration to the time it has spent getting them there, not just the time on a specific task.

While still paininting punters on the street Picasso was once questioned by a lcient why he charged so much for a painting that had taken him just two hours, he replied "it has taken all my life".

If you think its such big money for little work, then do the exams, do the training sell the annuity to yourself and keep the commission.

Yaffles

"Costs are linked to risk which are linked to size of premium."

No they are not- an IFA's costs will be fixed when dealing with an annuity. A £20,000 case will cost the same in terms of time as a £1 million case.

"Many professionals have high insurance and practce fees and business contingency plans that are linked to the value of the business."

So why not cut them out and keep the profits???

"the cost of someones knowledge, ability and positions comes with due consideration to the time it has spent getting them there, not just the time on a specific task."

It took me about 2 hours to research it, obtain quotes, think about it and complete the forms.

"If you think its such big money for little work, then do the exams, do the training sell the annuity to yourself and keep the commission."

Why? When, as I say it takes a couple of hours to do it yourself.

dunstonh

No they are not- an IFA's costs will be fixed when dealing with an annuity. A £20,000 case will cost the same in terms of time as a £1 million case.

True to some extent but the larger the case, the greater the liability.

So why not cut them out and keep the profits???

Why do we have any shops?

It took me about 2 hours to research it, obtain quotes, think about it and complete the forms.

Thats interesting seeing as many of the providers, in particular some of the better ones, do not deal directly with the public.

Plus, many of the products have an RRP but can be obtained by IFAs on better terms than the RRP due to economies of scale. So, you as an individual would never the the buying power to get such good terms.

Yaffles

Re: "Thats interesting seeing as many of the providers, in particular some of the better ones, do not deal directly with the public."

Of the providers considered by the IFA I saw- all were household names and all deal directly with the general public.

Re:"Plus, many of the products have an RRP but can be obtained by IFAs on better terms than the RRP due to economies of scale. So, you as an individual would never the the buying power to get such good terms."

It's precisely this reason that I went via an IFA firm where the bulk of the commission is rebated- because they have institutional terms and these are passed on.

Interesting game of smoke and mirrors we seen to have for something so straightforward that even an IFA could do it - whilst lining their pockets at the customer's expense.

Oh and the reason we have shops is because people enjoy shopping- nothing mysterious about it.

dunstonh

Of the providers considered by the IFA I saw- all were household names and all deal directly with the general public.

In which case you missed out on a few market leaders then in your research. Providers like Just Retirement and Canada Life for example.

It's precisely this reason that I went via an IFA firm where the bulk of the commission is rebated- because they have institutional terms and these are passed on.

You complain about buying from an IFA but then a happy to buy from an IFA as it gets you better terms. Make your mind up.

Interesting game of smoke and mirrors we seen to have for something so straightforward that even an IFA could do it - whilst lining their pockets at the customer's expense.

Clearly you are lack understanding of retail business, economies of scale and logistics of the supply chain and dont want to as it suits you to continue whinging about a retailer making money on a retail product they sell to you.

Yaffles

Re: "In which case you missed out on a few market leaders then in your research. Providers like Just Retirement and Canada Life for example."

Wrong. Canada Life deal directly with the public and you can obtain quotes from them without an IFA. Just Retirement were not competitve.

Re: "You complain about buying from an IFA but then a happy to buy from an IFA as it gets you better terms. Make your mind up."

I bought from a discount broker where it was transaction only. At no point have I complained about it- and you are right on the second bit- it got me better terms.

"Clearly you are lack understanding of retail business, economies of scale and logistics of the supply chain".

No. Clearly you seek to overcomplicate a straightforward transaction and have yet to present me with a single compelling reason as to why I should go via an IFA and receive advice.