Arranging an annuity

SonOf

I wonder why the IFA rates are lower, is this just down to higher charges (inevitable?) or due to other things?

I doubt it as the commission is usually greater than a fee on a large pot unless the IFA is charging more than the commission and doesn't have a fee cap (many IFAs will have a fee cap).

Broadly speaking, if the commission and the fee are the same, then both get factored into the rate. Any differences after that are down to how the medical details are input and how the haggling goes.

Is HL able to negotiate better rates than an IFA? (likely)

Not in our experience.

I wonder if the IFAs have given a ballpark figure rather than actual. To get to the stage where an IFA can give an accurate annuity quote, there would need to be a factfind, medical questionnaire, have written to existing providers to check what they offer etc. To do all that with two IFAs seems unlikely. The quoting systems that IFA use with annuities have a quick and dirty quote system and a detailed quote system. One is to get a ballpark figure with limited info. The other is to get an accurate figure. After the accurate figure is obtained, you usually get a phone call from the reps asking if the case is just a quote or likely to proceed. If they are told it is likely to proceed, they then ask how they are compared to others and will often increase their figure if they are not top.

Also, there is the possibility of quotes not being like for like. For example, this one is RPI. One quote could be RPI with no floor and the other RPI with a floor. i.e. negative inflation could see the annuity go down with one but not the other. Value protect has a range of options as well.

xylophone

To get to the stage where an IFA can give an accurate annuity quote, there would need to be a factfind,

Post from OP from two years ago


https://forums.moneysavingexpert.com/discussion/comment/72893772#Comment_72893772

And he has been mulling over the same question for two years ( taking IFA advice) without making any decision.

SonOf

Post from OP from two years ago

Wow.

In which case, the answers above could be that the quotes were obtained at different times as annuity rates move around a lot and unless they were all obtained in the same week, then a like for like comparison would be flawed. Indeed, on a large fund, daily differences in annuity rates would make a fairly large monetary difference.

AnotherJoe

OP will probably die before he ever gets round to actually making a decision.

He's so frightened to make a not-absolutely-the-best-decision that he makes none at all which means that he's worse off than if he made the worse choice (out of a group of all OK choices)


Analysis paralysis.

Old_Lifer

Look on the bright side AJ, as the OP gets older he or she should receive a better annuity rate!


On a serious note, as Sonof says, a Life Office will often increase the rate if in competition with another Life Office.



During my time with a Life Office, we used the attained age to quote for an annuity, so for a 65 year old we would use the rate for that age. If we were in competition we would improve this by taking the rate for a 66 year old and deducting the rate for a 65 year old. The resulting figure was then divided by 4 and if the actual age was 65 and a quarter, we would add this to the lower rate, if 65 and a half we would add twice this and if 65 and three quarters we would add three times this. Use of quarter years attained meant a higher rate than normally quoted for a 65 year old

choi

SonOf wrote: »

Wow.

In which case, the answers above could be that the quotes were obtained at different times as annuity rates move around a lot and unless they were all obtained in the same week, then a like for like comparison would be flawed. Indeed, on a large fund, daily differences in annuity rates would make a fairly large monetary difference.

Stick to helpful advice please

Of course the quotes were obtained at the same time

Yes it's taken me two years to sort this out
I didn't realise their was a time limit

Ease up everyone
You know nothing about my personal circumstances
Give me a break

jamesd

choi wrote: »

Should I go direct with them
Or ask an IFA to carry out this work

Neither.

A few weeks ago I explained how to get income matching another quote at less than half the price of the other quote, simply by deferring your state pension and eventually that of your wife. Then clarified some misunderstandings. Hopefully the enhanced one is a lot better but it's still likely to be a lot worse than the alternative.

A proper IFA who will produce a plan including state pension deferral and what to do with the half of your money that's no longer being just thrown away on a poor value for money annuity purchase would be useful.

Or alternatively continuing a discussion here about suggestions made to you so any further issues can be addressed. Sometimes it can take a fair bit of discussion.

At the moment you seem intent on wasting half of your money. That's your right but not the sort of major financial self-harm that those posting on a money saving site are likely to support.