Annuity Ready

cfw1994

dunstonh said:

https://www.ageuk.org.uk/information-advice/money-legal/pensions/annuities looks to have a reasonably clear description of options - they show 7, certainly reads like they cover most options.

They show the types but not the options.

Oh sure, I can see there will be an *infinite* number of options within each type.
Can you confirm those are the only types available: no funky hidden ones?

How can any person know they have been correctly advised to the perfect options within those types?
Would every IFA reach the same conclusion after gathering information?  I assume no, unless they all use exactly the same questions and indeed analyse the answers in exactly the same way?

& does every IFA have access via some mechanism to all the same ‘whole of market’ choices for annuities?

thanks

Malthusian

cfw1994 said:

Oh sure, I can see there will be an *infinite* number of options within each type.
Can you confirm those are the only types available: no funky hidden ones?

They don't mention guarantee periods or value protection, and the whole thing is an info dump which fails to show which options are an "either / or" choice and which can be picked alongside each other. The section about "short term / fixed term annuities" mangles fixed-term annuities together with partial annuitisation. 

How can any person know they have been correctly advised to the perfect options within those types?

By reading the IFA's report which will go into detail about how the proposed solution meets their objectives.

Would every IFA reach the same conclusion after gathering information?

Possibly not as financial advice is an art as well as a science, meaning there can be multiple right answers. But if someone wanted guaranteed income for life and their spouse would be dependent on the income after their death, I would be surprised if one IFA recommended single life and one joint life. Two IFAs might disagree on minor details like whether to buy value protection or a guarantee period. 

& does every IFA have access via some mechanism to all the same ‘whole of market’ choices for annuities?

Yes. There are no annuity providers that do not sell via IFAs.

flaneurs_lobster

I'll piggyback my enquiry here as it's similar to the OP's original query.

When looking at taking a DC pension administered by XPS I've agreed to be referred to HUB Financial Solutions (who are owned by Just Group) for their "guided annuity service".

Looking at the possibility of receiving an "enhanced annuity", I've completed a detailed medical questionnaire and after a hour-long telephone conversation about the options available to me the next step is for HUB to return with the best quote from the market.

They will also inform me what their arrangement fee would be.

Should I be gob-smacked if this best quote is from the Just Group?

Would I always be better getting advice from an IFA rather than a "guidance service"? Are the fees charged likely to differ between the two services? 

I have no idea as to what level of fee is usual for these arrangements - if I were told 1% or 20% of the fund I'd just nod. Can someone put a "normal" level on this please?

dunstonh

Should I be gob-smacked if this best quote is from the Just Group?

They wont know if its the best quote.   The literature may say it is or isnt but that is highly unreliable.

Would I always be better getting advice from an IFA rather than a "guidance service"? Are the fees charged likely to differ between the two services? 

Not always.  IFAs tend to be better for those with medical issues and higher values.    Guided services typically take a commission.  IFAs take a fee.   If the fee is lower than the commission, then that is a headstart.  if its the other way around its a drag.

I have no idea as to what level of fee is usual for these arrangements - if I were told 1% or 20% of the fund I'd just nod. Can someone put a "normal" level on this please?

Think monetary armount.   Commission is usually percentage based.  IFA fees are more typically percentage based but often with a cap and collar or tiering.  

flaneurs_lobster

dunstonh said:

Should I be gob-smacked if this best quote is from the Just Group?

They wont know if its the best quote.   The literature may say it is or isnt but that is highly unreliable.

Would I always be better getting advice from an IFA rather than a "guidance service"? Are the fees charged likely to differ between the two services? 

Not always.  IFAs tend to be better for those with medical issues and higher values.    Guided services typically take a commission.  IFAs take a fee.   If the fee is lower than the commission, then that is a headstart.  if its the other way around its a drag.

I have no idea as to what level of fee is usual for these arrangements - if I were told 1% or 20% of the fund I'd just nod. Can someone put a "normal" level on this please?

Think monetary armount.   Commission is usually percentage based.  IFA fees are more typically percentage based but often with a cap and collar or tiering.  

Thanks for that. 

Can you not take a punt on "typical" commission/fees? Say I have £100K to purchase an annuity, what should I expect to pay? I'd like to get at least some idea, I really am clueless about this marketplace.

dunstonh

Can you not take a punt on "typical" commission/fees? Say I have £100K to purchase an annuity, what should I expect to pay? 

Probably broadly similar between commission and fee on £100k at around 2%.    Advisers that tier or cap their charges tend to do so around the £2500-£3500 range.      So, £125k+(ish) would swing more to models.

Health is where the IFA can offer best value.   I have a client I am doing an annuity on he is now using us to complete it but he also got quotes from one of the direct to consumer sites.   The guidance/non-advised method just accepted what he wrote on the medical Q and didn't probe for more in respect of gaps.   In contrast, an adviser will probe for gaps and push for more info.    In doing so, I got the quotes up by over £1500 a year higher than his starting point.    If it's a clean application (i.e. not health/lifestyle issues) then the differences really just boil down to fee vs commission and awareness of the options and issues.