Fee for IFA

Bostonerimus1

MarkCarnage said:

US annuities will use Treasury Bonds plus $ credit.
Better rates probably reflect lower US life expectancy. 

Yes lower life expectancy is a factor, but I wonder if fees and expenses are also in the mix.

wjr4

dbrookf said:

Managed to negotiate down to 1.3% from 2% (£9k instead of £15k 🫣) and the IFA tells us her fees are £300 per hour. Ah well, you live and learn.

I’d be using a different IFA. That fee is far too high. 

RogerPensionGuy

IvanOpinion said:

dbrookf said:

IvanOpinion said:

What does the 1.3% cover? I would be expecting that to cover IFA, platform and OCF charges - and even then would consider it to be high.

“ Initial Advice Charges

There are initial charges in relation to our advice, and the implementation of the annuities “

Then why not approach it from a different angle.
I have seen some postings, on this board, that say advisors can get a more favourable annuity rate. Why don't you try running your details through some of the online annuity quote engines to see what answer you get (it only takes a few minutes) and compare it to the offering from the advisor. Maybe their favourable rate will prove to be value for money.

For information I just went to an online annuity engine. 

A simple single annuity using 400K, it came back with many offerings and I picked the best which was 18K PA and inflation linked and was okay in my opinion espically with the SIPP IHT changes coming. 

Reading the information from the actual provider, it said 10K would be received by the intermediary, so the search engine people are getting a 2.5% chunk.

It's a shame I can't just deal direct and get a 2.5% top up on the 18K, I know the fee doesn't get inflation, so if I could deal direct, maybe get 2% on that 18K.

artyboy

dbrookf said:

Managed to negotiate down to 1.3% from 2% (£9k instead of £15k 🫣) and the IFA tells us her fees are £300 per hour. Ah well, you live and learn.

You may wish to refine your negotiating skills...

RogerPensionGuy

RogerPensionGuy said:

IvanOpinion said:

dbrookf said:

IvanOpinion said:

What does the 1.3% cover? I would be expecting that to cover IFA, platform and OCF charges - and even then would consider it to be high.

“ Initial Advice Charges

There are initial charges in relation to our advice, and the implementation of the annuities “

Then why not approach it from a different angle.
I have seen some postings, on this board, that say advisors can get a more favourable annuity rate. Why don't you try running your details through some of the online annuity quote engines to see what answer you get (it only takes a few minutes) and compare it to the offering from the advisor. Maybe their favourable rate will prove to be value for money.

For information I just went to an online annuity engine. 

A simple single annuity using 400K, it came back with many offerings and I picked the best which was 18K PA and inflation linked and was okay in my opinion espically with the SIPP IHT changes coming. 

Reading the information from the actual provider, it said 10K would be received by the intermediary, so the search engine people are getting a 2.5% chunk.

It's a shame I can't just deal direct and get a 2.5% top up on the 18K, I know the fee doesn't get inflation, so if I could deal direct, maybe get 2% on that 18K.

I've been doing more thinking on best value way of getting an annuity and/or a purchase life annuity.

If I take up another free one hour with an IFA, guess I can just ask the IFA to get quotes from a provider on an advised and non advised basis.

If I use the example example above of 400K.

Am I liklihood to receive two quotes of the deal, one will pay a 10K fee due non advised and the advised route where say IFA cost is 5K?

If my thinking above is correct, the 10K fee is paid out of the SIPP funds so a tax advantage, but if I pay the 5K IFA fee, that's 5K cash I need to give the IFA and must check if that 5K fee has VAT on top, so 6K cash. 

So maybe the two routes above will be exactly the same if I'm a 40% income tax payer. 

I'm sure someone will put me right on my thinkings. 

It just bugs me that a person who just wants say a 400K annuity with their SIPP that was diligently funded has to loose 10K or 2.5% value, but the same customer can just ask SIPP provider to take out 400K in one hit and happy daze, 400K vents out paying lots of tax. 

I'll look forward to posters putting me right on my thinkings please? 

Qyburn

Surely the acid test is the end result .

Either give £400k to the "online annuity" thing, behind the scenes someone gets a £10k kickback, and you get annuity of £18k/year

Or give £400k to the IFA, they deduct their £15k fee and arrange an annuity for you with the other £385k - do you end up with more or less than £18k/year?

Albermarle

Qyburn said:

Surely the acid test is the end result .

Either give £400k to the "online annuity" thing, behind the scenes someone gets a £10k kickback, and you get annuity of £18k/year

Or give £400k to the IFA, they deduct their £15k fee and arrange an annuity for you with the other £385k - do you end up with more or less than £18k/year?

From what I have read on other threads, the probable answer is that if your annuity is very straightforward, the IFA will struggle to get a better deal. However if you have say medical issues, or are looking for a more bespoke/niche annuity, then the IFA will probably win out.
Also the IFA will stop you making a  big blunder if you do not really know what you are doing.

dunstonh

Qyburn said:

Surely the acid test is the end result .

Either give £400k to the "online annuity" thing, behind the scenes someone gets a £10k kickback, and you get annuity of £18k/year

Or give £400k to the IFA, they deduct their £15k fee and arrange an annuity for you with the other £385k - do you end up with more or less than £18k/year?

If the IFA is charging a similar fee to the commission, then the outcome will largely be the same.   If the IFA was charging a more reasonable amount  (circa £1500-£2500) then the IFA should beat the higher commission version.

One other area that the annuity companies have said that an IFA adds value is where there are medical conditions.   They say that in general, the details obtained via IFAs improve pricing more than non-advised quotes.  I can attest to the as last year I had someone who did a quote via a popular DIY annuity site.    They gave me the same medical details and the initial figures were pretty much the same as the annuity site.  However, the medical Q was badly answered with many gaps.  It took me three attempts to coax the medical details out of the person and the final annuity was 20% higher than the annuity site that made no effort to fill in any gaps.  They just accept what they are told.  That is not the first time but it was one of the largest differences I have seen.

    

RogerPensionGuy

Albermarle said:

Qyburn said:

Surely the acid test is the end result .

Either give £400k to the "online annuity" thing, behind the scenes someone gets a £10k kickback, and you get annuity of £18k/year

Or give £400k to the IFA, they deduct their £15k fee and arrange an annuity for you with the other £385k - do you end up with more or less than £18k/year?

From what I have read on other threads, the probable answer is that if your annuity is very straightforward, the IFA will struggle to get a better deal. However if you have say medical issues, or are looking for a more bespoke/niche annuity, then the IFA will probably win out.
Also the IFA will stop you making a  big blunder if you do not really know what you are doing.

Yes, I understand, if a person has medical conditions, the IFA can pad out the paperwork to get more payments.

However a person could say they smoke 40 faggs a day and weigh maybe 3 stones more than current weight etc etc.

RogerPensionGuy

dunstonh said:

Qyburn said:

Surely the acid test is the end result .

Either give £400k to the "online annuity" thing, behind the scenes someone gets a £10k kickback, and you get annuity of £18k/year

Or give £400k to the IFA, they deduct their £15k fee and arrange an annuity for you with the other £385k - do you end up with more or less than £18k/year?

If the IFA is charging a similar fee to the commission, then the outcome will largely be the same.   If the IFA was charging a more reasonable amount  (circa £1500-£2500) then the IFA should beat the higher commission version.

One other area that the annuity companies have said that an IFA adds value is where there are medical conditions.   They say that in general, the details obtained via IFAs improve pricing more than non-advised quotes.  I can attest to the as last year I had someone who did a quote via a popular DIY annuity site.    They gave me the same medical details and the initial figures were pretty much the same as the annuity site.  However, the medical Q was badly answered with many gaps.  It took me three attempts to coax the medical details out of the person and the final annuity was 20% higher than the annuity site that made no effort to fill in any gaps.  They just accept what they are told.  That is not the first time but it was one of the largest differences I have seen.

    

Tks.

So as a general rule of thumb, an IFA gets the best deal overall generally, plus I am aware insurance companies actually give IFAs a better deal as they like using IFAs because it has less hassle for the insurance companies.

So I tend to agree an IFA is probably the best option, maybe the IFA may suggest a different route as well.