Do you need an IFA to purchase an annuity?

System

This discussion was created from comments split from: Bold leap into retirement.

HUSKYPAL

Hello all, I have a couple of questions, I'm hoping that the clever people on here can help. 

Firstly, do you need an IFA to purchase an annuity (looking for a 10Yr fixed term),  I don't need financial advice for this, I know this is the route I want to take for my circumstances.

Second question, how far in advance can you set the annuity up? e.g. If I know I want one to start paying in say 2 years, can I set it up now and lock in the rate?? I can't find the answers to these questions online.

Any help would be appreciated.

LHW99

HUSKYPAL said:

Hello all, I have a couple of questions, I'm hoping that the clever people on here can help. 

Firstly, do you need an IFA to purchase an annuity (looking for a 10Yr fixed term),  I don't need financial advice for this, I know this is the route I want to take for my circumstances.

Second question, how far in advance can you set the annuity up? e.g. If I know I want one to start paying in say 2 years, can I set it up now and lock in the rate?? I can't find the answers to these questions online.

Any help would be appreciated.

Normal annuities there are plenty of other (non-IFA) sources, I think HL has been mentioned, but there are others for comparisons.

However, i think fixed term annuities are a more specialised beast, not so many companies offer them and I don't know if any of those work direct with consumers.

You might get better answers if you start your own thread on this.

cloud_dog

HUSKYPAL said:

Hello all, I have a couple of questions, I'm hoping that the clever people on here can help. 

Firstly, do you need an IFA to purchase an annuity (looking for a 10Yr fixed term),  I don't need financial advice for this, I know this is the route I want to take for my circumstances.

Second question, how far in advance can you set the annuity up? e.g. If I know I want one to start paying in say 2 years, can I set it up now and lock in the rate?? I can't find the answers to these questions online.

Any help would be appreciated.

Hi...it is not a requirement to utilise an IFA for an annuity but commentary on this board has suggested that using a IFA can obtain you better rates for the annuity. 

@dunstonh might be able to offer slightly more insight.

Cobbler_tone

I use Money Helper for things like FTA quotes. One of the rare places that doesn't want your phone number and email address. It'll give you some ideas.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities

zagfles

No you don't need an IFA. Some IFAs will claim they can get you a better rate (Mandy Rice-Davies springs to mind  ) due to the commission on non-advised sometimes being more than IFA charges. But there are annuity brokers who will refund part or most of the commission so it pays to shop around. 

Delayed annuities are a great idea but don't think you can get them. At least you couldn't when I last looked into it. They'd be a great product, particularly for lifetime annuities. 

dunstonh

Firstly, do you need an IFA to purchase an annuity (looking for a 10Yr fixed term),  I don't need financial advice for this, I know this is the route I want to take for my circumstances.

No.  Although it may give you the best outcome.
DIY on annuities doesn't mean you can save money, as non-advised earn commission, which is factored into the annuity rate.  i.e. a commission annuity is lower than a fee-based annuity.

Second question, how far in advance can you set the annuity up? e.g. If I know I want one to start paying in say 2 years, can I set it up now and lock in the rate?

There are some flexible drawdown products that can hold an annuity within them, where the income is retained inside the pension and can be taken later.   However, they are only available via IFAs.  They are niche options though.

FIREDreamer

I used Hargreaves Lansdown and locked in a great RPI annuity rate at the end of May just before the rates dropped more than 10% the next day and onwards (still monitoring but I really shouldn’t). Had i wasted time going to an IFA I would have missed out significantly in this case.

Lucky timing, nothing more.

Nothing wrong with using an IFA but I would have missed out significantly here.

Brie

I'm doing my annuity without an IFA as I haven't found one that won't charge me a huge amount up front to do something that I've already done myself.  

dunstonh

Brie said:

I'm doing my annuity without an IFA as I haven't found one that won't charge me a huge amount up front to do something that I've already done myself.  

And how much is the self-service intermediary you are using for the annuity charging by way of commission?

This is one of the key areas to look at.   i.e. if the commission on the annuity is £4000 and an IFA fee is £2,000, then the IFA should come in with the better annuity rate outcome.    If it is the other way around, then the self-service option is better.

Some of these direct options result in commission over £10k with larger purchases. 

Mr_Benn

Dunstonh -  Ive mainly just been using Moneyhelper as a guide for Annuity rates.  When you mention 'Commission' , who is that payable too ? 

Also, if I contact an IFA, will they provide me with some Annuity rates , with their Fee if I go ahead, or will they tend to charge some sort of fee regardless to cover their time spent.