Income drawdown vs annuity purchase at retirement

whiteflag_3

hoylakeq wrote: »

Whiteflag,

In my experience, and I'm sure yours is the same, clients want to know you are helping them with the right advice concerning the suitability of the product and the provider irrespective of your own fees.

Q.

Agreed- I think you have sussed that we are probably singing from the same hymn sheet.

On here, an awful lot of posters cant seem to understand the difference between "advice" and "implementation" and the costs attached to each.

EdInvestor

I'd have thought a reader of this site (in particular posts by DH) would get the idea there was potentially quite a wide disparity in fees and commissions charged by different IFAs.

Perhaps QH and WF (and DH) would like to at least give a ballpark indication of how much advisor's fees might add to the above quoted basic investment cost of 0.35% for a 300k low-cost Sipp drawdown fund invested mainly in ETF trackers..

whiteflag_3

EdInvestor wrote: »

I'd have thought a reader of this site (in particular posts by DH) would get the idea there was potentially quite a wide disparity in fees and commissions charged by different IFAs.

My point exactly, straight away you ask for costs for implementing a product and not advice.

EdInvestor

whiteflag wrote: »

My point exactly, straight away you ask for costs for implementing a product and not advice.

Perhaps you'd like to define the difference, so we all know exactly what where we are.

jonniek

I agree that Tracker funds are the cheapest way of gaining equity exposure, Actively managed funds under perform on a regular basis, with the ftse finishing the year around 32% down is this really a surpise though?

Has anyone used or know any details on 3rd way products? i have read on various sites that theses combat the pitfalls on drawdown and annuity products. They allow you to have equity exposure without the risk of out living your fund.

Thoughts?

hoylakeq

There are different versions in the 3rd way products. Some are more like a 5 year temporary annuity with a guaranteed future value whilst others look more like an investment with a guaranteed minimum income.

I'm not 100% convinced by a long shot, if you are in drawdown and purchase an investment that has a guaranteed income of, say, 5% pa but variable capital, there is the possibility for income to fall in order to comply with max GAD in the future.

Ed, with regards to fees, it's impossible to give a ball park figure without knowing the clients details in full. This may sound like I'm dodging the issue but there are so many possibilities that need to be considered that I really cant pluck a figure out of thin air........

dunstonh

Actively managed funds under perform on a regular basis

Its not as simple as that though is it. FTSE100 has spent most of the last 15 years in the bottom quartile. FTSE all share is consistently mid table as you would expect it. FTSE250 spent most of the same period top for much the same reason that FTSE100 was bottom.

Has anyone used or know any details on 3rd way products?

Not a fan. So far they all seem to be issued by companies that need business in new areas as their existing product range isnt good enough (generalisation alert). The terms dont seem that good although they do have some nice soundbites which could appeal to people. Its a new market in the UK and I think it will develop but nothing stands out so far.

whiteflag_3

EdInvestor wrote: »

Perhaps you'd like to define the difference, so we all know exactly what where we are.

implementing the product ( for example a pension) is the end the advice process and is the simple part.

Advice is the planning part, the gathering of the facts both soft and hard, doing a lifetime cashflow, the tax planning, the investment planning, the risk management, the goal setting.

EdInvestor

whiteflag wrote: »

implementing the product ( for example a pension) is the end the advice process and is the simple part. [/

Advice is the planning part, the gathering of the facts both soft and hard, doing a lifetime cashflow, the tax planning, the investment planning, the risk management, the goal setting.

Yes, I think we understand that.What we'd like to see is a list of the fees, charges and commissions that apply to each bit of the procedure.

whiteflag_3

EdInvestor wrote: »

Yes, I think we understand that.What we'd like to see is a list of the fees, charges and commissions that apply to each bit of the procedure.

"Perhaps you'd like to define the difference, so we all know exactly what where we are."

So thats what you meant by this then? You asked for a definition and thats what you got!