Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!



william morris
Posted: 07 November 2012 19:40:35(UTC)

Joined: 31/10/2012(UTC)
Posts: 20

Thanks: 54 times
Was thanked: 2 time(s) in 2 post(s)
Can anyone tell me if there is any financial advantage to an adviser or annuity broker to promote Fixed Term Annuities over traditional Life Time Annuities.?
Posted: 07 November 2012 20:34:17(UTC)

Joined: 10/02/2012(UTC)
Posts: 101

Thanks: 2 times
Was thanked: 62 time(s) in 40 post(s)
Fixed Term Annuities can sometimes offer an adviser a slightly higher commission William, but not hugely different from a conventional annuity, (unless they have negotiated a distribution deal!).

The motivation is often that the FTA might offer a trail commission, but will also mean another chance for the adviser getting another slice of the action at the end of the term.

I personally think they, (FTA) offer awful terms in general, but depending upon your circumstances, they can serve a purpose.

Has your adviser offered you the option of an underwritten annuity? If not, steer well clear of them.
1 user thanked Roydo for this post.
william morris on 08/11/2012(UTC)
Redundant (Old Timer?)
Posted: 08 November 2012 18:47:03(UTC)

Joined: 07/01/2010(UTC)
Posts: 147

Thanks: 94 times
Was thanked: 124 time(s) in 80 post(s)
Remember that post 1/1/13, commission is abolished on new sales (trail continues), and with it "free" advice. Thus when the FTA comes to an end, you will have to pay your IFA a fee for his advice, on any new annuity you take, which will come out of your pocket rather than commission from the annuity brought..
1 user thanked Redundant (Old Timer?) for this post.
william morris on 09/11/2012(UTC)
Posted: 08 November 2012 18:55:49(UTC)

Joined: 15/09/2010(UTC)
Posts: 242

Thanks: 132 times
Was thanked: 49 time(s) in 37 post(s)
Will trail commission apply to new sales and to pension transfers after 01/01/13? Or will there only be an up-front fee?
Posted: 08 November 2012 19:09:18(UTC)

Joined: 10/02/2012(UTC)
Posts: 101

Thanks: 2 times
Was thanked: 62 time(s) in 40 post(s)

As with most things developed by the FSA, the answer is yes, no, and maybe!

In a very small nutshell, for existing contracts in place on 31.12.12, then commission/trail will continue as is. So, if you transferred into an existing PPP/GPPP, then it is likely that commission would still be available, subject to the product provider continuing to pay it of course!

If you make an alteration to an existing product, fund switch for example, then trail currently being paid could be renegotiated between you and the adviser, again, subject to the provider being able to cope with the change.

For brand new investment/pension business post 31.12.12, then no "commission", as such is payable, but most providers can cater for what will be called Adviser Charging. In other words, any payment agreed between you and the adviser can be deducted from the investment. This already happens in reality, except it is disguised by allocation rates, exit penalties and the like.

Of course, the above only applies if you actually purchase a product. Fees have always been payable for pure advice, once a clients agreement has been reached.

Advice has never been "Free", I am afraid.
1 user thanked Roydo for this post.
dd on 08/11/2012(UTC)
+ Reply to discussion


Other markets