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FIXED TERM ANNUITY
william morris
Posted: 07 November 2012 19:40:35(UTC)
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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.?
Roydo
Posted: 07 November 2012 20:34:17(UTC)
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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.
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william morris on 08/11/2012(UTC)
Redundant (Old Timer?)
Posted: 08 November 2012 18:47:03(UTC)
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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..
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william morris on 09/11/2012(UTC)
dd
Posted: 08 November 2012 18:55:49(UTC)
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Will trail commission apply to new sales and to pension transfers after 01/01/13? Or will there only be an up-front fee?
Roydo
Posted: 08 November 2012 19:09:18(UTC)
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@DD.

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.
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dd on 08/11/2012(UTC)
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