Advice is cheaper than non-advised when getting the best annuity rates
Its a common myth, in many industries, that taking out the middle man will make life cheaper, better and mean you will get a better deal. This could not be further from the truth in ‘At Retirement’ advice, of course I am going to say that I hear you all say. Also see my post here on DIY drawdowns and the high cost of doing it all yourself, Taking a company like ourselves out of the question and doing it all yourself will not mean a better deal. Why is that, cant we save on your fee? Well you can go to a non-advised annuity broker, they will, as the name suggests,
- not offer any advice
- most probably be un-qualified
- Have little or no experience
- Charge in many cases more for the transaction
- The more ‘sales’ they get the more money they earn. Does that mean you get a good deal?
Well why would they charge more? Think about how you found them in the first place, was it an internet search? Did they appear on the top of google in the ads? Where they on AOL? Did you find them from fancy marketing material, where they affiliated with a national newspaper? Think of the costs involved in all of this marketing material, its not cheap and they have to re-coup the costs somewhere and that is in the fees or commission they charge.
If you didnt know already commission has been banned by the Financial Conduct Authority, the new name for the Financial Services Authority. Well its been banned for qualified advisers but not for non-advised sales. What does this mean for the consumer, surely a non-advised sale is cheaper because they do not have to pay these high fees for advisers. This is just not the case at all, yes you will find that these big providers will tell you they get better terms with the providers but this small increase in terms is nothing compared to the ability of an experienced and qualified adviser who has the knowledge to get better rates based on the questions and know-how they have over the call centre staff that try and ‘sell’ you an annuity. One provider is offering the ability to allow retirees to do the whole annuity application themselves but will charge around 3.5% for the privilege. see here
Ok, jump off your soap box you small advisers just have to realise that the big guys are walking all over you and can do a better job than you. Well this is the key, when going for any annuity rate quotes make sure you have at least one conversation with a qualified adviser and not an un-qualified sales person. If they cant get you a better rate and offer you the right advice then do it all yourself but remember ‘at retirement ‘ advice is a one-time only deal get it wrong and it can have a huge impact on not just your future but that of your family, do you think that young non-advised salesman working for the big firm in a call centre will still be around to help you out of any pickle you have got yourself in to? Think of this situation illustrated here, the widower has now lost the pension payments and is under financial pressure. A qualified adviser stands by their advice and if there is anything that has gone wrong then re-dress occurs and you get the insurance of going back to the position you were in before you took the advice. An un-qualified non-advised sale offers no redress and you should have done your research yourself.
Of course your not stupid, an annuity is a simple product and once you know you want one and understand the options then why not just go for the best rate, you will make sure you provide for your wife/husband. In short yes this makes perfect sense but again will a non-advised un-qualified adviser have the knowledge to get you the best rates available, well they have better terms, so of course. Personally at RetireRight we have never been knowingly outbid by one of the big brokers, the reason for this is experience and asking all the right questions and offering a personal service by a qualified adviser who is able to still get a better rate by using that experience.
To note a provider rang me last year and told me about a little known way of increasing income by asking about certain readings and what to say on the form, this was something the provider himself was not aware of but its enabled a 3-4% increase on many quotes that wouldnt have been available before. This comes with the invaluable advice and experience that can be achieved by working with an adviser and you are getting the peace of mind that you are not one of the many customers going through the sales process of a big firm.
To get yourself an annuity quote please add your details to our quote request and we can show you the best rates available.