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Categories:Pensions

Adviser anger over Axa annuity commission share offer

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An adviser has hit out at Axa Wealth for contacting his client directly with a quote for a Legal & General annuity and offering to share the 2.5 per cent commission with the adviser if the client buys the plan.

On November 24, Axa Wealth sent a wake-up pack to IFG consultant Nigel Stratton’s client, who has a £434,000 pension fund. The letter, seen by Money Marketing, says L&G is Axa’s annuity partner and a comparison of the two providers shows L&G would offer a higher income. It adds that the client should shop around.

On the same day, Axa Wealth wrote to Stratton saying it will share the 2.5 per cent commission if the client buys the annuity after taking advice.

The letter says: “The L&G illustration takes into account the total commission payable. This assumes a total payment of 2.5 per cent of the purchase price which is payable to Axa Wealth Limited and yourselves.

“Should this quote be accepted and your client indicates that your firm has provided advice with respect to the application, L&G will share the commission between you and Axa Wealth.”

Stratton says: “It is extremely annoying that Axa has contacted my client and recommended a product when it does not know the client. Then it has the gall to say it will share the commission, which is high. I would expect it to be 1.5 per cent at the most.”

An Axa spokesman says the firm did not make a recommendation to the client but rather highlighted a quote from its preferred provider in accordance with best practice, which included telling the client to shop around. He says the 2.5 per cent commission offered to Axa by L&G has no bearing on the annuity rate offered to the client. The spokesman says: ‘We have followed correct procedures, in particular in regard to the OMO and duty of care to our clients.”

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Readers' comments (20)

  • Welcome to the new world folks - it's a spiv fest!

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  • I always thought sharing/refunding commission on a pension product could result in scheme approval being withdrawn. Does the same apply to annuities? Answers on a postcard please

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  • Would someone really use the Elevate platform now with AXA Wealth, after reading this ?

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  • Things will only get worse after RDR!!!!!

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  • Appalled.
    From my knowledge of directly marketed/bog standard annuity illustrations from providers they confront the client with a very limited range of options, completely lacking the nuances which result from face to face meetings.

    And to think £400k plus is on the roulette wheel.

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  • I have to say, no surprises here, but hopefully a wake up call for all those advisers that think these big players are going to respect your links with your clients... the sooner people get out of the life office controlled sector for investments, the better.... and I would suggest Platforms that are not owned by Life Offices would be a good plan!!!

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  • this is not new its been going on for years and the likes of Allied Dunbar / Zurich have been paid far higher commission than the odinarly IFA intoducing business to the company (not only L & G)

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  • I'm not surprised, sadly. A client of mine was retiring and was sent a quote by his PP provider, Zurich. The annuity illustration was from L&G and showed that Zurich would be paid THREE times as much commission as we would be for the same annuity. Ironically, L&G's quote was the best available for this particular client.

    So we had a choice - do the work ourselves or let Zurich do it (they paid us what L&G would have and kept the rest for themselves). We nearly did it ourselves just to spite them! I hope RDR puts a stop to this.

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  • If this has been accurately reported, the AXA spokeswoman either (a) hadn't read the letter (b) hadn't understood the question or (c) was hors de son arbre.

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  • Friends Provident - sorry Friends Life are at it too - offerring clients annuity deals direct - in my case with Partnership assurance if they might be poorly enough - oh yes and earning themselves an introducers commission from Partnership. Single co tie-up[s are hardly treating customers fairly.

    Who owns Friends - yes aggressive Resolution Group - who happen to also have bought AXA

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