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IFAs urged to spurn annuity commission on default choice

IFA groups have been challenged to set an example by refusing to take commission where clients automatically take out an annuity with their pension provider without having received advice.

Speaking at a Money Marketing at-retirement round table, Living Time sales and marketing director Dave Harris said “Mercedes man” often received excellent advice while “Mondeo man” fell into the default category.

He said: “There is lethargy that comes with the system. Advice is currently wealth-based. Above a certain level, the IFA will have flashing on their radar that someone is approaching retirement. Below a certain amount, they might not. In the end, there is a commission stream that comes through to advisers anyway.

“If only there were some adviser groups which publicly said, we do not want to see that commission, stop it, don’t send it to us because we do not want to end up with a problem downstream and do not want to be part of that outdated model.”

Kerr Henderson associate Mike Hardy said: “I think the sales process for an annuity, is in theory, a direct offer under the retail distribution review. Retirement is the one place where there should only be space for advisers.”

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