Experts suggest that annuity advice best for UK annuity rates, enhanced, smoker, or standard, stating that annuity advice should be made widely available, before the industry starts pushing more and more direct-to-consumer options, according to retirement specialists, Living Time. Despite a recent report published by the Pension Income Choice Association (PICA) suggesting direct pension annuity sales should be promoted, Living Time says efforts should be focussed on making annuity advice more accessible. PICA’s report, Optimising Value in Retirement, says more could and should be done to promote direct-to-consumer pension annuity purchases, to increase the uptake of shopping around utilising the open market option (OMO).
However, Dave Harris, Living Time’s M.D., says making annuity advice accessible for the public at large should be made a priority. He says not enough financial advisers are taking up the opportunities offered by our ageing UK population, and many of them will not consider smaller pension funds for annuity advice. He adds that he often hears financial advisers say they cannot make any money out of retirees with funds of less than £50,000, and therefore these retirees can lose out on getting the best UK annuity rates. However, he suggests that there are ways of streamlining a sales process and using recurring income opportunities that can make these retirees very profitable.
PICA has called for annuity providers to help advisers make it more cost-effective to deal with retirees with smaller pension funds, but has also urged the pensions industry to develop direct-to-consumer propositions, such as is available from AEGON Direct with the Telegraph and this website. Tom McPhail, its chairman, says the group’s priority should be to expand uptake of the open market option, whether advised or not. PICA want shopping around to be the first option for all retirees. They might well choose to go to an adviser, or they might choose their own pension annuity, but the important thing is they, the retirees, engage and consider the various options available to them.
However, Harris says life insurance companies (the annuity providers) are already making some headway in the direct-to-consumer space, and says financial advisers should look at ways of serving the mass-market now, rather than waiting for the insurance companies to dominate. These insurers are not stupid, says Harris, and they actually see the huge opportunity available in the retirement market market. Advisers need to pull their fingers out, so to speak, and look at how they can make these retirees a profitable source of business, because it can be done very easily, creating a better outcome for both the client and the adviser.