Advisers move to annuities in droves


By Julie May

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There had been an upsurge in advisers recommending annuities to clients, while consumer demand was also driving increased use of the income guaranteed-style products, research from Investment Trends revealed.

The “December 2014 Retirement Planner Report” was based on an in-depth survey of 617 financial planners between October and December 2014.

According to the report, 38 per cent of financial planners recommended annuities in 2014, up from 32 per cent in 2013 and 27 per cent in 2012.

“In addition to already increasing usage, the intention to use annuities has also increased, with 59 per cent of planners intending to recommend annuity products in the coming year, up from 45 per cent saying so in the previous study,” Investment Trends senior analyst Recep Peker said.

Other findings showed lifetime annuities continued to garner support and were the guaranteed income product of choice, with 39 per cent of planners saying they intended to use them in 2015, compared with 31 per cent for long-term annuities and 21 per cent for short-term annuities.

In 2014, 19 per cent of planners used lifetime annuities, compared with 20 per cent for long-term annuities and 17 per cent for short-term annuities.

Peker highlighted that among planners who recommended income guaranteed products in the past 12 months, the vast majority, 86 per cent, used a Challenger product.

“Planners continue to see a greater role for annuities as part of their retirement advice,” he said, adding that by recommending annuities, planners were responding to client concerns such as longevity risk.

The push for annuities was not only being driven by planners, but largely consumer appetite as well, Peker told financialobserver yesterday.

“More and more people approaching or who are in retirement are saying they have unmet advice needs around how they can make their money last,” he said.

“Areas where there is great growth and interest in lifetime annuities is they guarantee a set outcome for life, which is particularly important amid growing concerns that people are not going to have enough money in retirement.”

He acknowledged Challenger had been a dominating force in the annuities space and there were a number of active providers also making inroads, highlighting there was great opportunity in the area.

“Planners are out there looking for products that are easy to understand and easy to use from robust product providers, and given consumer interest, we see noise around this space only growing,” he said.

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