Adviser uptake of annuities increases rapidly; Growing trend towards lifetime products

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Peker Recep

Peker Recep

Significantly more financial planners are recommending annuities, according to new research from leading wealth researcher Investment Trends

The December 2014 Retirement Planner Report is based on an in-depth survey of 617 financial planners between October and December 2014. The report reveals rapidly increasing usage of annuities by financial planners.

In 2014, 38 per cent of financial planners recommended annuities, up from 32 per cent in 2013, and 27 per cent in 2012.

“Planners continue to see a greater role for annuities as part of their retirement advice,” said Investment Trends Senior Analyst Recep Peker. “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.

“In recommending annuities, planners are responding to client concerns such as longevity risk. Healthy client interest will continue to buoy planner appetite for annuities in the current low interest environment.”

The trend towards lifetime annuities continues to grow. They are the guaranteed income product of choice, according to the survey, with 39 per cent of planners saying they intend to use them in 2015, compared with 31 per cent for long-term annuities (5 years or more) and 21 per cent for short-term annuities (less than 5 years).

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.

Among planners who recommended income guaranteed products in the last 12 months the vast majority, 86 per cent, used a Challenger product.

The December 2014 Retirement Planner Report, released to Investment Trends clients last month, is a comprehensive study of Australian financial planners and advice services for retirees and pre-retirees, together with the evolving attitudes and preferences of investors aged 40 and up.

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