As the dust settles on the FCA annuity review announcements and all those column inches fulfil their ultimate destiny with cod’n’chips, what can advisers do to help the consumer?
I was asked live on Sky TV News how people can make these difficult decisions at retirement safely. I wanted to say go see an independent financial adviser but, as chairman of Annuity Direct, I would clearly have been seen as a self-serving spokesman.
I urged people to call The Pensions Advisory Service and I would encourage the pension experts who are reading this to consider volunteering some of their time to work with the organisation.
In our industry, we have to accept that we do not enjoy the trust of many consumers. Nearly 40 per cent of people would not use a financial adviser.
Some of the blame is not really down to us – it was the banks’ salesmen etc – but that does not cut much ice with the consumer.
A good financial adviser should be respected and used without fear by the consumer at retirement, being competent in the following:
- Help clients understand their needs for income and capital in retirement and set some clear goals
- Consider whether now is the right time to buy a guaranteed annuity or whether other retirement income products would best meet those goals
- If buying an annuity, then make sure it has the right protections for their family too
- Look at the whole market when buying an annuity
- Take the time to fully disclose medical information and get genuine guaranteed quotes, not estimated rates
- Check the policy terms of existing pensions to make sure clients benefit from valuable legacy promises or are not caught out by penalties
- Be clear about their charges
- Execute the product purchase promptly and make sure clients are not exposed to market risk during the at-retirement process.
How can we convince the customer of these benefits?
We need a national quality kitemark for our service covering these areas. All the customer needs to know is whether the adviser has the quality kitemark.
Supporting TPAS will help too. A TPAS call with consumers will educate them far better than a 20-page insurance wake-up pack can ever do. TPAS needs our help too!
They cannot and do not give personal advice. Inevitably many people will want to know where they can find a good adviser. What better way than to say look for one with the quality badge?
To make this vision a reality, we need an organisation that is trusted by consumers with the expertise to administer and police this kitemark.
I would love to hear from anyone who would like to do this.
Alan Higham (firstname.lastname@example.org) is chairman of Annuity Direct