Looking back over the last 12 months, 2013 was unlucky for some and lucky for others.
Those who were unlucky include some who rushed into buying annuities in the frenzy to beat the gender neutral annuity pricing at the end of last year. Annuity rates increased by about 9 per cent during the year following the rise in yields for gilts and corporate bonds. This means 2013 was one of those years when not rushing to arrange an annuity would have paid dividends for some.
Looking back at the highs and lows of the year I think some of my predictions made at the beginning of the year have come true.
Back in January I was talking about the possible increase in non-advised sales and the potential for the pay per click annuity web advertising bubble to burst. Sales of non-advised annuities have increased at a pace with annuity providers reporting a reduction in advised sales and an increase in non-advised sales. This would have been of concern if another prediction of mine had come true; namely the potential for customer detriment resulting from the RDR as more clients turned away from advice.
It is difficult to measure but it seems that the quality of some non-advised propositions has increased to meet the challenges of the post-RDR world. I do not say this just because of my new position with Annuity Line but I am supported by the evidence and comments from other industry commentators and research papers.
My personal highlights of the year include the Money Marketing summit in Cork where I saw Steve Lewis from LV= deliver one the best annuity presentations ever when he did his ‘Hopscotch”. Please don’t tell him this because he might do the annuity Hokey Cokey next. ‘Put the fixed term in, put the enhanced annuity out, in out, in out shake it all about’.
Another highlight was helping Channel 4 with the filming for their investigative programme Dispatches and the episode called ‘What’s your pension really worth?’ It was fascinating working with Michael Buerk especially when he was calling two insurance companies for annuity quotes. At the end of the calls he remarked, ‘It seems that regulation has got in the way of common sense”. I couldn’t agree more.
But without doubt my best highlight of the year was the publication of my paper, Annuities at a tipping point, the case for investment-linked annuities written in conjunction with Professor John Maule and sponsored by MGM and Prudential. I am working on the next version so watch out for this next year when I will be looking at the more practical aspects of advising on annuities.
I cannot end a review of 2013 without referring to my departure from Better Retirement. I wish my previous colleagues the best of luck but I feel very lucky to be working with my colleagues at Annuity Line as we plan to make the experience of arranging an annuity as good as it can be.
If I had a wish for 2014 it would be that the industry works together to raise the profile of annuities. Not just the narrow theme of shopping around but the importance of knowing what to shop for in the first place because there are more options than ever to choose from.
Billy Burrows is director of the Retirement Academy and head of business development at Annuity Line