View more on these topics

Britannic targets PLS market

BRITANNIC RETIREMENT SOLUTIONS

PURCHASED LIFE ANNUITY

Type: Purchased life annuity

Minimum investment: Lump sum £10,000

Minimum age: 50

Income frequency: Monthly, quarterly, half-yearly, annually

Charges: Implicit

Commission: Initial 2%

Tel: 0845 3003321

The panel: John Blunt, Senior manager, Advisory & Brokerage Services,
Alex Benson, Associate, JM Taylor & Associates,
Brian Pack, Principal, Brian Pack Financial Services,
Alan Lakey, Partner, Highclere Financial Services,
Ian Bird, Account executive, Adams Tingle Financial Services

Investment options 5.6
Flexibility 6.3
Company&#39s reputation 7.3
Past performance 6.3
Commission 7.5
Product literature 7.7

Britannic Retirement Solutions&#39 purchased life annuity is not a pensions annuity, which means it can be taken out by anyone who needs an income for life.

Looking at how the annuity fits into the market Blunt says: “There are a few purchased life annuity products offering improved terms for impaired lives and these have been pigeon-holed as long-term care products. An immediate needs annuity can pay out substantially more than an ordinary purchased life annuity provided that the impairment is severe enough. Special terms for non-smokers can also lead to improved rates.” Bird views it as a niche product in a niche marketplace while Lakey says: “It is a worthwhile addition to a growing market.” Pack thinks the annuity market needs brightening up by stressing a different aspect. Benson says: “This fits fairly well in that, especially for impaired lives, there is the possibility of a better income

Identifying the clients the product could attract Pack says: “According to Britannic, one in four people could receive an enhanced annuity due to their lifestyle or health.” Lakey suggests older clients looking for a guaranteed level of income, while Benson mentions those who need a regular income to pay for care of some kind. Bird goes for people looking for income who can accept a loss of access to their capital. Blunt says: “Any person with capital who wants a guaranteed lifetime income. In the case of this product, Britannic is aiming it towards those who have some for of medical impairment or who are regular smokers. Also, same sex couples.”

Looking at potential marketing opportunities Pack points out that it is only of interest to those who qualify for enhanced annuities. Benson says: “It may be an alternative to bank or building society accounts, especially for single or widowed people, with a view to fund long-term care.” Blunt says: “It may create a greater awareness of guaranteed lifetime income products. This may be even more relevant at the moment, when many clients are reluctant to commit to products which carry a degree of investment risk.” Lakey thinks there will be more clients looking for income stability because of the current stockmarket misery.

Highlighting the positive features of the annuity, Lakey and Bird go for flexibility. Bird and Blunt mention the same sex joint life option. Blunt also likes the range of income increase options and the longer than average rate guarantee.

Looking at the investment options Benson says: “It is limited but for this type of annuity there really is no other option.” Blunt says: “It is a guaranteed product and the asset backing is provided by gilt and fixed-interest securities of matching maturities and yields.” Bird thinks this is appropriate for a purchased life annuity.

Drawing attention to the disadvantages of the product Lakey says: “As with all annuities, it is the loss of access to the capital.” Benson agrees and adds this could be very prohibitive especially for higher-rate taxpayers. He also mentions its lack of capital protection. Bird says that the only bad point for this policy in particular is that the guarantee period is only payable as income, not as a lump sum.

Discussing the annuity&#39s flexibility Pack says: “It has the usual choice of single and joint lives, 5 or 10 year guarantees, level or increasing by up to 8.5 per cent. This is all quite normal.” Benson says: “There is not a lot of flexibility. Joint lives and the guaranteed period are about it.” Lakey says: “It is very welcome, particularly the ability to effect a joint annuity with a non-spouse.” Blunt says: “As an annuity, it does not have any flexibility. Some would regard that as the intrinsic strength of an annuity product.”

Assessing the company&#39s reputation Bird says: ” It is generally very good but tarred by its association with the recent bad press its holding company has received.” Benson thinks it is very good, especially in the impaired life market. Pack says: “It is known to break new ground in a very staid market.” Lakey says: “An innovative company which has established a niche presence. Its parent company is up for sale with no takers currently, so this may deter clients and advisers alike.”

Looking at past performance Benson believes it is above average in the annuity market. Lakey says: “It has a fairly short track record but is looking good so far.” Blunt says: “The service has been good and the improved annuity for medical impairments has compared well with the results from other insurance companies. Our limited experience of the admin has been good.”

Considering the competition the annuity is likely to face. Bird says GE Life is the only real competitor that he is aware of. Lakey goes for Prudential and Standard Life, while Blunt suggests immediate needs impaired life annuities from Norwich Union, Bupa and PPP.

On the issue of charges, the panel point out that they are implicit in the rate offered and believes this is reasonable.

Moving to commission, Bird thinks 2 per cent is fine as long as the IFA can justify it. Blunt thinks it is normal, but points out there is extra work needed when dealing with impaired lives and that it may be necessary to agree on a fee basis with clients.” Pack thinks it is average, while Benson thinks it is above average.

Examining the product literature, Lakey feels it is quite explicit and detailed. Pack believes it fits the regulator&#39s requirements, but finds it boring. Benson finds it very easy to read. Blunt says: “Colourful but too much of our insurance language. An improvement could be to emphasise the lifetime income guarantee. In our business, we all think we know what an annuity is but it is wrong to suppose that a prospective client has this knowledge. For most people, the word annuity is a turn off. They need to be enthused by the prospect of an income which is not dependent upon any investment risk.”

Summing up Pack says: “I feel the next few years will see dramatic changes in the annuity market and this product is just one of the steps.” Blunt concludes: “If Britannic Retirement Solutions was to be acquired by a major group that showed a clear commitment to the business and with a good financial strength rating, I feel that advisers and clients would be a lot more confident about using this product. At the end of the day, the result of any annuity recommendation will be rate driven, subject to the underwriting company demonstrating financial strength and administrative capability.”

Recommended

Striking resemblance

Is that M2 managing director Mark Howard or the evil propertydeveloper trying to get his filthy hands on Warbury Warriors&#39 stadiumto turn it into a supermarket? The Diary hopes Howard&#39s businessmethods don&#39t have much in common with the character in The Sun&#39sStriker cartoon strip.We have never seen them both in the same room.o Help the […]

Website seeks views on pensions

Pension consultant Watson Wyatt is setting up a website to collectthe views of employers and pension schemes on the Government&#39sPensions Green Paper proposals.The website at www.watson wyatt.com/gpq is structured as aquestionnaire that allows people to post their reactions to theDepartment for Work and Pensions Green Paper and the Inland Revenue&#39stax simplification proposals.Watson Wyatt will use […]

Martin Currie – Martin Currie European Private Equity Fund

Wednesday, 19 February 2003 Aim: Growth by investing in a portfolio of European private equity funds and European direct equities Minimum investment: Lump sum £100,000 Maximum investment: £2m Investment split: European private equity funds 85%, European equities 15% Types of shares: Ordinary Isa link: No Pep transfers: No Redemption date: July 1, 2013 Charges: Annual […]

Oliver Wyman to merge with rival consultancy

Oliver Wyman & Company, the consultancy best known for identifying the £27bn savings gap, and the financial services arm of Mercer have announced they are merging. The new consultancy, Mercer Oliver Wyman, will have more than 600 employees with offices in Europe, Asia and North America. OW&C chairman John Drzik will assume the title of […]

How QE is distorting the gilt market

By Mike Riddell The moves in gilts in August were truly exceptional. Volatility in the gilt market (based off 10-year gilt futures) has soared to close to the highest levels seen this millennium, on a par with the eurozone debt crisis of 2011/12 and behind only the global financial crisis of 2008/09. The first distortion […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com