View more on these topics

Burrows sees pre-retirement role for variable products

William Burrows Annuities director Billy Burrows has suggested that clients should consider taking out new-style variable annuity products in the pre-retirement phase.

He said that one of the most interesting questions was whether advisers and clients would prepared to consider such a strategy as he outlined his view that too many clients saw the world in black and white between taking an annuity and using drawdown.

He was speaking in response to concerns raised by Prudential director of annuities Karin Brown who asked: “If you are looking for an exit strategy, what are the rates going to be like in 12 months or 24 or 36 months? I can see scenarios where annuity rates will worsen very considerably as interest rates come down over the next few years so what is the exit strategy then?”

Burrows said that many clients might seek not just a combination of annuity and drawdown but also use the new-style products in the period before retirement so that their investment strategy incorporated some guarantees.

He said: “The problem is that people tend to see life in black and white – should I have an annuity or a drawdown. You ought to have a combination. When you analyse it, you should not go into drawdown unless you can live with a shortfall in income. Those that could not should have had some guar- anteed income to cushion themselves. It is a question not only of a combination of annuities and drawdown but also an investment strategy where you limit the downside which brings these new third- way guaranteed drawdowns into play.

“It is a question of whether advisers and clients will buy into the concept pre-retirement. You could go into one of these drawdowns in the accumulation phase, benefit from a mini-ratchet and then convert within the fund into a drawdown and take the guarantees with you.”

Recommended

Nucleus at the core

At Cameron Chase, our business philosophy seeks to provide a truly holistic, financial plan in line with our clients’ life goals.

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