Head of products and marketing Simon O’Connor says the firm saw a 34 per cent increase in the number of requests for illustrations during the last quarter of 2008 and plans to double its salesforce of 16 by the end of 2009.
He says: “Considering that it was the run-up to Christmas, this is a fairly significant increase and I think most of the players in this market have had a similar experience. I think it has taken the stockmarket crash last October to bring home the value of variable annuities to people. I expect it will be a good year for products like ours because they have had a chance to show their worth.”
Some advisers agree that certain guarantees have become more attractive.
William Burrows Annuities director Billy Burrows says: “At times like this, products with a guarantee do become more important but people need to understand the risks they are taking and not put all their eggs in one basket. These products are not the complete answer but they are certainly an increasingly important part of the answer. I think the uptake will increase slowly and surely over time as advisers and clients start to better understand the benefits.”
Annuity Direct director Stuart Bayliss says: “Guarantees are more important to people now but a conventional annuity is the ultimate guarantee and I do not think variable annuities will attract business away from this market. What I do expect to happen is that many people who would otherwise have chosen income drawdown will buy a guarantee.”
Hargreaves Lansdown pensions analyst Nigel Callaghan says: “Maybe people will want to buy it when the market bounces back but why would anyone pay for an expensive guarantee when the market is at 4,300? Most people would do an awful lot better splitting their money between a conventional annuity and income drawdown. It effect- ively does the same thing but is cheaper and cleaner.”