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Drawdown drawbacks

Client fund size is the main barrier to recommending drawdown to clients, according to a GE Life survey conducted in association with Money Marketing.

Thirty per cent of advisers say small funds puts them off drawdown, with 20 per cent citing client concerns over uncertainty over future income and 8 per cent seeing the option as being poor value.

Eight per cent say difficulties explaining the product to clients is the main barrier to recommending it to clients, while 7 per cent say complexity of income limits and reviews is the biggest deterrent. Twenty-eight per cent say there are no real barriers to recommending drawdown.

The most important feature of drawdown for 22 per cent of respondents is the ability to continue drawdown beyond age 75 via alternatively secured pension after A-Day. For 21 per cent, the lack of a minimum income limit is the most important feature while 18 per cent are most drawn by more investment freedom after A-Day.

GE Life product manager for drawdown Ray Chinn says: “What is interesting is that most IFAs feel there are no real barriers to recommending drawdown. Our concern from an advice perspec- tive is that time is limited with less than a year to go before the new rules take effect. IFAs need to do their homework and start talking to their cli- ents now.”

Need An director Jo Roberts says: “It is very hard at the moment to know what you can and can’t do. Clients generally don’t seem to understand it. It needs to be simple and pension simplification is not simple.”


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