View more on these topics

Firms to follow guarantee rise

MetLife’s decision to increase prices on its income for life and capital guarantees is likely to trigger price hikes by other players, warns Annuity Direct director Stuart Bayliss.

Money Marketing revealed last week that MetLife was pushing up prices as well as dropping the maximum equity exposure available on its guarantee from 85 per cent to 60 per cent.

The income for life guarantee will now cost between 70 and 145 basis points, depending on the equity exposure, while the cost of the capital guarantee will rise by between 130 and 180 basis points.

Bayliss says some variable annuity providers are subsidising the increased cost of guarantees but he predicts they will struggle if the derivative market remains volatile for some time.

He says: “It is almost inevitable that other players are going to have to raise their prices because continuing to subsidise guarantees will start to hurt.

“There is a view that even at MetLife’s new price they are subsidising the guarantees. Knowing what the market place is indicating for these guarantees and knowing what concerns there are in the States, it is almost inevitable that this might not be the last price hike from MetLife and that the others will probably have to put prices up as well.”

But despite price hikes, The Retirement Adviser head of retirement planning Nick Flynn is optimistic, suggesting that the third-way market may get a boost from plunging lifetime annuity rates.

He says: “As lifetime annuity rates fall, alternatives become more attractive. Annuity rates have been at reasonable levels over the last few years, making alternative retirement income products less attractive when the income is directly compared. But rates are slipping at an alarming rate, which may be the boost that is needed for third-way products. I think clients and advisers will start showing more interest as rates decline.”


Active response

It has not gone unnoticed that active management has struggled in recent years – the Investment Management Association UK all companies sector has, for example, underperformed the FTSE All Share by 3.46 per cent in 2007 and 2.29 per cent in 2008 compared with a 10-year annualised return that has been pretty much in line with the market.

Councils will be searching for answers

Your readers will probably be aware that the trans- itional arrangements for Hips come to an end on April 5, after which date, most properties must have a Hip in place before they can be marketed. Some of your readers may not be aware, however, that although Hip suppliers will still have 28 days to […]

My claim change

Jeremy Noble, a mortgage packager and master agent for claim management company Credit Issues, explains how, with mortgages lending at record low levels, many mortgage brokers are looking at other areas to supplement their income. He recounts his experience of finding a new source of work as mortgage lending dried up

Introducing Trevor Greetham

Ryan Medlock, Investment Proposition Manager, Royal London Royal London Asset Management’s (RLAM) new head of multi-asset is officially up and running. I want to look at what expertise Trevor brings to the table and how this affects the Governed Portfolios (GPs) and Governed Retirement Income Portfolios (GRIPs). Trevor Greetham joined RLAM in April 2015 from […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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