Critics have disputed claims that the retail distribution review will reduce the use of the open market option for annuities.
Last week, Fitch Ratings said the fact that customers would be faced with explicit fees for advice will drive some towards cheaper, restricted advice or no advice at all. It said this was likely to result in less take-up of Omo.
But Hargreaves Lansdown pensions analyst Nigel Callaghan says there are still options for clients to pay for Omo advice so the RDR should not be a deterrent.
He says: “Once the financial agreement between the client and adviser has been reached, the client can pay directly or both parties can agree for the services to be paid through adviser-charging.”
Burrows and Cummins partner David Cummins says: “The cost can either come out of the annuity fund itself or you can pay for it from the tax-free cash. I think that is how it will pan out.
“There are a lot of clients that would be quite happy to have a fee met from the fund they are investing but on the basis that it is agreed with them.”