A total of 73 per cent of advisers believe that flexible annuity products offer a valid alternative to conventional annuities and income drawdown, according to Lincoln Financial Group research.
The figure compares with 55 per cent in 2007, when the firm conducted the same survey among 200 advisers.
According to Lincoln’s research, 12 per cent of advisers said the majority of their clients would consider a flexible annuity when planning for retirement.
Lincoln says the results demonstrate a loss of confidence in conventional annuities. Fifty-six per cent of the sample said they did not offer sufficient choice and 57 per cent claimed they were outdated and failed to offer enough flexibility.
Meanwhile, 55 per cent of IFAs said conventional annuities did not provide enough protection against inflation.
Head of products and marketing at Lincoln Simon O’Connor says: “Flexible annuity products carry increasingly important benefits in the current climate such as protecting a pension pot against the effects of inflation and providing income guarantees.”
Ernst & Young financial services director Malcolm Kerr believes that there will be a role for conventional annuities for some time, particularly for less affluent people who want the maximum possible income.
But he warns: “With the duration that people are retired increasing, being in a veh- icle that gives you limited opportunities for any access to equities can be a concern because of the impact of inflation.
“There is a need for innovative products that combine some form of guaranteed income with some exposure to equity markets. It is disappointing that none of these products have really resonated with the IFA market.
“Variable annuity products are complicated but IFAs have not invested as much time as they might to get to grips with them. But this is changing. The sharp reduction in stockmarkets has given them pause for thought.”