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Now: Pensions selects Annuity Direct for non-advised Omo service

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Low cost provider Now: Pensions has partnered with Annuity Direct to offer members a whole of market annuity shopping around service.

The agreement will see Annuity Direct provide a non-advised service to all members when they are six months away from retirement.

Those who choose to use the service will each be charged the same amount, regardless of the size of their pot, through a “variable commission”. This charge will be taken from the client’s pension fund.

Now: Pensions and Annuity Direct declined to disclose how much this charge will be.

Members with more complex retirement needs will be offered full regulated advice from Annuity Direct, which will incur a higher charge.

Now: Pensions chief executive Morten Nilsson says: “I firmly believe that pension providers have a responsibility to offer members access to the best options from the whole marketplace when they reach retirement to make sure that their pension pot stretches as far as possible.

“Too often pensioners end up with an annuity that doesn’t reflect their individual circumstances or needs, and doesn’t give them the best value. By partnering with Annuity Direct, we are confident that Now: Pensions members will get the best possible retirement income.”

Annuity Direct chairman Alan Higham says the shopping around process goes “above and beyond” The Pensions Regulator’s requirements.

He says: “The Pensions Regulator has issued draft guidance that clearly shows it expects trustees to support members through their decision making process at retirement and monitor the outcomes achieved. 

“We are delighted to be working with Now: Pensions to implement a solution that goes above and beyond the new demanding standards proposed by the regulator.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. What no advice man ! Confused 10th June 2013 at 2:17 pm

    So the company is going to offer a whole of market annuity service on a non-advice basis.

    How does that work?

    Are we really saying that client understands terms like guaranteed period, escalation, level, and of course spouses pension. Maybe a traditional annuity is not even the best option for the client – is this service going to make that clear as it’s been advertised as a non-advice service.

    The FCA has already stated that is going to take more notice of comparison websites and so-called information only services. Maybe the FCA would like to start with this one as there seems to be a rush of firms offering annuity quotations with no advice.

    In my opinion, it is virtually impossible to hold a telephone call or face-to-face visits without giving advice. Clients making one of most important decision should be encouraged to take advice from IFA’s rather than using services like this one – as too often these services have disclaimers on the bottom that state no advice was given or sort as a way of limiting their liability, while actually giving opinions and very detailed explanations which could constitute advice.

    Even the FCA so concerned about this as they have clearly stated that companies offering information only services should be wary that consumers believe that they are actually receiving advice.

    I wonder how many of the consumers really realise that they have no comeback on the service as this is effectively an execution only service.

  2. A bit like the None Advised mortgage sales arranged by banks and building societies that will now need to be advised following MMR.
    This needs sorting out otherwise what is the point of giving any advice, just make up a decision tree of questions for any product and be paid commission instead!

  3. @what no advice man,

    I agree with what your are saying, and that everyone would benefit from full independant financial advice… depending on the level of Adviser Charge applied.

    For example, how much would you charge a client with a £5,000 pension pot for full independant advice? A £500 Adviser Charge would reduce the customer’s income in retirement by 10%.

    Assuming the customer is happy to pay you 10% of his pension pot, your advice has got increase his (or his widow’s) income in retirement by 10% or more for it to be worth it.

    In these circulstances, a simplified process that gets a customer enhanced rates where applicable, and makes sure he is aware that his annuity will reduce in value over time and will die when he does may be sufficient.

    If this can be done for a fraction of the price of full independant advice, then I would support it. Unfortunately, Annuity Direct is silent on this point.

  4. Hampshire Yokel 10th June 2013 at 5:26 pm

    Whilst professional advice (I’ll leave out the word ‘independent’ in this post RDR world) would ultimately be best for everyone, it is not viable to provide to everyone.

    Even before the ban on commission, many professional advisers had recognised that it was not commercially viable to provide advice to retirees with small pension pots. Now, with the ban on commission for advised sales, it is even less likely that people with pension pots of less than (picks a figure out of thin air) £50k will receive advice.

    The regulatory requirement for non-advised sales is that the consumer be given sufficient information with which to make an informed decision. This means that they will need information about the various options and, if possible, a tool that can help them understand the impact of those options, both in the short term and the long term.

    If firms can offer a sensible service that provides this information and therefore encourages consumers to use the Open Market Option, this has to be seen as a benefit to those annuitants.

    If the service can also identify when a potential customer may be able to benefit from enhanced terms due to health or lifestyle issues, the chances of the annuitant improving their retirement income is clearly increased.

    It is however important that any such service is also able to identify when there are factors that would mean that advice is essential. The existance of guaranteed annuity rates (or similar), MVAs or other ‘non-standard’ issues must be identified in the process. In addition, if a consumers pension pot was over a certain figure, say £100k, they should at least be asked if they would like to seek professional advice and helped to do so whenever applicable.

    Non-advised annuity services, such as those offered by Bankhall Gateway, TOMAS and Premier Retirement Services have been operating for years and have helped many people achieve improved retirement incomes.

  5. What no advice man ! 11th June 2013 at 9:37 am

    I never could understand double standards so what some people are saying is that because a client has a small pension pot, those clients are therefore given an inferior service.

    The example of £5,000 pension pot is a good example as most people in this predicament would not be investing in an annuity, they would be using the small pot concession of £18,000 to take all of the money as cash.

    If we simply enforced authorisation rules, and stopped this nonsense of non advice or information only, we would probably see a boom in adviser numbers rather than what we are seeing at present, which is a rush to information only services which in my book are actually giving advice via the back door.

    If this nonsense is to continue then I hope that the FCA reclassifies these types of services in a different class so that when claims eventually start to fall it does not fall on the adviser sector to pick up the tab for the increased FSCS fees that are bound to come.

    Have we learnt nothing from PPI miss selling which was effectively caused by this type of execution only sales process?

  6. RegulatorSaurusRex 11th June 2013 at 9:47 am

    “Non advised OMO service”

    The regulators need to get round there pronto.

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