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Online tool cuts cost of advice on small pensions

The Open Market Annuity Service is pushing its automated at-retirement shopping around proposition to IFAs as a way of providing a low-cost service to people with small pension pots.

Tomas sales and marketing director Graeme Riddoch says the tool, which has recently been revamped, allows advisers to shop around the entire annuity market in 60 seconds. He says doing this process manually would take at least six hours.

Tomas takes either a share of the adviser’s commission or a percentage of the value of the annuities sold.

Riddoch says: “Post-RDR, advisers will find it difficult to manually shop around the entire annuity market for people with smaller pension pots. Tomas allows IFAs to produce a full report of the market for the client almost instantly.

“This will help address concerns that too many people are choosing the default option when they retire and will make it possible for advisers to provide a service to people with small pots.”

Last week, an influential group of industry experts signed a letter from the International Longevity Centre UK calling on the Department for Work and Pensions, the Treasury and the FSA to address the risk of a post-RDR advice gap for people with small pension pots.

Radcliffe & Newlands chartered financial planner Mel Kenny says: “Direct offerings and automated processes will become increasingly popular as advisers strive to streamline their processes in the annuity market.

“Small pots are already uneconomical to deal with so I can imagine providers such as Tomas being considered by most IFAs.”

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