Web comment in response to John Lawson’s column in last week’s MM defending providers over the Omo
There is not enough space to list why this market is so inefficient. I find it unbelievable that anybody would suggest that good outcomes are being achieved for most customers. An independent macro-economic assessment by Oxford Economics at the end of 2009 found that customers could improve their outcomes by over £3bn by improving the shopping-around process.
Do we really believe customers shop around and then say, I will forsake those many thousands of pounds?
The open market option (it should be more aptly called the one market option) facilitates shopping around for one retirement income solution – a lifetime annuity and it amplifies a focus purely on rate. There are now over 10 retirement income choices available to advisers and their clients – the question we need to address is why do most people (nine out of 10) end up in one category often with inappropriate options selected – this is not informed purchasing in many cases? Often, it is ticking a box to get an income as quickly as possible because the thought of working through a sleep-well-at-night pack that is 30-plus pages is too overwhelming.
The opportunity is to get customers first into the most appropriate retirement income solution with features that meet their changing needs – and Omo does not do that – it is not compulsory Omo being called for but compulsory shopping around. This is not an efficient market that delivers great outcomes – we all have to be more ambitious to deliver a better solution and stop believing that what exists is good enough.
Marketing director, Living Time