Advisers 'don't see profit in annuities'

A quarter of advisers feel they are unable to take advantage of growing opportunities in the annuities market because they lack the skills to make it profitable.

More than eight in ten (84%) advisers say they would welcome more annuities business, while a similar number (80%) say they are prepared to take on customers with smaller pension pots, research by Assureweb suggests.

But many are reluctant to take on what is often seen as a more complex aspect of their business without first ensuring they will be able to turn a profit.

"The annuities side is fairly fraught with a whole host of issues which could trip advisers up, leaving them with very little return on quite a large investment of their time," says Steve Hunt of Rockingham Retirement.

However Hunt is confident advisers can overcome the obstacles if they take advantage of time-saving technology.

"With the potential for returns as small as £200 on a £20,000 annuity, advisers need to use technology as much as possible so they can save time and earn more money by turning around a higher volume," he says.

By using a service like the Annuity Clearing House (ACH), an online service for advisers Rockingham Retirement is launching with the Pru, L&G and MGM in the New Year, Hunt says advisers will be able to tap into the annuities market at much less risk.

"ACH will give advisers the ability to complete a piece of annuity business in seven to 12 minutes at a higher rate of commission. So even with small value business they will be able to turn around more and come off better."

Over half (55%) of more than 300 advisers surveyed view annuities as a growth product line for their business, as public awareness of the Open Market Option (OMO) continues to grow, according to Assureweb.

Around one in 10 (9%) are already managing one or more cases per week and just over a third (38%) are managing at least one case per month, the research suggests.

Richard Ross, product manager of Assureweb, says: "Annuities business does not have to be complicated and can be very lucrative. Advances in technology, particularly in the area of guaranteed, fully underwritten quotes means business can be written much more efficiently.

"Advisers may need to review their current processes to ensure they benefit from these advances in technology."