Friends reveals plans for assault on annuity market

Friends Life will widen its annuity product range and ramp up its consumer marketing next year in a bid to avoid losing its existing savers, and to capture more when it becomes an open market option (OMO) provider.

The life company's two-part plan is to first build up its internal at retirement offering to stop its current client base from abandoning it for other providers.

With a strenthened proposition it hopes it will then be able to compete with rivals once it becomes an OMO provider in 2012.

David Still, director of retirement income at Friends Life, said 60,000 people saving with Friends retire every year, but that only a quarter buy a retirement product from Friends.

Friends Life will market intensely to existing savings clients with small pots, he said, whose combined assets total £2bn every year.

Still said the company will continue to serve the IFA market, which he predicts will have wealthier clients with more complex needs.

"We are looking at improving the breadth of our proposition, such as developing annuity products that use lifestyle or medical underwriting," he said.

Still said Friends is committed to the OMO and will not, through targeting its own savings customers, neglect its duty to promote shopping around at retirement.

Friends Life announced in February its intention to enter the OMO market as an annuity provider to all savers, not just current Friends investors.

The insurer will also look into developing a non-advised, execution-only retirement proposition for clients who sit in between those who require full advice and those who require none, Still said.

Both parts of the new retirement business unit will begin selling new annuity and at retirement products in 2012, Still said.

In September, Friends Life was accused of targeting IFAs' clients with its direct-to-consumer business PlanWise.

However, the insurer said PlanWise is only aimed at orphaned IFA clients or those who had never had an IFA to start with.