Advised option should be annuities priority – Living Time

Annuity advice should be made as widely available as possible, before the industry starts pushing direct-to-consumer options, according to Living Time.

Despite a recent report by the Pension Income Choice Association (PICA) - of which Living Time is a founder member - suggesting direct annuity sales should be promoted, the firm says efforts should be focussed on making advice more accessible.

PICA's flagship report, Optimising Value in Retirement, says more should be done to promote direct-to-consumer annuity purchases, to increase uptake of the open market option (OMO).

However, Dave Harris, managing director of Living Time, says making annuity advice accessible for the masses should be made a priority.

Harris says not enough advisers are taking up the opportunities offered by an ageing population, and many will not consider smaller pension pots for annuity advice.

"I often hear advisers say they cannot make any money out of people with pots of less than £50,000, but there are ways of streamlining your process and using recurring income opportunities that can make these customers very profitable," he says.

PICA has called for providers to help advisers make it more cost-effective to deal with customers with smaller pension pots, but has also urged the industry to develop direct-to-consumer propositions.

Tom McPhail, chairman of PICA, says the group's priority should be to expand uptake of the OMO, whether advised or not.

"We want shopping around to be the first option for all people approaching retirement. They might go to an adviser, or they might choose their own annuity, but the important thing is they engage and consider the options available to them," he adds.

However, Harris says life companies are already making headway in the direct-to-consumer space, and says advisers should look at ways of serving the mass-market now, rather than waiting for the insurers to dominate.

"These insurance companies are not stupid," says Harris, "they see the huge opportunity available in the annuity market. Advisers need to pull their fingers out, and look at how they can make these kind of customers profitable, because it can be done very easily, creating a better outcome for the client and the IFA."