A latest survey has indicated that experts and annuity providers believed retirees will turn to their employers and current investment service providers before seeking an IFA’s advice. IFAs occupy a distant fourth spot after most retirees are satisfied with present providers and internet based advice.
The research conducted on behalf of annuity administrators Xafinity Paymaster found that while most providers believed consumers should involve IFAs to seek expert advice on critical issues such as annuity, in reality most retirees think otherwise.
In order of preference for annuity advice, existing investment service providers were on top, followed by internet advice. Current employer or scheme trustees took the third slot while IFAs were the fourth choice. Banks are the least preferred institution for seeking annuity related advice and occupied the fifth spot.
The survey also found that 96 percent of industry experts believed execution-only business will get a boost due to the implementation of retail distribution review (RDR) proposals, smaller annuity pots and greater availability of web-based advice, while intermediary sales will suffer as a result.
The trend of people buying their car, travel and home insurance on the internet is picking up, said Keith Boughton, director of insurance and payments at Xafinity Paymaster.
“However, the purchase of an annuity is for most people the most important financial purchase they will make; even more so than the purchase of the family home as once the decision is made it cannot be changed”, he said.
“There was recognition amongst annuity industry professionals in our latest survey that the internet will be a source of much information and, if it is easy for retirees to transact using this medium, it will attract increased volumes of business”, he added.
Buying annuity products over the internet may soon become commonplace he said, adding: “Other retirees will use the internet for research and then discuss their findings with an advisor or simply transact on a non-advisory basis”.
“The use of the internet and web-based specialists will certainly be the focus for retirees with mid-range levels of funds”, concluded Mr. Boughton.