5th April 2012

Metlife: IFAs see surge in enquiries from retired clients

But nearly two out of five are worried about complaints, says MetLife

The past year has seen a surge in business for IFAs from already retired clients, with 56%of advisers reporting that they have seen more retired clients compared with previous years,research* from MetLife shows.

The nationwide study shows that around two-thirds of retirement specialists (65%) are
expecting 2012 to see a rise in the number of clients asking for advice about annuity
purchase, as a combination of low long-term interest rates and stock market turbulence
drives interest in alternatives to traditional retirement income solutions.

However the good news on potentially rising business is tempered by concerns about
possible consumer complaints in the wake of ongoing volatility - the study found 38% are concerned about possible complaints from clients and 9% very concerned about the
possibility of regulatory action over retirement income advice given to clients over the past two years.

These issues with existing retirement income solutions have recently been highlighted by a combination of annuity rates at all-time lows, as well as changes to drawdown rules which came into effect in April restricting the maximum allowed under Government Actuary Department rules to 100% of a comparable annuity from 120%.

MetLife would like to remind advisers of the importance of reviewing the full range of retirement income solutions for clients, including fixed-term annuities and unit-linked guarantees.

Dominic Grinstead, Managing Director of MetLife UK said: "The rise in inquiries from retired clients demonstrates the value of advice from advisers.

The increasing level of demand for advice from people who have already made retirement income decisions, is due to the fact that what once appeared to be entirely sensible strategies could now look inappropriate given the ongoing low long-term interest rates and stock market volatility.

The option to review decisions is valuable. Fixed-term annuities can play a role in this as they enable clients to plan for their current circumstances but still have the flexibility to change their retirement income decisions as circumstances change."

The research shows that more than four out of five (81%) advisers specialising in retirement expect the market for fixed-term annuities and other alternatives to conventional annuities to grow over the next two years.

MetLife's Freedom Income Plan fixed-term annuity enables clients to transfer to another retirement product during their selected term should they become ill and qualify for enhanced terms on a lifetime annuity, or if the dependant attached to the plan should die.
They can choose either a level income or an incremental annual rise of up to 8.5% with the certainty of a known fixed income plus a guaranteed maturity amount at the end of the selected term.

Minimum investments in MetLife's Freedom Income Plan are £20,000 after taking a pension commencement lump sum, with a choice of terms running from three to twenty-five years.

Investments, Retirement