Annuity knowledge gap hampers advisers

A lack of comprehensive understanding of annuity products among advisers means only 38 per cent of them are recommending annuities, while 63 per cent of advisers who have not used annuities rate their understanding below ‘good', a senior analysts said.

Investment Trends senior analyst, Recep Peker, said a distinct education gap exists among advisers who have not used annuity products.

"What we find is advisers are after products that are easy to use and easy to understand so that they can implement it with their clients efficiently but also provided by a financially strong provider," Peker said.

"The more advisers understand the nuances of income guaranteed products, the more likely they are to be interested in using them."

Out of 617 planners surveyed in the December 2014 Retirement Planner Report, only 36 per cent say they have a good or expert understanding of annuities, while 64 per cent rate their knowledge as average, limited, or none.

Peker said advisers need to be equipped with the appropriate education material and marketing collateral to help their clients understand the products if they are to boost their business performance.

For example, if advisers are creating a life stage modelling where they need to enter client details like how much money they have, what investments options they are in, and how much money they will accumulate until they reach retirement and so on, they want customised tools that will show the expected outcomes of adding certain products like annuities to a client's portfolio.

"There's a lot of interest and one of the best ways of converting the existing interest in annuities to action is through education provided, giving advisers the right tools to use with their clients," Peker said.




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