More than 85% of retirees will find it difficult to access professional annuity advice because their pension pots are too small, research suggests.
A study conducted by Aegon and the Association of British Insurers (ABI) found a large gap between commission rates paid by providers and the fees advisers expect.
IFAs surveyed at Aegon's workshops said a reasonable fee for annuity advice would be an average of £733.
However, annuity providers offer a standard commission rate of 1% of fund value, meaning many consumers may consider their pots unattractive to advisers.
The ABI's research suggests 85% of annuities purchased in 2007 were from pots of less than £40,000, while 95% were below £80,000.
With retirees need a pension pot of £73,300 to be a viable business opportunity for advisers, Aegon fears many will go without independent advice, and may not get the best deal available in the market.
"The adviser research at our workshop suggests the 'affordability gap' for annuity advice could be greater than many people think," says Aegon's head of annuity sales, Mark Cardy.
He says providers should offer more flexible remuneration options for advisers, allowing them to agree a sensible fee for their advice with the customer.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook