CA Summit – Advisers challenged to stop passing buck

People must be told what’s right for them when it comes to at-retirement products rather than have the industry pass the buck for responsibility on to them, Hymans Robertson partner Douglas Anderson told delegates at the Corporate Adviser Summit 2014 yesterday.

Bernard Casey, principal research fellow at the Institute for Employment Research, University of Warwick said advisers should not hide behind ‘communications and engagement,’ to shirk their responsibilities. Speaking from the floor during a panel debate on DC investment strategies, Casey said the industry should not sit around for 10 years, only to realise that annuities were the right solution.

Anderson said:  “If we think annuities are right for most people, we should tell them so and warned that drawdown should not be advocated on an investment perspective and that it had an unacceptable longevity risk.

Scottish Life investment marketing manager Lorna Blyth admitted that annuities would still be an attractive option for some because there was a lot of complexity with drawdown. But in a show of hands, a slight majority of delegates indicated they did not think the industry woudl come to regret the current intense negativity towards annuities.

The panel was also split on the relative merits of TDFs versus lifestyling, with BirthStar director Henry Cobbe arguing that only TDFs had the  flexibility to meet the  ever changing  investment and regulatory environment, and where nine in 10 people relied on default funds. Blyth hit back saying Scottish Life’s lifestyling already catered for different customer outcomes and provided monthly rebalancing. “We’re keen to make clear about what lifestyling can and can’t do. We have solutions that go to cash, annuity and drawdown.”

For Roger Breeden, Mercer partner, searching for appropriate lifestyle strategies was a “constantly evolving project, “but that he tended towards TDFs. He said clients wanted a smooth investment journey, with costs kept down on the transition from work to retirement.

Friends Life head of corporate benefits Martin Palmer said some people in lifestyling were picking the wrong age for retirement and would be sitting in cash at age 60 and was concerned about whether people in their 70s would be capable of making investment decisions.

But Aegon strategy director, workplace solutions John Quinlivan said he thought people could overcome this problem by locking  into a guaranteed income within drawdown.