Surveys have found that this is due to a lack of understanding and general awareness of the alternatives to an annuity, while some advisers believe they are too expensive.

But these products have been created because annuities themselves are by no means perfect for everyone. It must be remembered that an annuity is essentially a ‘one-way street’ whereas drawdown allows the investor to keep all the options on the table.

Moreover, in the case of the third-way products the concept of an investment product which provides some form of guarantee, a rate of return above cash and the potential for income for a drawdown arrangement has undoubted appeal for a small proportion of clients - even if they do have to pay a bit more.

This guide aims to lift the lid on these products, providing an introduction to the subject, the pros and cons, which clients are best suited to them, and scrutinising some of the adviser misonceptions and confusion.

Additional material was supplied by Andrew Pennie, marketing director of Intelligent Pensions; Billy Mackay, marketing director of AJ Bell; and Alan Mellor, managing director at Phillip Bates & Co.