Uncertainty in financial markets coupled with growth in final salary transfers are likely to push more people to purchase retirement products with a guaranteed income over the next two years.
Research from MetLife found that 65 per cent of advisers it surveyed believe that the guaranteed drawdown market will benefit from the market volatility surrounding the ongoing Brexit process, as savers look for retirement solutions that can withstand investment uncertainty.
Higher transfer values for those switching from a defined benefit (DB) to a defined contribution (DC) scheme will also likely boost the popularity of guaranteed drawdown products as they look for safe places to stash their cash.
Half of advisers surveyed by MetLife said that they think growth in the guaranteed drawdown market will accelerate over the next two years as more growth-focused products are launched by providers.
Most advisers agreed that guaranteed drawdown products offer a lower-risk alternative to conventional drawdown or annuities and now feel obliged to offer such solutions for those clients looking for a sense of investment security.
Richard Evans, intermediary development manager at MetLife UK, encouraged advisers to include a wider range of options when discussing retirement savings with clients, as the need for guaranteed drawdown is increasingly playing a central part in this discussion.
“Advisers clearly see guaranteed drawdown as offering security against a range of perceived threats, including Brexit, and as a method of hedging against taking too much risk for those transferring out of DB schemes,” Mr Evans said.
Providers should also heed the research results, as more than half of advisers thought that consumers would be more likely to save if more guaranteed annuity products were available to choose from.
Metlife offers guaranteed drawdown products.
julia.faurschou@ft.com
