More than a year after being the first platform in the market to offer annuities, total Funds Under Management (FUM) on FirstChoice and FirstWrap has exceeded $535m, driven in large part by advisers.
Head of Retail Sales for Colonial First State, Laird Abernethy said annuities usage was on the rise, and had become a stronger part of the advice offering as education and understanding of the benefits they provide in retirement improved.
“When we first launched annuities on the CFS platforms, we knew it was because advisers were looking for more efficient ways to deliver advice, particularly in retirement,” Mr Abernethy said.
“With the addition of Challenger annuities last year, advisers have benefited from more choice when it comes to portfolio construction and meeting the needs of clients approaching or already in retirement in one place.”
As well as including CommInsure annuities last year, CFS also expanded its offering to include Challenger’s CarePlus Annuity via the FirstChoice platform, broadening its range of retirement solutions.
Mr Abernethy said the retirement gap was well known, further evidenced by CBA’s most recent Retire Ready Index that found customers are underfunded with, on average, 61 per cent of required retirement savings.
“More advisers are seeing the benefits of using annuities in conjunction with an account-based pension by constructing portfolios that provide a regular income from a lifetime or term annuity whilst benefiting from potential market gains and income from the account-based pension,” he said.
“The streamlined application process and consolidated reporting benefits of annuities on platform means more advisers are now seeing they can meet the complex needs of those in retirement whilst maintaining administration efficiencies.
“We expect this to continue to grow as the demographic trends of population growth and increasing life expectancies become further apparent.”
Mr Abernethy also pointed to the favourable treatment of annuities for social security purposes, an important consideration for retiree clients impacted by the asset test changes coming in January 2017.
“More advisers are looking to partner with providers who have deep technical support and a range of product solutions to support their retiree clients,” he said.
