The research, entitled ‘Advisers embrace use of guaranteed income streams’, found despite the market volatility of the past two years, advisers remain reluctant to embrace the products as part of holistic financial planning.
However, Cerulli also found that almost 30% of advisers said they had increased their use of guaranteed income streams during the course of 2009.
One of the more popular guaranteed income streams are variable annuities, which are being increasingly sold as ‘third way’ retirement products for investors not wishing to lock up their capital in a standard annuity but to have the ability to continue to invest a portion of it.
“The increased interest in insured retirement income methods calls for improved education on the methods available to generate income from variable annuities,” said report co-author, Lisa Plotnick.
“For example, advisors in the insurance channel are more apt to recommend annuitization for qualified variable annuities and withdrawal strategies for nonqualified variable annuities, an ironic reversal of traditional convention.”
However, after a strong start, variable annuities have struggled with a number of issues in the UK, with The Hartford having completely pulled out of the UK market in May last year. Aegon’s product also received negative press after the firm was forced to increase its charges due to the increasing costs of hedging required to administer the product.