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Actuarial Post: Technology is no silver bullet for annuities

Actuarial Post: Technology is no silver bullet for annuities

By Tom Murray, Head of Product Strategy, Exaxe.

Back in the seventies, when I was young, a programme called Tomorrows World aired every week on the BBC and showed us what life would be like in the 21st century. New technologies were going to change how we did everything and deliver the human race a life full of ease and plenty.

The future hasn’t actually turned out as it was forecast. The Tomorrow’s World presenters were certain that most of our time would be leisure time by now and that minimal work would be needed to sustain luxury lifestyles.

Nevertheless few people would deny that technology has dramatically changed how we live our lives and the pace of that change is getting faster. A mere twenty years ago, mobile phones were seen as sufficiently elitist to be the subject of mockery in programmes such as Only Fools and Horses. Now not only does everyone have one for communication, but the range of things they use it for has grown exponentially. Many people are prepared to use their phones for shopping, banking and other everyday activities rather than just for point-to-point communication.

Yet it is a mistake to think that technology is the solution to every problem that arises. Take the issue of annuity purchases, for example. There is currently a lot of discussion around the fact that buying annuities is a life-changing moment, a once-and-for-all irrevocable decision and yet many people lack knowledge when they actually make the purchase. Few people understand how at-retirement products work, primarily because they generally only make one purchase in their lifetime, yet very few get proper advice from a trained professional at this crucial moment.

This is for a number of reasons. Firstly, many people just accept whatever annuity offer comes from their pension provider. Secondly, the Retail Distribution Review (RDR) has banned commission, meaning that anyone who is buying an annuity is faced with a costly up-front fee charge which is off putting.

Finally, a third choice has emerged to plug the gap with execution-only websites proliferating and providing information rather than advice to the people who purchase. Technology has stepped in to plug the gap that the IFAs have left in the advice market...

Read the full article in the Actuarial Post: Actuarial Post - Edition 26

Actuarial Post is an online publication offering actuaries insight into the market, an extensive library, news and the latest job listings. With a dedicated comment section; the most talked about topics in the actuarial market are discussed by actuaries dealing with the issues on a daily basis. Articles focus on the latest trends changes in regulation and the areas of pensions, investment, life and insurance.

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