Planning for volatility
Jennifer Lowe, 23 July 2008
Two-thirds of IFAs say the ongoing stock market volatility has spurred their clients into changing the way they plan for their retirement, according to research by MetLife.
The remaining 33 per cent have seen investors turning primarily to cash, but for 21 per cent, guaranteed pension products are now at the top of the list for their clients.
Surprisingly, more than ten per cent of IFAs admit that investors are switching to other assets, such as property, despite the weakening market.
According to the research, investors are increasingly asking for advice on alternatives to traditional annuities and drawdown, including pension products with unit-linked guarantees, variable annuities, with-profits annuities and impaired life annuities.
Dominic Grinstead, strategic development and marketing director at Metlife, says, ‘Stock market volatility and growing worries about inflation are raising uncertainty. So it is no surprise that pensions with unit-linked guarantees are becoming more attractive as an alternative to traditional pension products.
‘They address inflation by facilitating exposure to equities, which have an in-built defence against price rises in the long run, and protect pension pots against stock market falls.’
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