Originally posted by CaptainBarnacles
I suspect that a lot of people who have annuities have ended up in them via a financial planner. I don't think there will be so many visits to, or contacts with financial planners any more, after Hayne is implemented. I doubt many of the less sophisticated wake up one morning and think they need an annuity. They think of a term deposit or higher interest variable rate deposits. They'll have their default super fund and when they are approaching retirement they will pick up the phone and find out the rules, and keep cash in an account to pay out as required, and transfer lumps to there from their balanced fund as required.
The staff will not be commission driven sales people any more - they will just get a wage, not so many of them will benefit from making things more complicated any more.
I suspect that a lot of people who have annuities have ended up in them via a financial planner.
That’s correct: financial planners have so far been CGF’s main distribution channel. They will likely continue to be the case, even though (as goldbear77 pointed out) nothing prevents CGF from developing direct marketing channels to consumers.
I don't think there will be so many visits to, or contacts with financial planners any more, after Hayne is implemented.
I don’t see it that way. The need for financial advice is only going to increase, as a direct function of the increase in size of the superannuation and fund management industry. Demographics alone point overwhelmingly in that direction. There will be structural changes in the way financial advisers are remunerated, as well as a generational turnover in the industry, but I see no evidence that financial advice will no longer exist (or that it will exist to a far lesser extent) in twenty or thirty years.
I doubt many of the less sophisticated wake up one morning and think they need an annuity. They think of a term deposit or higher interest variable rate deposits. They'll have their default super fund and when they are approaching retirement they will pick up the phone and find out therules, and keep cash in an account to pay out as required, and transfer lumps to there from their balanced fund as required.
That isn’t really the point, as you can say the same thing about pretty much any non-vanilla financial product. The point is that annuities do have a fundamental utility, which is the hedging of longevity risk (i.e. the risk of outliving one’s savings), as well as the customisation of cashflows; as such, they will continue to have a legitimate place (or even a legislated one, under the CIPR framework) in advisers’ approved product lists. More generally, and irrespective of how the financial advice industry evolves in Australia, they will continue to be in demand as long as people are made aware of their benefits via appropriate distribution channels.
The staff will not be commission driven sales people any more - they will just get a wage, not so many of them will benefit from making things more complicated any more.
Again, I think you’re missing the point. Annuities are not highly complex financial packages that need a greed-driven salesforce to be pushed through to the public; on the contrary, they are relatively simple financial products that meet a fundamental need. As such, I personally see your case for a future drop in the demand for them as being misconstrued.
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