Retirement Income: Planning for Profit Peter Cantrell

Agenda Annuities and your business Refining your advice process Creating profitable business Being proactive Just a reminder

Agenda Annuities and your business Refining your advice process Creating profitable business Being proactive Just a reminder

Annuities and your business Let’s face facts: Over 1 million people retire each year* By 2012 the Annuity market is predicted to be worth £20bn – an immediate and real opportunity** Potentially, £500m p.a. of retirement income is lost each year*** We have seen changes in the “Variable Annuity” sector Maximum income from USP impacted by changing gilt yields and fund values Annuities are the “peace of mind” option in volatile times Providing certainty where it is needed – and representing good value Source: * Mintel Report, Annuities and Retirement Income Solutions, 2007 ** DC World, July 2008 ***Just Retirement, based on ABI data Q4 2008

Male Aged 65 – Smoker, HBP & High Cholesterol Purchase Price Payment Frequency Annuitant's Annuity p.a. 40, Monthly3, % Yield Source: Just Retirement 30/04/09 Annuities – value for money

Annuities and your business What’s the catch? OMO usage below potential at 37%* Average pension funds static at £28,893* IFAs write on average less than one annuity per month** *Source: ABI ** Just Retirement

Annuities and your business *Source: Just Retirement ** Times Online March 2009

Annuities and your business *Source: Just Retirement ** Times Online March 2009

Annuities and your business Engage IFAs think that 23 cases per year makes this a creditable income stream* 75% find the TCF requirements easy to comply with* Simplified processes will help Refer 25% of IFAs want to refer smaller annuity cases* Half of those who would refer would choose another IFA* Service Fee? Ignore 29% of advisers have seen an increase in demand for annuities* Government focus on advice at retirement Clients are losing out by 500m p.a.* Fund values down 25%** *Source: Just Retirement ** Times Online March 2009

Agenda Annuities and your business Refining your advice process Creating profitable business Being proactive Just a reminder

Refining your advice process FactfindResearchIllustrationReport Application process

Refining your advice process Look for clues Three key questions Factfind “Everybody qualifies for an Enhanced Annuity unless you can prove otherwise.”

Refining your advice process Do you smoke? Are you taking prescription medication? Have you ever received hospital treatment for a medical condition? Three Key Questions “Everybody qualifies for an Enhanced Annuity unless you can prove otherwise.”

COPDCancerDiabetesObesity Heart Conditions High Cholesterol High Blood Pressure Asthma Liver Conditions Smoking Qualifying Conditions

Why those three questions are important +46% above standard rate +46% above standard rate Source: Just Retirement

Why those three questions are important +34% above standard rate +34% above standard rate Source: Just Retirement

Why those three questions are important +42% above standard rate +42% above standard rate Source: Just Retirement

Why those three questions are important +50% above standard rate +50% above standard rate Source: Just Retirement

Why those three questions are important +54% above standard rate +54% above standard rate Source: Just Retirement

Why those three questions are important +44% above standard rate +44% above standard rate Source: Just Retirement

Why those three questions are important +35% above standard rate +35% above standard rate Source: Just Retirement

Underwriting – things aren’t always as they seem! Just be aware of Alcohol ADLs Ex-smokers Post codes

Male 65, £40,000, Guaranteed 5, % + 41% + 23% Source: The Exchange & Just Retirement 30 April 2009 Worst Standard Rate Best Standard Rate Moderately Enhanced RateSeverely Enhanced Rate Maximising Income

Refining your advice process Medical Questionnaire Prescription Renewal Forms Test results and Consultant letters Call us first! Income needs Attitude to risk Factfind “Everybody qualifies for an Enhanced Annuity unless you can prove otherwise.”

Refining your advice process Portals Always quote AFTER the factfind Indicative or real figures? Research & Illustrations

Refining your advice process Common Quote Form or Providers’ own? Who to quote? How long should it take? Who should do it? Research & Illustrations

Refining your advice process Bankhall Suitability Letter Generator Help from providers? Report

Refining your advice process Submit a clean application “Reset the clock” Online or paper? Application Process

AEGON Aviva AXA Canada Life Friends Provident Just Retirement Legal & General LV= MGM Advantage Partnership Pearl Group Prudential Scottish Widows Skandia Standard Life Zurich Average Transfer time? 8 Days

Origo Options – what’s next? Increasing the number of providers using the service Extend the product range supported by the service Simplified age verification Removing the need for Discharge Forms Even faster transfer times FSA encouragement to sign up to Options

Agenda Annuities and your business Refining your advice process Creating profitable business Being proactive Just a reminder

Creating Profitable Annuity Business Fee or commission? Fees: Commission Flexible Commission 40% of your business could be on enhanced terms* – and that usually means enhanced commission too! *Source: Watson Wyatt

Agenda Annuities and your business Refining your advice process Creating profitable business Being proactive Just a reminder

Being proactive Looking after existing clients Target and talk to those approaching retirement Talk to your clients in USP, who are taking income: HMRC limits changed? Health changes? Exit strategy? Talk to your clients in USP who aren’t taking income: Do they now need to draw on fund? Fund value? Health changes?

Past Investment Performance Outlook Current Investment strategy Gilt Yields Income requirements Attitude to risk Changes in circumstances (health) Income Requirements Income Requirements Critical Yield Assess Risk Profile Assess Risk Profile Construct Investment Portfolio Construct Investment Portfolio Enhanced annuity rate? The USP Review Process

The USP Review Process – Critical Yield High OMO Rates increase Critical Yield Health affects Critical Yield Careful and regular monitoring is required whilst in USP

Being proactive Finding new clients Your own clients! Referrals – spouse, family, friends Other IFAs Professional Connections Target local government, charities, job centres

Being proactive – in the longer term

Secure income – and the correct benefits Annuitant Support additional need for cash and/or income Equity Release 1 in 2 women and 1 in 3 men will need some form of care Long Term Care

Being proactive Secure income – and the correct benefits Annuitant Support additional need for cash and/or income Equity Release 1 in 2 women and 1 in 3 men will need some form of care Long Term Care Just Retirement is the primary development sponsor of the Later Life Adviser Accreditation Scheme

Agenda Annuities and your business Refining your advice process Creating profitable business Being proactive Just a reminder

Just.... a reminder

Proactive Quote Management Chase ceding scheme Additional support for you Value Efficient Rapid illustrations Complete and pay by source Quick to pay income /your commission Phone, , fax or write to us Progressive Underwriting No medical examination Origo /Online Tracking/E- commission Flexible Commission

Handset Question I would like Just Retirement to switch me from paper based to e-commission statements 1Yes - please contact me to arrange this 2Maybe – please send me more information and a sample statement 3No thanks

Handset Question Would you prefer a single point of contact within Just Retirement throughout the application process? 1Yes 2No

Handset Question Would you prefer Just Retirement to provide updates throughout the application process directly to the client? 1Yes 2No 3Only if you sent copies to the IFA for information

Just – the difference matters

Our Annuity Advice Profitability Calculator Business Profile Number of cases written 12 Number £100, Number £50,000-£100, Number £25,000-£50, Number £15,000-£25, Number under £15, Sales ProcessHours Worked: TaskAdministratorIFA Requesting Illustrations 10 Retirement Options Report 10 Meeting Preparation 01 Client Meeting 01 Post Meeting Administration 0.50 Post Sale Meeting 01 Total Time (Hrs) 2.53 Cost per Hour (£) Cost per case (£)500 Standard Annuities 1% Income Generated (£) 5225 Total cost to company (£) 6000 Net Profit (£) % Enhanced & 3.25% Commission* Income Generated (£) Total cost to company (£) 6000 Net Profit (£) *Assumes 40% of commission is enhanced

Handset Question Would you like us to send you a copy of the Annuity Advice Profit Calculator 1Yes please 2No thanks

In summary Work out how to tap in to the £20bn opportunity – profitably! Review your processes Benefit from both at retirement and in retirement advice Clients in later life will become increasingly important Ask the experts for help and support Marketing Profit calculators Service