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Consumers shop around more annuities

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People are ‘shopping around’ independent financial advisers (IFAs) in a bid to compare and secure the best annuity rates, according to research.

MGM Advantage found 4.5% of quotes produced each month are for customers using more than one IFA. This has increased from 2% at the beginning of 2012.

The annuity provider has said although this increase is small, they expect customers to increasingly take this approach.

Aston Goodey, distribution and marketing director at MGM Advantage said: “We were very surprised to find even this number of customers effectively window shopping around advisers looking to get the best annuity rate. It looks like this might be a growing trend – we know of one customer who approached six different advisers to try and secure the best rate.

Phillip Brown, head of retirement proposition at LV= agreed it is a growing trend, with 7% of LV= customers having used more than one IFA.

He said: “One of the FSA’s original outcomes for the Retail Distribution Review (RDR) was a more efficient advice market where people shopped around for the advice as well as the product. It’s interesting this is on the increase now. When people start advertising their propositions and people start advertising their fees and the service involved, you can see how that might drive [more] people to pick up multiple quotes post RDR.

“I don’t think it’s a bad thing, if you think about shopping around in anything; it’s not just about the product but where to source the product from. As a consumer it’s not unusual to get multiple prices for the same product. It’s just the next step on that people would get that with financial products as opposed to books and DVDs.”

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