Shirley Owen, Advice Quality Manager, Simplybiz

After years in the wilderness, annuities are once again playing a meaningful role in retirement planning. Higher interest rates have strengthened pricing, bringing this option back into sharper focus for advisers and their clients. Guaranteed income, previously viewed as inflexible or poor value, is increasingly being considered a practical way to secure essential expenditure and better financial certainty in retirement.

This renewed focus comes alongside heightened regulatory scrutiny. The FCA’ s Consumer Duty and its ongoing work on retirement income advice have raised expectations around product research, suitability and client understanding. Advisers are required to evidence why a particular retirement strategy is suitable, clearly linking this to a client’ s circumstances, needs and objectives.

While market conditions have improved, recent file checks show that advice quality is not always keeping pace. As annuities move back into focus, the scrutiny applied to annuity advice is likely to intensify.

For many clients, annuities now deliver materially higher starting incomes, allowing advisers to secure core expenditure without exposing clients to market volatility.

Enhanced annuities can offer substantial uplifts where health and lifestyle factors are properly explored. When executed well, annuity advice can materially improve client outcomes.

To evidence advice quality, advisers must now demonstrate, clearly and consistently, why the recommended solution is suitable, how alternatives have been considered, and how the advice delivers good outcomes both at the point of retirement and throughout later life. In this context, annuity advice should not always be considered simple or lower risk. The assumption that a guaranteed product automatically equates to suitable advice will not always be correct.

Good quality annuity files tend to have one thing in common: robust fact‐finding, with advisers taking time to understand the client’ s income needs in detail. Essential, lifestyle and discretionary expenditure is clearly identified, allowing the adviser to explain exactly why a certain level of guaranteed income is required and what risks would arise if that income were not secure.

Good files also demonstrate a far more rigorous approach to health and lifestyle disclosures. Advisers who rely on closed or generic questions continue to miss enhanced annuity opportunities, sometimes at the expense of materially better income for the client. In contrast, advisers who gather detailed medical histories, medication information and lifestyle factors can clearly evidence why an enhanced annuity was, or was not, appropriate, and how the final recommendation places the client in an informed position.

Strong files clearly show how the adviser has surveyed the market, compared providers, and selected a solution based on evidence rather than familiarity.

One area of weakness that continues to surface is around capacity for loss. A persistent misconception remains that

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