APRA cites value of advice on longevity products
Not having access to appropriate advice has been identified by both of Australia’s financial services regulators as one of the significant impediments to longevity products gaining traction among retirees.
Both the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have told a parliamentary committee that the take-up of longevity product is being affected by a range of factors, including accessing advice.
ASIC said that consumers would need to understand their options with respect to longevity products and may need information and advice, while APRA went a good deal further listing access to advice as one of four factors impacting demand for longevity products.
It said supply and demand drivers, product design and pricing, as well as access to advice, were impacting the longevity products market.
“APRA has heard from stakeholders that absent material demand, the incentive for insurers to offer these products is limited,” APRA told the committee.
“Demand is driven by several factors, including but not limited to retirees:
- having a bequest motive;
- valuing flexibility and not wanting to ‘lock’ their retirement savings into longevity products;
- not appreciating the value of longevity products; and
- not having access to the appropriate advice and hence not aware or fully understanding longevity products.
APRA said the factors that contribute to the supply of products include:
- insurers focusing on other risk products where there is more demand;
- elements of the capital framework that may be constraining relative to overseas jurisdictions, resulting in unattractive pricing; and
- not part of the overall group strategy (noting most life insurers in Australia have an overseas parent).
How about make it simple to understand and actually some decent benefit.
Like the 50% Asset test exemption for 15yr or Lifetime Annuities.
APRA & ASIC have a wonderful way of not staying the most obvious issue.
Why is Canberra SOOOOOO DYSFUNCTIONAL ????
The morons are in charge now.
All very well for ASIC to point the finger at lack of access to advice, but ASIC’s biased persecution campagn against licensed financial advisers has been one of the primary drivers in advice becoming too complex and expensive for most consumers.