Royal London, Aviva and AJ Bell have topped the list of the most recommended pension providers in Defaqto’s newly-released Pension Service Review.

The annual survey measures how satisfied financial advisers are with providers.

While Royal London and Aviva saw a reduction in support from advisers compared to the previous year, AJ Bell experienced an increase, moving it ahead of Quilter and Prudential in ranked position.

Over two years, AJ Bell has leapt from seventh to third spot, Defaqto said.

As well as the most recommended provider, Royal London also tops the list of preferred providers, holding the position for its third consecutive year. However, the gap to Aviva considerably narrowed this year, while Quilter ranked third.

The top 10 preferred providers, in order, were:

1. Royal London
2. Aviva
3. Quilter (Old Mutual Wealth)
4. AJ Bell
5. Fidelity Adviser Solutions
6. Prudential
7. Aegon Retirement Choices (ARC)
8. Transact
9. Canada Life
10. abrdn (for Wrap)

 Canada Life, Wealthtime and 7IM also made the list of preferred providers and saw the most significant increases in support from advisers, whilst Dentons Pensions Management featured in the list of preferred providers for the first time.

Richard Hulbert, insight consultant at Defaqto, said: “It’s interesting to observe those providers who have not been rated and/or who have experienced a decrease in popularity.

“With the FCA's Conduct of Business Sourcebook (COBS) ‘fair value’ and ‘value for money’ assessments in mind, a Defaqto rating based on hundreds of advisers’ experiences appears more valuable in 2023 than ever before.”

The report also revealed the types of pensions financial advisers have recommended in the last 12 months.

Personal pensions, drawdown and SIPPs remained the most popular while support for fixed-term annuities increased by 23%.

Richard Hulbert said: “Drawdown is no longer the all-dominating option it once was. The observed increase in the use of annuities is especially interesting because it precedes the ‘Truss mini-budget’ and the cost-of-living crisis starting to take hold.”

He said he expected to see their popularity of annuities increase further.

The survey also revealed a 58% increase in interest in small self-administered schemes (SSAS).

Mr Hulbert said: “That is somewhat of a surprise. This is because, arguably, none of the traditional big financial providers offer a SSAS.”

He put the growth down to a rise in advice solutions “that have truly put the client at the heart of the solution, which shows the Consumer Duty is having an impact on advice.”

Defaqto conducted the survey of financial advisers between August and September 2022.