Julie Lord: “The FCA listened to us…”

by | Jun 5, 2018

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As the new DB rules make cashflow modelling effectively mandatory, speaking at the PFS Power Live conference today, Julie Lord, director of Prestwood Software, said: “It has taken four years of Prestwood warning about possible mis-sales but from 1 October, the FCA has made it effectively mandatory. This is a huge step in the right direction.  However, we would like to see mandatory cashflow modelling used for ALL financial planning, and at the very least, retirement planning.”

Prestwood explained that the primary focus of DB transfer advice should be whether it’s in the client’s best interest to transfer out of their pension scheme but this must take into account the client’s goals and objectives.

What’s more it said, many good, qualified planners are shying away from DB business because of the cost of PI insurance and potential future liability issues. Hopefully, the PI insurers will go further than categorizing the product as high risk and take into account the tools used to de-risk advising on this product area.


Lord added: “Cashflow modelling software, used well, helps the planner to go far beyond just critical yield.  It takes into account clients’ aspirations and allows them to see whether they will be “better off” in a holistic sense, rather than just being better/equally well off in relation to a specific financial transaction.

“Extremely complicated, technical language and rules can be easily understood using visual graphics.  In Prestwood’s Truth, all information is automatically recorded, errors immediately flagged, and assumptions tightly embedded and agreed with the client.  This should mean that clients, planners, PI insurers and the regulator are comfortable with taking advantage of the pension freedoms.”

Mandatory use of cashflow modelling to make the consequences of transferring out of DB pensions clear to consumers was first called for by Prestwood in 2014. Paul Etheridge, Chair of Prestwood Group, said then: “If an adviser is not using cash flow modelling I believe their clients are being short-changed – it is an essential tool for this day and age.”


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