Research by Wealthtime and Copia Capital reveals an increasing number of financial advisers are changing their retirement propositions following the FCA’s focus on retirement income advice.
A survey of financial advisers in January as part of Wealthtime and Copia’s Rethinking Retirement: Changing Gear?report before the publication of the thematic review, revealed that just 17% of respondents operated a CentralisedRetirement Proposition (CRP) separate from their Centralised Investment Proposition (CIP), while 80% used the same model portfolios for clients in accumulation and decumulation and 3% used bespoke portfolios for those transitioning through retirement. A follow-up poll during the companies’ Rethinking Retirement Roadshows last month, found that 29% of respondents now have a specific CRP and 7% use bespoke portfolios for those in retirement, while the number using the same CIP for clients accumulating and decumulating has dropped to 64%.
The research also revealed a significant change in the use of guaranteed investment products for clients in retirement. The January survey found that 56% used these products for at least some clients, but by October this had increased to 88%.
Tony Hicks, Head of Sales at Copia Capital, comments, “The impact of the FCA’s thematic review of retirement income advice continues to be felt as firms increasingly realise that their retirement propositions might not be as robust as they previously thought. Ensuring that they are meeting the regulator’s standards is particularly important given the Dear CEO letter to financial advisers last month which reinforced the FCA’s expectations for good practice and its ongoing focus on this area.
“Pension freedoms unlocked greater flexibility around retirement planning for many people, but in doing so, created more complexity in mitigating the specific risks faced in decumulation to deliver a sustainable income throughout retirement. It is encouraging that firms are continuing to review their advice processes to protect clients from foreseeable harm. Providers have an important role to play too, with further innovation around investment solutions and retirement functionality that meets the needs of those in decumulation and helps support good outcomes for clients.”
