Steven Cameron, Pensions Director at Aegon comments: “The FCA’s Retirement Income Advice report highlights just how important, but also complex, advice ‘at and in retirement’ is, emphasising the hugely important role of advisers. It’s very encouraging that the FCA points to many areas of good practice, with the overall tone much less critical than some recent Dear CEO letters. But as with any such review, the regulator identifies a range of areas where some firms could improve.
“All firms active in this important market will need to devote considerable time to reflect on the FCA findings. For many, this will endorse current approaches including changes made since the Consumer Duty came into force, which was after the survey was carried out. Improvements may have been made already to target markets, service design, communications and approaches to serving customers with vulnerabilities.
“One recurring theme, very much at the heart of the Consumer Duty, is that it’s not good enough to be delivering good outcomes – firms need to be able to evidence this in their client information gathering, advice files, due diligence records and management information.
“Ideally all those approaching retirement would receive holistic financial advice, tailored to their individual circumstances, objectives, investment risk profile and capacity for loss. Delivering this in all its complexity has huge value but clearly comes at a high cost, meaning only a minority will access it. The thematic review emphasises just how important the Advice Guidance Boundary Review is to ‘at and in retirement’ clients, and why all efforts should be made to deliver both targeted support and simplified advice in this market.”
Chris Hudson, Managing Director for Retail Intermediary at Standard Life, part of Phoenix Group said: “We know that income retirement needs are highly specific to each individual and their circumstances and lifestyle, with the decisions taken at retirement shaping long-term financial outcomes. Having access to the right advice and guidance is therefore just as vital as being in the right products to secure income needs at the various stages of retirement.
The FCA is right to highlight the value of guarantees and the importance of income certainty in retirement. We already know that 9 in 10 people are looking for income security in retirement – but they also want to hold on to an element of financial freedom and be able to access their pension savings flexibly. Today’s review provides an opportunity to assess whether the industry is currently striking the right balance and to ensure that the processes that inform advisers recommendations are creating the best outcomes for their clients.”
Stephen Lowe, director at the retirement specialist, Just Group: “Advisers will find today’s thematic review helpful in understanding how the FCA wants firms to modify their approach to meeting the needs of those clients who are focussed on the spending, or decumulation phase.
In a nutshell, clients who are ‘spenders’ need a different approach to those who are ‘savers’. But the devil is in the detail and adjustments to cashflow modelling and risk assessment are highlighted as important areas that need focus.
“Prior work published by the FCA on DB retirement advice improvements has, as expected, been drawn on as an important evidence base to inform the FCA’s new publication.”
FCA Retirement Income Advive Thematic Review
|
