Headlines:
- The Retirement Outcomes Review found that full encashment is the most popular option among consumers
- The vast majority of fully withdrawn pots (88%) continue to be relatively small (under£30k). As before, around 30% of drawdown sales are non-advised
- There is improved client engagement approaching retirement
- Where values are low e.g. below 50k, advisers are considering referring clients to non-advised solutions
- Easier, less expensive non-advised journeys could lead to reduced demand for advice
- Firms and advisers are exploring and, in some cases, developing CRP (centralised retirement proposition) to support Pensions Freedom changes and create an In-Retirement proposition
Key Issues and Challenges:
- Some firms are reviewing processes to be more pro-active in client engagement pre-retirement
- Greater use of data and digital services
- Reduced tendency to take cash – perception that clients will still want to access UCLS
- Pathways will provide default options but clients will still require/seek guidance and advice
- Changes to demand for advice will create a commercial dilemma for firms and advisers. Cost of servicing low value clients will still exist
- Priority will be to establish value services in drawdown e.g. cash flow modelling in de-accumulation, longevity reviews
Conclusion and Solutions:
- In-house advice not perceived to be a big threat to advisers. Feedback suggests that firms and advisers will retain loyal clients
- Increased scrutiny on charges will influence clients to review non-advised solutions and determine value v costs
- Customer definitions may cause confusion with firms, advisers and clients. Seek clarity in consultation
- Clients will be challenged with understanding two processes and where responsibility and liability for poor outcome sits
- Overall effectiveness of ROR proposals – too early to say and understand some of the impacts
- Consumers be more inclined to investigate non-advised as an option but recognise value of advice
Experts:
Richard Parkin, Richard Parking Consulting - Richard Parkin, Richard Parking Consulting
Facilitator:
Dave Edwards, Independent - Dave Edwards, Independent
