De-risking retirement income planning advice



    The standards expected by the FCA are different depending on whether you are an independent or restricted adviser.

    The FCA ‘Standard for independent advice’ states that to qualify as independent advice, the personal recommendation must be “based on a comprehensive and fair analysis of the relevant market” and be “unbiased and unrestricted”.

    Rather than analyse the meaning of this in detail, if we consider the regulatory guidance used to be ‘whole of market’ the emphasis of the standard becomes a little clearer.

    My personal view is that the standard is still whole of market; however, if you inadvertently miss out one or two solutions at a practical level the rules appear to allow for this. If you consistently exclude a notable number of options without a reasonable rationale for doing so, I suspect this maybe an issue.

    Research tools

    Research tools have become increasingly important to advisers. As an independent research house working in this complex market we can see just how demand has increased in recent times.

    It is essential for advisers to carry out due diligence of their research tools; questions to ask often can include:

    • Who owns the research tool?

    • How financially strong is the company behind the tool?

    • How comprehensive is the tool’s coverage of the relevant subject areas, is it bias or restricted in any way?

    • Who is paying for the data and research, and why?

    • How up to date is the data, and how has it been independently validated?

    • Who constructed the search options available, and how impartial are they?

    • Is the presentation of results impartial?

    When considering research tools with the FCA standard for independent advice in mind, what does a comprehensive and fair analysis of the relevant market that is unbiased and unrestricted start with?

    At a product level one presumes an analysis of how the different tax wrappers and investment vehicles would meet the client’s needs would be appropriate. When looking at pensions, for example, which should be used out of stakeholder, personal pensions, Sipps and Ssas? Rationales for excluding and including should be recorded.


    For many in retirement it is appropriate to consider using different income sources to meet different income needs. It is therefore unlikely to be sufficient to list a single balance and produce net income to achieve it.

    Advisers may find it useful to identify the following income levels and segment their advice around them:

    CoreBasic income needed to maintain a home and provide a reasonable standard of living
    LifestyleIncome needed to maintain a desired standard of living
    ExcessIncome that isn’t being spent and is usually reinvested

    For example, the ‘core’ income requirement could be met through lower risk income sources such as state benefits and an annuity, while the ‘lifestyle’ income need through a drawdown strategy involving a mixture of a guaranteed income solution and a managed equity portfolio.


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. What is the potential conflict of interest cited in relation to percentage charging structures?

    2. Which of the following is not listed as a requirement in the fact finding and needs analysis assessment advisers should underake?

    3. And which of these will often ‘trump’ the others?

    4. Which product is listed in the table is at the top of the investment risk chart?

    5. And which was top in terms of access?

    6. How were many drawdown products initially designed?

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