Have you got your centralised retirement proposition?

If your client is approaching or enters into retirement, are they genuinely comfortable with the same investment solution they have been in throughout their accumulation period?

Do they understand the investment risk that comes with this? If they suffered a fall in the market just before drawing an income or once they start, do they understand the impact this would have?

Is this sustainable? Attitude to risk is still part of the consideration, but capacity for loss becomes the real driver.

And this leads me to the second strand of a Centralised Retirement Proposition – your process. 

Can you evidence the investment assumptions you have used

Can you demonstrate that you have built a robust and evidence-based income strategy? Can you demonstrate the client understands this?

Can you evidence the investment assumptions you have used, where these have come from and that they link in to the clients risk profile? Have you stress tested this solution?

I am not talking about the individual advice process here – this absolutely should be specific to each and every client and the solutions you advise should tie in with their specific aims and objectives. 

But if we consider the fact that we now have £9.48bn (ABI Q4 2018 stats) entering the advised drawdown market, up from £2.96bn in 2014, how has this affected your business?

Would you agree you have more clients than ever going into drawdown?

Directly as a result of this, have you seen an increase in the number of client reviews you are undertaking?

Five years ago most drawdown clients went into capped drawdown – someone else calculated the maximum income they could take. 

Someone else worked out if that income was sustainable. Now that sits with you.

Client reviews

So, you have more clients going into drawdown resulting in more reviews. The review process has changed significantly and the actual work involved has increased too.

It is therefore likely that you have already seen an increased time spent on reviews and as more clients go into drawdown, this will only become greater. 

If you consider two clients per month going into drawdown spending four hours on each review, you can see from the table below that five years from now you will be spending a lot more time on client reviews.

If you are in a position to take on more staff to deal with this – great. If not, what options do you have?

As a firm, you have a documented process that demonstrates regardless of who the client sees within the firm, they will receive the same service

Well one option is to streamline your processes and ensure you have the most efficient proposition possible.