PensionsSep 3 2019

Have you got your centralised retirement proposition?

  • Identify the differences between Centralised Retirement Proposition and Centralised Investment Proposition
  • Describe what ability to bear loss means
  • Describe some of the risks you have to take account of with centralised retirement propositions
  • Identify the differences between Centralised Retirement Proposition and Centralised Investment Proposition
  • Describe what ability to bear loss means
  • Describe some of the risks you have to take account of with centralised retirement propositions
pfs-logo
cisi-logo
CPD
Approx.30min
pfs-logo
cisi-logo
CPD
Approx.30min
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
pfs-logo
cisi-logo
CPD
Approx.30min
Have you got your centralised retirement proposition?

A centralised retirement proposition is one way to do this – 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 and you have a range of investment options within this to reflect the specific needs of clients drawing an income. 

Similar to a CIP it should not be one size fits all. You have different clients with different requirements and if you have not carried out a segmentation exercise post-RDR it is perhaps worth considering now.

An argument for this could be that if you have two clients at the same age with similar objectives but vastly different wealth, should the advice process for the client with less wealth really be different to the wealthier client?

Yes, the solution might be different but if they are drawing income from a pension and/or other assets surely the same things need to be assessed. 

A secondary argument for this comes in the form of the Product Intervention and Product Governance Sourcebook (PROD) which was introduced with MiFID II last January.

Segmenting

I could write a whole other article on the requirements within PROD but one element focuses on target market.  Essentially both advisers and providers need to identify their target market and recognise that they each have different aims, needs and objectives.

You then need to demonstrate that you have different products and solutions to fit these.

Yes, I have completely over simplified this – and I would strongly suggest if you are not familiar with the requirements to spend some time doing this. But, the point is – if you need to identify your target market the simplest way to do this is probably to segment your client bank. 

How you segment your client bank is really down to you, however some common approaches we have encountered consider:

  • Client stage in life journey
  • Their objectives
  • Their experience
  • How complex their needs are
  • Overall wealth

When it comes to integrating this with a Centralised Retirement Proposition, it is likely you will need more than one solution or a combination.

You could have two clients at the same age with the same size of assets in their pension.

At first glance their needs are the same or similar – but if you add a second layer you might soon identify that one has only their pension to rely on and the other has other wealth and assets therefore does not need or want to touch their pension.

PAGE 3 OF 4