- Deferring the introduction of investment pathways, now expected to come in from February 2021
- Deferring the policy statement in respect of contingent charging for DB transfers to Q2 or Q3
- Rules around pension transfer qualifications have been pushed back to October 2021.
It is important to remember that the suitability review 2020 focusing on retirement income may be deferred because of the current situation, it has not gone away.
The FCA confirmed in its 2020/21 business plan when commenting on consumer investment decisions: “At present we see significant risk of harm in these markets, in part driven by the way consumers have been given additional responsibility for complex investment decisions, through the shift to Defined Contribution (DC) pensions and the Government’s 2015 pension freedoms”.
Clients, particularly those in drawdown who are relying on their fund to provide them with a long-term income, are likely to be concerned at this time.
It is at times like these that the value of solid professional financial advice really shines.
According to the ABI document mentioned above, over half of pension pots were accessed with advice being given, which at least gives these clients the opportunity to discuss their circumstances with a professional and amend any plans where necessary.
Calming clients' nerves
Advisers will need to look at the current situation from two angles – helping to calm the nerves and fears of their clients and then getting into the practicalities of what can be done.
So what can advisers do to try and calm nerves of their drawdown clients?
It’s important to reassure all clients, not just those in drawdown, that you are there for them and that your ‘virtual’ door is always open. It would be prudent to let clients know what your business plan is in the short term.
A few of the basic but valuable thoughts advisers have shared with me on ways to do this:
- Keep regularly updating your website
- Use newsletters
- Use videos and video conferencing
- Use social media
- Give special consideration to vulnerable clients – what needs differentiate them and how do you deal with this?
- Make sure clients know how to contact you if they need to
If you have clients you know are likely to be nervous, consider bringing forward their reviews. Proactive contact from their adviser is likely to be welcomed and very reassuring. Also if action is necessary it may very well help to take that action sooner rather than later.
Ascertain how clients are feeling – I have heard various client sentiments spanning from ‘I need to move everything to cash’ to ‘I want to go all in and benefit from the market recovery’.
