Retirement CPD course  

Should you have a centralised retirement proposition?

This article is part of
Guide to pensions advice

“The main drawback appears to be that advisers find them too limiting,” says Alasdair Wilson, investments techspert at The Verve Group. “But I believe this is just a misunderstanding that every client has to go via the CRP process, which isn’t true at all.

“In the same way as a CIP, you cannot cover every eventuality regarding client goals and needs; this kind of documentation is just to cover the client segments, which can feature some degree of repeatability in terms of processes.

“There could also be some suggestion that clients could be shoehorned into solutions that aren’t ultimately suitable; however, a well-constructed proposition should leave allowances for where the solutions in the CRP aren’t ultimately suitable for the end client.”

The case for CRPs

Having a framework that enables companies to deliver robust retirement advice consistently and at scale is essential, says Justin Blower, director of sales at M&G Wealth Platform.

“In the heavily regulated world of financial planning, treating customers ‘fairly’ is synonymous with treating them ‘consistently’. Using a framework also helps to demonstrate your process to the regulator as well as your clients,” Blower adds.

“[Our research] found that as well as enabling firms to deliver retirement advice more efficiently and consistently, it also helped improve how advisers articulate the retirement proposition to clients and therefore support client acquisition and retention.”

Blower also says that while a CIP focuses on suitability and investment selection, a CRP encompasses many more aspects of the planning process, including cash flow modelling, withdrawal strategy and longevity assessment.

“The CRP is arguably a more nuanced and multi-layered beast, and the time you take to develop it must reflect that. You shouldn’t expect your CRP to work perfectly from the off.

“Refining tools, questionnaires and investment choices may require practical experience to get right. Training may be required to get advisers up to speed on each element too.”

Duggan at Bordier agrees that a CRP is much more complex than a CIP.

“The approach to the investment strategy may have to change considerably, as in our view decumulation is not performance-linked but volatility-linked and much more about a steady/safer journey of travel.”

Holt says: "A CRP shares the same values and objectives as a CIP, but deals with more complex decisions and a different set of risk as clients move from building wealth to generating sustainable retirement income.

"This means that firms will need to think more broadly about the components of a CRP, beyond investment strategies. This isn’t difficult, but additional things to consider include how to:

  • carry out retirement fact-finds to understand needs and objectives;
  •  identify and assess the risks in retirement,
  • assess a client’s capacity for loss once they start to spend their savings and (typically) have a high degree of dependency on them, evaluate the range of withdrawal options available and select those which will meet client needs and mitigate risks;
  • where drawdown is being used, select suitable investment strategies to match client needs within their risk profile and ability to bear loss."

And Chris Jones, proposition director at Dynamic Planner, says it is not just about a fund or model portfolio.