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Centralised retirement proposition – a case of déjà vu?

3 September 2018

Why are we discussing the merits of CRP? The industry should just be moving forward with it, says Jamie Evans, business development, Seven Investment Management

Over the course of the last year, the trade press has been busy publishing a variety of stories on the burgeoning popularity of centralised retirement propositions (CRP). And…probably quite sadly…I have to admit that some dim and distant memories were stirred by that coverage.

A quick internet search later and I found a similar set of headlines, but that had originally been published about centralised investmentpropositions (CIP). At least they explained my sense of déjà vu.

It was actually just seven years ago (in 2011) that the CIP term was coined by the FCA (then the FSA) in its Retail Conduct Risk Outlook. By the beginning of 2018, as we told all those who attended the 7IM adviser roadshow, the langcat were flagging that now more than 90% of firms offer CIPs and some 84% of firms use them for over 80% of their new business flows (well at least those researched).

However, while the CIP debate has certainly had its day, the discussion as to whether to implement CRPs seems set to be following a parallel journey, which – I have to admit – has me scratching my head as to why.

We’re told that most of the industry accepts that CIPs are pretty much the only way to achieve a consistent and cost effective approach for clients to take up appropriate investment solutions, and one that is in line with the regulator’s thinking.

We’re also told that it’s already three years ago that Rory Percival (then at the FCA) expressed the view that the same recommendation in accumulation and decumulation, even for the same client in the same risk profile investment, may not be right.

Looking back at the langcat research, the reason most advisers gave for adoption of CIPs was because “we are advisers, not investment managers”. So why aren’t advisers jumping at the implementation of a CRP?

Part of the reason is that most solutions for retirement planning/ decumulation are very new and shiny – it’s only three years since pension freedoms provided advisers with what is essentially a new business opportunity. Another reason may be that there aren’t enough clients with defined contribution pensions. Meanwhile, having just spent the time to implement a CIP that ‘feels’ right for the adviser practice, there might not be enough mileage on the clock to really understand the benefits for your business.

So what are 7IM doing to promote their adoption? Obviously, we have launched our own retirement planning services designed to support advisers. And we launched our own SIPP. But we’re also offering some education and paraplanner support through at least two events coming soon. In these, we’ll be talking about our research into retirement income and decumulation propositions. In line with the “we are advisers, not investment managers” quote from earlier, we want to help extend your knowledge of estate planning and the various investment wrappers that we appreciate will be more useful given that clients who seek drawdown represent a much longer term relationship than clients opting for annuities. Dates so far include:

20 September      For paraplanners from London & the South East

4 October             For paraplanners from the South West

We’re also joining the Paraplanner Powwow on 13 September at Upper Aynho Grounds in Northamptonshire.

We hope that we can see you soon…

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