The number of advisers using a centralised retirement proposition has nearly doubled since the FCA’s thematic review of retirement income advice, a study by Wealthtime and Copia has found.
In January 2024, a survey of financial advisers revealed that 17% operated a CRP separate from their centralised investment proposition (CIP), while 80% used the same model portfolios for clients in accumulation and decumulation and 3% used bespoke portfolios for those transitioning through retirement.
However, a follow-up survey in October showed 29% of advisers now have a specific CRP and 7% use bespoke portfolios for those in retirement. The number of advisers using the same CIP for clients in accumulation and decumulation has dropped to 64%.
The results of the survey also revealed a significant change in the use of guaranteed investment products for clients in retirement. The January survey found that 56% used these products for at least some clients, but by October this had increased to 88%.
Tony Hicks, head of sales at Copia Capital, said: “The impact of the FCA’s thematic review of retirement income advice continues to be felt as firms increasingly realise that their retirement propositions might not be as robust as they previously thought. Ensuring that they are meeting the regulator’s standards is particularly important given the Dear CEO letter to financial advisers last month which reinforced the FCA’s expectations for good practice and its ongoing focus on this area.”
Hicks said that while pension freedoms unlocked greater flexibility around retirement planning for many people, it also created more complexity in reducing the specific risks faced in decumulation to deliver a sustainable income throughout retirement.
“It is encouraging that firms are continuing to review their advice processes to protect clients from foreseeable harm. Providers have an important role to play too, with further innovation around investment solutions and retirement functionality that meets the needs of those in decumulation and helps support good outcomes for clients,” Hicks added.
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