The Financial Conduct Authority’s retirement income review has prompted two thirds (66%) of advisers to change their processes.
Research carried out by financial services mutual Wesleyan found that since the City watchdog’s Thematic Review of Retirement Income Advice was published, 91% of advisers have reviewed their advice processes, with 66% making changes as a result.
The most common change was introducing or changing advice file record-keeping (64%), followed by introducing or changing client screening processes (60%). Just under half (45%) of advisers have altered the way they segment their clients to offer more suitable service.
Wesleyan said 27% of those surveyed who had not yet made changes plan to do so going forward.
Overall, nearly eight in ten (78%) advisers agree that the Thematic Review has increased the industry’s focus on providing better, more suitable retirement advice, the firm said.
Karen Blatchford, managing director of intermediary distribution at Wesleyan, said: “Advisers are being diligent and acting in line with the review’s principles to make sure they’re delivering the best possible outcomes for clients. Revisiting and improving processes will also support firms’ ongoing compliance with the Consumer Duty.”
Wesleyan’s research also found that 90% of advisers have helped clients who are at or nearing retirement adjust their asset allocation in response to the FCA’s findings, most notably increasing bonds allocation and decreasing equities allocation.
Blatchford added: “Alongside changing asset allocation, advisers have a real opportunity to use specialist funds to help further improve suitability. This includes smoothed funds, which use an actuarial mechanism to hold back some returns during periods of strong fund performance that are then re-distributed during periods of weaker performance.
“This supports clients who may benefit from greater exposure to markets but want to help moderate risk and reduce volatility.”
