The FCA’s ongoing focus on retirement income advice has reinforced the importance of evidencing client needs. Sebastian Van Mook, Business Development Manager at Standard Life, explains why truly understanding a client’s spending needs remains central to good retirement planning.
When retirement planning is discussed, attention is often drawn to solutions.
Whether the conversation centres on drawdown, guaranteed income or annuities, much of the focus naturally falls on how a client’s retirement income will ultimately be delivered.
Yet before any recommendation can be made, advisers and paraplanners first need to consider something more fundamental – what does the client actually need?
We chatted to Sebastian, who said this starts with truly understanding expenditure.
“It’s the pillar that underpins all of your advice,” he says.
While the concept itself is hardly new, recent FCA activity has heightened the focus on the quality of fact-finding and the evidence firms hold to support retirement income recommendations.
This serves as a timely reminder of the important role that paraplanners play in ensuring client recommendations are supported by robust evidence.
Starting with the basics
Retirement planning can involve sophisticated cashflow modelling, tax planning and investment strategies. Yet all of those elements rely on understanding how much income a client will need and why.
Sebastian believes this is where good planning begins. Using an analogy familiar to anyone involved in financial planning, he compares the process to building a house.
“You don’t start building a house with a roof. You start with the foundations.”
Without a clear understanding of expenditure, it becomes difficult to assess how much income is required and whether a client’s retirement strategy should prioritise flexibility, certainty or a balance of the two.
The challenge is that expenditure conversations are rarely straightforward. Some clients arrive with detailed spreadsheets and carefully documented budgets. Others provide estimates based on memory or broad assumptions.
Both scenarios require advisers and paraplanners to explore the detail and ensure the information accurately reflects the client’s circumstances.
As Sebastian points out: “If you don’t know your customer, what they’re spending on their electric bill and their water bill and their food, we’re all different.”
Every client will have different priorities, spending habits and expectations for retirement. Understanding those differences is a crucial part of building a recommendation that reflects their individual circumstances.
Looking at expenditure is not simply about recording numbers in a fact find. It is about building an accurate picture of how a client lives today and what they will need their retirement income to support tomorrow.
The value of evidence
The FCA’s focus has not simply been on gathering information but also on evidencing the conversations that support advice recommendations.
This means demonstrating not only what information was collected but how it influenced the planning process.
“If you haven’t documented that right in your fact find, that says you haven’t had a thorough conversation,” says Sebastian.
He believes this can create important opportunities for paraplanners.
When reviewing a case, paraplanners are often the people best placed to spot where information is missing, where assumptions have crept in, or where further clarification would strengthen the eventual recommendation.
It’s not about questioning professional judgement. Rather, it is about ensuring the rationale behind a recommendation is clearly evidenced and understood.
Challenging assumptions constructively
One of the strengths of the paraplanning profession is the ability to approach a case with fresh eyes.
Because paraplanners are frequently removed from the client meeting itself, they can often identify gaps, assumptions or areas requiring further exploration before advice is finalised.
Sebastian says this role is becoming increasingly valuable. If expenditure information appears incomplete or unclear, the answer is not simply to work around it. Instead, it provides an opportunity for further discussion and clarification.
Importantly, this does not need to be confrontational. Many advisory relationships are built on years of trust and understanding. The goal is simply to ensure the fact find and supporting evidence accurately reflect the client’s current circumstances.
Keeping retirement planning client-led
Another important consideration is the temptation to focus too quickly on potential solutions.
Retirement planning has evolved significantly over the past decade, giving advisers access to a broader range of tools than ever before. While this is undoubtedly positive, it can sometimes mean product discussions begin before client objectives have been fully explored.
According to Sebastian, this is why the earlier fact-finding work is so important. Without a clear understanding of a client’s spending needs and objectives, retirement planning risks becoming theoretical rather than practical.
As he puts it: “Otherwise, it’s not real.”
Sebastian says the strongest retirement plans are those built from the client’s circumstances upwards.
Once expenditure needs, objectives and priorities are properly understood, the discussion can move naturally towards identifying the most suitable strategy.
A valuable reminder
Much of what has been discussed here will sound familiar to experienced paraplanners.
Strong fact-finding and a willingness to challenge assumptions have always been central to good financial planning.
However, as retirement planning becomes increasingly personalised and regulatory expectations continue to evolve, these fundamentals remain just as important as ever.
Before a recommendation can be made, there is one question that still needs answering – what does the client genuinely need their retirement income to achieve?
It sounds like a simple question, but as the FCA’s recent work highlights, it is one that deserves careful consideration. Get that conversation right and the recommendations that follow are far more likely to reflect what the client genuinely needs.
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