Here we go again. The FCA is consulting on new measures to stop consumers losing on pension incomes when they access their pension freedoms

Financial Advisory

Charlie Martin

DrawdownFCAFinancial adviserFinancial AdvisoryFinancial servicesPensionPensions freedomsWinning Advisers


  • The Retirement Outcomes Review found that full encashment is the most popular option among consumers
  • The vast majority of fully withdrawn pots (88%) continue to be relatively small (under£30k). As before, around 30% of drawdown sales are non-advised
  • There is improved client engagement approaching retirement
  • Where values are low e.g. below 50k, advisers are considering referring clients to non-advised solutions
  • Easier, less expensive non-advised journeys could lead to reduced demand for advice
  • Firms and advisers are exploring and, in some cases, developing CRP (centralised retirement proposition) to support Pensions Freedom changes and create an In-Retirement proposition

Key Issues and Challenges:

  • Some firms are reviewing processes to be more pro-active in client engagement pre-retirement
  • Greater use of data and digital services
  • Reduced tendency to take cash – perception that clients will still want to access UCLS
  • Pathways will provide default options but clients will still require/seek guidance and advice
  • Changes to demand for advice will create a commercial dilemma for firms and advisers. Cost of servicing low value clients will still exist
  • Priority will be to establish value services in drawdown e.g. cash flow modelling in de-accumulation, longevity reviews

Conclusion and Solutions:

  • In-house advice not perceived to be a big threat to advisers. Feedback suggests that firms and advisers will retain loyal clients
  • Increased scrutiny on charges will influence clients to review non-advised solutions and determine value v costs
  • Customer definitions may cause confusion with firms, advisers and clients. Seek clarity in consultation
  • Clients will be challenged with understanding two processes and where responsibility and liability for poor outcome sits
  • Overall effectiveness of ROR proposals – too early to say and understand some of the impacts
  • Consumers be more inclined to investigate non-advised as an option but recognise value of advice

Richard Parkin, Richard Parking Consulting - Richard Parkin, Richard Parking Consulting

Dave Edwards, Independent - Dave Edwards, Independent