Developing your Centralised Retirement Proposition – the untapped potential of a growing market.

Are you ready for the retirement planning revolution? Get ready to shake up the financial planning landscape as we know it! Perhaps a little dramatic, but this is important, very important.

Now picture this, the FCA visits and asks you how you guarantee consistency of post-retirement advice. Can you dazzle them with a quick and robust demonstration?

A glimpse into the future of retirement planning

If you’re a financial advice business, you’re over 80% likely to have a Centralised Investment Proposition. Hats off to you for streamlining a core area of advice. No more worries about inconsistent investment decisions and all its headaches (not to mention the roadblocks on the growth of the business).

Chances are you’re reading this because you know the FCA are now hot on retirement income advice, and here’s the catch – 80% of firms with a CIP drops to around 50% of firms with its retirement equivalent – a Centralised Retirement Proposition. 

Of those with one already, there’s a risk that many are a CIP with a ‘retirement’ badge on. Cheeky? Maybe! But a Centralised Retirement Proposition is more than just a selection of suitable investment strategies, much more. 

“Don’t Need One, Thanks!”

“Why?”, we ask!

If your business is smaller, you may feel few advisers equals little variation in working practices and standardisation happens naturally. Or perhaps the regulator simply wouldn’t expect you to have a framework. 

The simple truth is that, when you drill down, there is always more variation than you think and that having a streamlined approach and proving you do are two different things. 

As a bigger fish, client needs may be thought far too diverse to be covered by a single process. No doubt, financial planning is best when tailored to the individual, but you can still achieve that while embedding consistency.

A Centralised Retirement Proposition truly is for everyone.

10 Steps to a Centralised Retirement Proposition

When sitting down with an advisory practice regarding their Centralised Retirement Proposition we ask:

1. 1. Who is it for? Which clients are in and out? Are you segmenting?
   2. The value proposition – what is it your client actually gets?
   3. How does this change based on the segmentation?
   4. Scope – what service elements do you draw together and in what order?
   5. How can you reflect your competitive advantages in your Centralised Retirement Proposition?
   6. What’s the retirement income advice proposition?  Specifically – the actual products and solutions in the armoury, and where are they used.
   7. What about workflow? Meetings, paraplanning, suitability and record keeping.
   8. How can you streamline delivery? The documents, tools, templates and resources required.
   9. Any thoughts on the implementation plan? How this proposition is going to be rolled out in practice, including test cases and subsequent iterations. 
   10. What is the review strategy? How will you monitor the effectiveness of the Centralised Retirement Proposition, its individual elements, and pivot if needed?

More than box-ticking 

While pre-retirement planning is a well-worn path, post-retirement planning has often been left behind.“Maximise your pension fund, retire and withdraw funds as and when required” – all too often that’s the long and short of it. Throw Consumer Duty into the mix, sprinkle on a Thematic Review of Retirement Income Advice, and this recipe requires more thought. 

With a set of fresh eyes, we work with our clients to facilitate building a Centralised Retirement Proposition. Discussions and research bring the pieces together, and commercial opportunities (intergenerational advice, for example), cost and efficiency savings (less time overservicing less complex clients), and growth plans (repeatability unlocks scalability) are unearthed.

This is when it starts to get serious!

Your value proposition

What does your client get? Or more to the point, what do they need and can you give them it? In simple terms, they need a viable long-term plan to fund their retirement, something which allows them to know exactly when they can say, “That’s done, I know when I’m retiring”.

This report will take into account a whole range of different issues such as:-

• • Current finances

• • Goals for the future

• • Income requirements in retirement

• • Holiday plans

• • Inheritance

• • Emergency reserves

• • Backup plans

• • Cash flow analysis

• • Lifestyle levels

The key to a viable Centralised Retirement Proposition is the ability to deliver a realistic, sustainable, long-term income strategy which adapts to changing circumstances. 

The future and the opportunity

The UK has an ageing population, with the number of people over 65 expected to increase from 11 million to 13 million over the next decade. Aside from the typical pre-retirement financial services opportunities, this opens a (rather large) door to millions of new customers looking for post-retirement income advice. Unfortunately, at the moment, this is a journey which few advisers in the UK are adequately set up to see through to the end.

Yes, capital is often falling, but an extension of a client relationship can increase the commercial opportunity. Client care always comes first but this is quite literally a whole new market opening up before us which is getting bigger and bigger. We can add value by mapping out the process, systems, resources and overall service, which will put you at the forefront of a growing market.

Retirement income advice

As mentioned above, the stereotypical retirement plan will focus on building assets before retirement, taking tax-free cash and going into drawdown. While there will be plenty of cash flow analysis prior to retirement, this tends to be lacking in a post-retirement environment. 

How long is a client’s retirement fund likely to last? Are client income requirements realistic? Are they aspirational, and can those aspirations become reality?

We work with many firms ranging from solo practitioners to advisory arms of solicitors and accountancy practices, drawing together the best pension providers and investment solutions, some of which use innovative approaches to produce income, to form part of their unique CRP. Finding a balance between income and capital preservation, taxation, and legacy planning requires in-depth market knowledge and extensive research. This is where we come in as your consultative partner. 

Resources

Like a car without petrol, a financial planner without the resources and the tools required is going nowhere fast. This is where our clients can relax; we collate the tools, templates, documents and extended resources needed to deliver a comprehensive Centralised Retirement Proposition. Our detailed process review goes beyond simple words and advice, delivering on the small details that can make or break your new retirement service.

Using industry leading simulation modelling you can stress test – and literally visualise – the best and worst-case scenarios. This lets you present realistic proposals to your clients, backed by cold hard facts and figures. They might need to swap that holiday home in Spain for a timeshare in Bognor Regis (no offence to those from Bognor Regis), although let’s hope it’s the other way round.

The implementation of new technology and resources is an ongoing process. However, structured correctly, it doesn’t need to cost you an arm and a leg.

Implementation

As we all know, the world of financial services is fast-moving. Just when you think it has stopped to take a breather, we are off and running again. Consequently, the rollout in practice may be a little different from that in theory.

Doing a soft rollout in the early days is advisable, undertaking test cases and introducing new iterations along the way. This means you will likely be able to sleep easier at night and (dare we say) enjoy the big launch when it comes. As we know, you don’t get a second chance to make a first impression in the business world!

The review strategy

As tempting as it may be to sit back, relax and pat yourself on the back after the big launch, there is still work to do. It is important to put a review strategy in place, effectively marking your own homework, to look at different factors such as:

• • Process

• • Advice quality

• • Outcomes

We can help and guide you on what to look for, tweaks to consider and any wholesale changes to make. For example, you may need to respond to the competition; perhaps you could add additional elements to the service (increasing revenue), thereby enhancing value to customers.

Over the last few years, we have seen significant regulatory changes, but this is just the start. Unfortunately, many firms are sleepwalking into this new era. The idea that the role of a planner is to hold the hand of customers only until retirement is history. 

We feel that, in time, establishing a Centralised Retirement Proposition will be an obligation, not an option. Proactive rather than reactive, forward-thinking rather than looking backwards, whatever we call it, businesses are under even greater scrutiny. Planting the seeds for retirement is not enough; you need to help nurture, cultivate and maintain these unique landscapes. 

We provide advice, guidance and practical actions from process audit to building the proposition, training to resources, implementation plans to strategic reviews and more. So book a call with us today, and let’s chat through your options.