So the FCA will be keen to assess whether there is a risk of the ongoing service tail wagging the suitability dog.
It will also be likely to have an eye on whether this risk is greater within certain business models, such as consolidators and vertically integrated firms.
A side-helping of consumer duty
Finally, the FCA will be likely to use the thematic review to provide a litmus test for how advisers are implementing the consumer duty. This is because a company’s approach to retirement income advice will reveal how it is treating its customers in a number of key areas.
Companies should expect questions on how they have tailored their advisory services to meet the particular needs, objectives and characteristics of customers at and into retirement.
The design and delivery of ongoing services will also be key, given the important role ongoing advice plays in ensuring recommended solutions adapt to clients’ changing needs and circumstances.
This is an area the FCA has not looked at in detail before. So the review will probably probe key areas such as whether ongoing service recommendations are in line with client needs, whether ongoing service charges represent fair value, whether services are delivered as promised, and whether services deliver good client outcomes.
What companies can do to prepare for the FCA review
Advice to help clients meet their income needs in retirement is an area where advisers can really demonstrate their value.
This is a complex area where good advice has the potential to help clients prioritise the things that matter and use the assets they have in the best way possible to meet their needs.
But this is reliant on companies ensuring their approach to retirement advice is designed, delivered and monitored effectively.
Highlighted below are some of the insights Bovill has shared with its clients in this area.
Be clear on the types of customer your advisory service is right (and wrong) for: it is important companies have a clear view on the kinds of customers their retirement-focused advisory proposition is and is not appropriate for. This should include how factors such as the scope of your advice, your charges, your investment solution, and any ongoing services impact different groups of customers. If services work really well for certain types of customer but not for others, then companies need to ensure they have an effective triage process in place.
Document the rationale for the range of products and services you recommend from: companies should be able to demonstrate how the selection of the platform, wrapper, product and investment solutions they choose from has been based upon the needs and objectives of their retirement income clients.
