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FT Adviser readers react to FCA's retirement advice review

FT Adviser readers react to FCA's retirement advice review
FT Adviser readers had a lot to say about the regulator's findings (Toby Melville/ Reuters)

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FT Adviser readers have been voicing their opinions on the findings of the FCA’s thematic review into retirement income advice. 

As part of the review, the regulator found some advice firms were not taking account of the needs of their clients and told them to improve their retirement income advice services.

It also warned advisers not to rely on cashflow modelling without stopping to consider whether it was accurate or not.

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In a Dear CEO letter, published alongside its thematic review on retirement income this morning (March 20), the regulator promised to carry out more supervisory work into the retirement income advice market to identify the scale of the issues.

It identified 231 firms which had charged for ongoing advice but not delivered it affecting more than 6,000 clients. 

Readers shared their thoughts and concerns with the FCA's recommendations following the review suggesting a collaborative approach between the regulator and advisers could be a better way of engaging with the sector.

On the FCA's findings 

graham.w26009
A more collaborative approach by the regulator would bear more fruit. Their attitude is threatening rather than nurturing. Punitive rather than educational.
They should get out more, meet advisers and take as well as dish out criticism. I am pretty sure that they know that but prefer to enjoy their undeserved authority in an increasingly obviously pathological, dysfunctional display.
alan.m15709
Given the number of advisors are declining and the average age is somewhere now near 59 and with many weighing up their own exit strategy, the FCA are not exactly helping with their threatening approach surrounding post retirement planning . All of this means there is going be many less people getting advice in the future if the advisors then left are put into a corner and continue to feel threatened?

On cashflow modelling 

chris.n37040
The FCA also needs to consider clients behaviour and attitude towards the future. I have a number of clients where when shown the likelyhood of running out of money during their lifetime, usually modelled to age 90, their attitude is often "I might be dead by then" and im more concerned with living today, behavioural finance is not factored into any of the FCA rhetoric.

Despite annuity rates being a lot better now the ten years or so of "poor" rates has embedded in many clients minds that annuities are "rubbish" and that is a very difficult hurdle to get over and the main driver i come across against annuities is people now expect, and want control of their pension savings following the introduction of pension freedoms.

As the former chancellor said "it's your money to do what you want with". I spend more time covering my backside in reports with ifs buts and maybe's and caveats regarding cash flow modelling than anything else!

Clients are capable of making informed decision but advisers we are driven down a rabbit hole of compliance and fear of future reglatory action and costs! It is not a helathy environment in which to work and does not help client outcomes!
graham.g33007
One thing I can guarantee for certain is cash flow modelling is not accurate and I reiterate this to my clients at every opportunity I can get. In 2015 who ever though the £12,570 nil rate tax band would be frozen until 2028. Who built that into the CFM in 2015 or 2016 or 2017 or 2018 or 2019 hats off to them if they did though.

On ongoing advice issues

allan.f47210
On going charges are not just solely for an annual review. Various other factors need to be considered. I refer to the regular and ad hoc contact available to clients throughout the year which involves providing 6 monthly valuations, dealing with death claims, periodic newsletter, arranging pension withdrawals, rebalancing funds, responding to queries at any time the client needs our assistance, responding to tax queries, I could go on and on!!
The FCA needs to acknowledge the fact that the majority of advisers have regular contact with their clients and deliver a valuable service. It would be nice to receive some complimentary remarks from the FCA on how well advisers conduct their business instead of generating more avenues for at times unjustified complaints.
richard.w70254
The FCA seem to be focusing solely on annual reviews, there are many other aspects of ongoing service. For us, all clients with ongoing service receive an annual newsletter, an annual budget report and video, ad hoc help or advice at any time -ad hoc valuation report when requested,, withdrawal advice (and we facilitate the withdrawal for them) fund switching, on average a client receives at least 1 email per quarter to update them on numbers of issues or changes, including contacting client if a fund(s) has altered its risk rating and then having to take appropriate action and of course the annual review every 12 or 6 months depending on type and size of portfolio. Why do the FCA not see the bigger picture ?

 

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