For professional advisers only

Amira Norris | Wealthtime, Head of Sales | 14 March 2024

This year marks my 30^th year in financial services (I started young!). As you’d expect I’ve seen the retirement planning space change markedly over the last three decades.

And we’re on the verge of entering a new phase – the most substantial since pension freedoms – where more of your clients will be in retirement than ever before. Alongside this, the FCA’s thematic review into retirement income advice, and ongoing factors like the decline in defined benefit schemes, will drive significant change. To keep up, I think there are three key services and products advisers should be ensuring their platform of choice can offer.

1. A modern approach to secure income

The last couple of years has been a bumper time for annuity rates. As interest rates have risen, the knock-on effect on gilts has driven annuities up dramatically. They’ve come down a little lately but the ballpark rate for a healthy 65-year-old (with no inflation linking and no guarantees) is still hovering around 7%.

What hasn’t helped traditional annuities in the post pension freedoms world is their inherent inflexibility. Many clients don’t want their income plans tied down forever. They want the ability to change how much they receive each year and utilise lump sums as and when they need them in later life.

This is what makes Just’s Secure Lifetime Income (SLI) such a timely product for retirement planning today. It provides a guaranteed income for life from a proportion of a client’s pension just like an annuity, however, the income is paid gross into the client’s drawdown account. Then it can either be taken as income or reinvested depending on what the client needs. Adding control and flexibility while keeping assets on platform and helping to make them significantly easier for you to manage.

When arranging an SLI, your client’s health and lifestyle details could affect the amount of income they receive. You can enter their details easily online. If their health and lifestyle information can’t be confirmed through medical reports, the plan may have to be cancelled.

Don’t forget, just like a traditional annuity, how long your client lives will dictate whether the income paid is more or less than the purchase price. Inflation may reduce the monthly income over time. Once an SLI has been set up, and the cancellation period has come to an end, your client won’t be able to receive a full refund. A cash in value is available for a set period but it will be less than the purchase price.

Find out more >

2. Full drawdown functionality

Whether your client needs to take income or is still focusing on growth or asset preservation, circumstances and plans can change at any time. It’s vital your platform can provide the full array of income and investment services that you need to effectively support your clients.

When taking income, any day payments should be seen as standard. Flexi-access drawdown and UFPLS should be ready for ad-hoc payments and lump sums. To help combat sequencing risk, you might want to utilise a With-Profits Smoothed Fund or a purpose-built Centralised Retirement Proposition (CRP) – more on that later…

When going for growth, you need a wide range of investment options and might want the choice of various DFMs to build the right portfolios for your clients. To make life easier, you’ll want a platform that offers the full suite of product wrappers like a Flexible ISA, GIA and Offshore Bond so you can manage everything under one roof. 

Speak to us about our award-winning drawdown service >

3. Fit for purpose Centralised Retirement Proposition (CRP)

We’re expecting plans that leave income-drawing clients in accumulation focused portfolios to come under scrutiny in the FCA’s thematic review. Advisers will have to review existing plans or find suitable alternatives.

At present, there’s a lack of decumulation focused Discretionary Fund Manager (DFM) portfolios on the market. And only one so far that offers a fully blended portfolio and guaranteed income solution…

Launched last year, Copia Capital’s Retirement Income (RI) portfolios are designed to provide a durable income for clients that can be tailored to their risk and decumulation requirements. Their strategic asset allocation is derived from long-term risk return characteristics to help address sequencing risk. Ideal for clients who need a purpose-built income portfolio that invests across multiple asset classes, locations, and sectors.

Retirement Income Plus (RI+) combines Just’s SLI product with a purpose-built decumulation portfolio. The low risk SLI element allows the RI+ portfolio to contain an increased exposure to equities and alternatives, reducing the fixed interest weighting. Giving it the opportunity to go for further growth with no increase in overall risk.

Find out more about Copia’s retirement portfolios >

As the publication of the FCA’s thematic review draws ever nearer, we’re getting ready to take our experts on the road again to discuss what it means for retirement planning. Take a look at the 17 dates and venues and book your spot at the one that suits you.

Register for our rethinking retirement roadshow >

Please remember that the value of investments and the income from them can fall as well as rise, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.