20 March 2024

For professional advisers only.

Following the FCA’s report on its thematic review of retirement income advice, Robert Vaudry, Head of Commercial at Wealthtime, comments:

“The FCA’s report highlights some poor practices in terms of the approach many advice firms are taking to retirement income. In several areas, firms are failing to take account of the different needs of customers in decumulation, as opposed to accumulation. And more work needs to be done to embed Consumer Duty best practice, as it warns that most firms would not comply with some of the requirements of the regulation without taking appropriate action to address concerns raised.

“The regulator’s comments about the sustainability of income withdrawal are particularly important given that people in retirement have few options to boost their income if they start to run out of money too soon. Firms need to consider different investment approaches for clients in decumulation to mitigate some of the specific risks faced, like sequencing and longevity risk and avoid providing unsuitable retirement advice that could result in significant financial harm. They also need to ensure their investment approach, whether using a Centralised Retirement Proposition, Centralised Investment Proposition or something else, is suitable for clients who are taking an income.”

“While there is clearly an onus on advisers to deliver appropriate advice to clients approaching and in-retirement, there is also a need for platforms and DFMs to offer functionality and propositions that support the different needs of those in decumulation. This includes flexibility and choice over tax wrappers and managing income, as well as innovative investment choices that deliver a sustainable long-term income, perform in different market conditions and continue to meet the client’s objectives and risk profile.”

Copia and Wealthtime, alongside speakers from the lang cat and Just, will be discussing the issues raised at a series of roadshows starting in April. See the Rethinking Retirement website for more information: