At We Complement, we’ve been delving deep into the elements that constitute an exceptional Centralised Retirement Proposition (CRP). A CRP is more than merely a Centralised Investment Proposition (CIP) modified slightly for retirees. It should offer a reliable, repeatable, and consistent procedure for managing clients in the decumulation phase, with an emphasis on financial planning aspects that are particularly crucial at this life stage. This article aims to highlight areas to contemplate while devising an appropriate and sustainable withdrawal strategy for your clients. This article is not intended to be an exhaustive checklist of what a CRP should include, nor does it favour one strategy over another. Instead, it aims to stimulate thoughtful discourse and consideration. We hope it offers some valuable insights!

How do you determine the sustainable withdrawal rate for your clients?

Clients typically rely on their pensions to sustain them throughout their remaining years, necessitating guidance to discern the ideal withdrawal amount to ensure their pension does not deplete prematurely. The calculation of this figure is a challenging process, not necessarily an exact science, underlining the importance of documenting your methodologies and the reasoning behind them. Having this documentation can provide a solid defence should a client question or challenge your conclusions in the future, demonstrating the how and why of your calculations. What considerations factor into your sustainable withdrawal rate? Do you adhere to the often referenced 4% sustainable withdrawal rate proposed by William Bengen, or do you modify this percentage for UK investors? How do fees impact the sustainable withdrawal rate? Do you consider that the sustainable withdrawal rate might change for portfolios with different asset allocations? Do you apply a uniform sustainable withdrawal rate to all clients? What research and evidence support your approach? Determining a suitable withdrawal strategy is a significant aspect of assisting your clients with retirement planning. Your CRP is the perfect place to justify your thought process.

How much are you allocating to cash?

As discussed in last week’s newsletter: CRP Deep Dives: Decumulation Risks, sequencing risk can significantly influence the longevity of a pension pot. To mitigate this risk, some advisers adopt a bucket strategy or maintain a certain amount of cash ready for withdrawals. Some advisers avoid this approach and don’t place any more importance on cash than they would for an accumulation client.

Both approaches have their merits and can be backed by compelling arguments. The critical factor is to clarify your methodology and substantiate the reasoning behind it. This clarification promotes a consistent procedure across the firm and among clients, ensuring that your advice is robust, well-founded, and evidence-based.

What if things don’t go to plan?

The unpredictability of the future plays a significant role in making retirement planning a challenging task. Unforeseen events such as market downturns or significant life changes can disrupt even the most meticulously crafted plans, underscoring the need to prepare for the unexpected. What measures do you implement to counteract unexpected occurrences? Do you frequently engage in discussions about contingency plans with your clients? If so, at what stage do you determine that it’s necessary to resort to these contingency plans?

What probability of failure are you comfortable with?

Choosing a sustainable withdrawal rate often requires balancing a higher income against the risk of depleting the portfolio. Some clients might favour the potential of a higher income, despite the risk of it running out, as opposed to the certainty of a lower, but enduring income. Your CRP could be an opportunity to document the level of uncertainty you are typically willing to tolerate when deciding on a sustainable withdrawal rate, the reasoning behind that tolerance, and how you approach this compromise with clients.

Assumptions about longevity

Predicted longevity is a crucial factor in determining the sustainable withdrawal rate, and your methods for estimating probable longevity can be documented in a Centralised Retirement Proposition (CRP). Do you use a standard life expectancy for all clients? Do you rely on longevity data from authoritative sources like the Office for National Statistics? When advising a couple, do you factor in the likelihood of at least one partner reaching a specific age, or do you evaluate their life expectancies independently? Your CRP is the optimal platform to outline the assumptions you make regarding longevity and the process by which you arrive at these assumptions.

Establishing a resilient CRP requires recognising and mitigating risks to assure clients of a secure and sustainable retirement income. It’s crucial to craft strategies that resonate with clients’ risk tolerance, objectives, and personal circumstances. Although CRPs may not be heavily regulated, integrating these risk considerations can significantly enhance the quality and efficacy of your retirement planning services.  If you’re contemplating a review or implementation of your CRP, consider enlisting the expertise of our seasoned professionals. We specialise in constructing bespoke CRPs, finely tuned to meet your clients’ distinctive needs. Get in touch with us either online or by dialing 01472 728 030. We’re at your service, ready to deliver top-notch due diligence and investment research services.

Yes, keeping in touch with your clients regularly is a great thing to do, however, as you will no doubt know, the Financial Conduct Authority (FCA) also requires advisers who supply investment advice to do annual planning reviews in a formal way. Specifically, you should “agree with a client whether a periodic assessment of suitability will be performed. If periodic assessment is to be performed it must be at least annually and the continued suitability confirmed in writing”.

These annual planning reviews- which we can help with, are a valuable opportunity to have a really in-depth check-in with your client – and the best ones focus on the person, as well as the products.

So, while it is possible to include everything on one page, at We Complement we believe APRs should become a document of your client’s annual financial planning journey – not just a snapshot.

For example, while you need to include details of all current investments, their performance, and any recommendations you would make, a good APR will also appraise your customer’s circumstances – what are they investing for, how they are planning on making it work and any worries they may have.

Clearly, this is considerably more time consuming for an IFA – which is where the We Complement team come in.

We will work with you to develop a document which is personal to each client, while also ensuring it truly represents your brand. We will undertake all necessary research to emphasise the value you have provided during the previous 12 months – and how you will continue to do so in the future.

We can also access all the necessary information on your system, such as products, planning and risk profile, and add these to the APR document, giving an overall review that provides a truly detailed view of your client’s financial year.

We Complement believes that your annual planning reviews are a great opportunity to engage fully with the financial planning needs of your clients. Sending a one page summary just seems to be such a wasted opportunity not to take the chance to engage positively with them.

Once we have all the details we need, we go ahead and prepare the review, and typically produce reports in five to seven working days.

For more information about our annual review offering and complementary offerings, and how they can benefit you and your clients, please get in touch.

The We Complement Research & Due Diligence Service includes a comprehensive collection of documents which are more than just a centralised investment proposition. Our documents delve deep into the governance structure of financial planning firms. Leaving behind a trail of unique ‘fingerprints’ that distinctly represent each firm’s ethos. 

Navigating the Landscape 

At the core of our service is the meticulous examination of critical elements, including a firm’s central investment policy and proposition (CIP), central retirement proposition (CRP), target client market/segments, and the platforms and portfolios in use. While the starting point generally is consistent, the finished documents reflect the unmistakable identity of each firm. 

Embracing the Accord Initiative 

We have integrated the Accord Initiative into our research, enhancing the ability of advice firms to demonstrate suitable and compliant advice. In particular, our approach aligns seamlessly with Consumer Duty, Product Governance (PROD), COBS, Sustainable Disclosure Requirements (SDR), and sustainable investment labels. 

Consumer Duty and PROD: A Commitment to Excellence 

Consumer Duty lies at the heart of our service, ensuring financial planning firms act to deliver good outcomes for their retail customers. Subsequently, we meticulously address the four main consumer duty outcomes. Emphasising products and services, price and value, consumer understanding, and consumer support. Our commitment extends to acting in good faith, avoiding harm, and enabling customers to pursue their financial objectives. 

Furthermore, if we delve deeper into our approach, adhering to FCA FG 22/5 6.80. This involves addressing granular aspects, including target market specificity, product design, vulnerability considerations, distribution strategies, and ongoing monitoring. Evidently, our commitment ensures optimal consumer outcomes. 

PROD 3: An Unavoidable Chapter 

Despite being often overlooked, Chapter PROD 3 of the FCA Handbook remains a focal point for us. We meticulously cover key rules relevant to both distributors (advisers) and manufacturers (providers), ensuring there is no room for ambiguity in compliance. 

Investment Policy: A Collaborative Approach 

Teaming up with the firm’s ‘Consumer Duty Champion,’ we provide comprehensive research and due diligence support to crystallise the firm’s unique investment policy. This includes clarity on investment and platform selection, ESG considerations, passive/active stance, and decisions on outsourcing or in-house investment management. 

Client Segmentation: Unveiling Unique Fingerprints 

While not explicitly mandated by Consumer Duty or Product Governance rules, our service empowers firms to segment their customers effectively. Through a straightforward framework within the centralised investment proposition, we enable firms to identify and evidence their target market at a granular level. This means considering characteristics, risk profile, complexity, and product or service nature. 

Value for Money: Beyond the Bottom Line 

Value for money assessments, a crucial outcome of Consumer Duty, is seamlessly integrated into our process. We go beyond the mere evaluation of costs. Considering the nature of products or services, associated limitations, and the expected total charge over the client-firm relationship. Our tailored framework ensures a transparent demonstration of fair value. 

Addressing Vulnerability: A Caring Commitment 

Consumer Duty mandates additional responsibilities regarding vulnerable customers, and we rise to the occasion. Rule 2A.3.16 underscores the need to consider and document the understanding of vulnerable customers. Therefore, our service ensures that product selection aligns with the needs of customers facing health conditions, major life events, low financial resilience, or limited financial knowledge. 

Research Process and Evidence: A Foundation of Trust 

We Complement’s commitment to clarity extends to the research process itself. Moreover, our research is backed by independent tools from industry leaders such as Langcat, FE Analytics, and Synaptic. The documentation produced stands on a solid foundation of evidence. 

To summarise, in a landscape where precision and compliance are non-negotiable, the We Complement Research & Due Diligence Service stands as an invaluable partner. Let us unravel the complexities of your centralised investment propositions and leaving behind a trail of unmistakable fingerprints that showcase each firm’s commitment to excellence and client-centric practices. 

Our team has over 50 years of combined financial planning experience, with a big portion of that spent on research and report writing. In that time, we’ve picked up lots of tips and tricks on how to make the research and report writing process easier and more efficient, and this article will share some of our advice.

1.       Work Smart, Not Hard

One of the great things about working in financial planning is that the learning never stops. Even if you somehow think you know everything there is to know, you can guarantee that there’s a change in legislature waiting around the corner to bring you back down to earth. While this keeps things interesting, staying on top of changes can sometimes seem never-ending, and knowledge relating to some areas of financial planning can grow fuzzy over time without the chance to put it into practice.

With this in mind, a key aim for those working in financial planning should not be just gathering technical knowledge (though of course that’s important too), but also knowing where to look when you need a nudge in the right direction.

Fortunately, there’s a whole range of helpful material online. I recommend creating a catalogue of this information so that you can easily return to it in future. To get you started, here are some of my favourite and most used tools and pages:

– Quilter’s Tools: in particular, the Tapered Annual Allowance Calculator, Carry Forward Calculator, Chargeable Event Gains Income Tax Calculator and Scheme Specific Tax-Free Cash Calculator.

– Pru’s Tools: in particular the Tax Wrapper Comparison Tool, Bond Gain Tool, Emergency Tax Tool and Salary Sacrifice Calculator.

– Scottish Widows’ Tools

–  Royal London Technical Centre

– Quilter’s guidance on bonds

– Pru’s Technical Content

–  abrdn Techzone

Have I missed anything? Please share with us your favourite technical content or tools.

2.       Initial File Reviews

Spending a little bit of time doing a thorough review of any new case before you really get to work can save a lot of time in the long run.

It’s key to make sure you have all the information you’re going to need to complete the case and gives you the opportunity to spot any potential problems that might rear their heads later on. It’s much better to identify a problem early on than halfway through a case – think a pension consolidation exercise where it turns out that some of the existing plans have safeguarded benefits that weren’t made very clear in the policy documents!

3.       Collaborate

It’s all too easy to go down a Google rabbit hole when looking for information, but reaching out to others in the financial planning community first could save you a lot of time.

I’m lucky to be able to pick the brains of all my knowledgeable colleagues at We Complement, but I understand that not everyone has that luxury. Fortunately, there are lots of helpful groups available for paraplanners and others who work in financial planning, including on LinkedIn and WhatsApp.

In particular, the Big Tent at the Paraplanners’ Assembly and the M&G Wealth Technical Group are really useful resources where you can benefit from the collective brainpower of financial planning minds all over the country.

4.       Templates

I’m sure we all know what it’s like to work with templates that need a lot of tweaking (think adding in various paragraphs that are scattered across different documents, remembering to remove certain wording that isn’t relevant to some cases, or wrestling with formatting) before you even get around to personalising them for the client. Relying on memory to make sure you remember to add or remove content is not only an inefficient use of time but is almost certain to catch you out on a bad day!

Make sure you’re happy with the templates you’re using and how you use them. It can be a time-consuming task, but sorting out your templates and making sure that you have a slick suite of templates that suits your needs can save a lot of time in the future.

Ideally, you should have a range of easy-to-use templates available to you that need minimal tweaking, so when the research stage is over and you’re ready to crack on with the report you can get started without any fuss.

Have I missed anything? Please share with us your favourite technical content, tools or tricks.

Thanks for reading!

What Is Outsourced Paraplanning and Why Do Advisers Use It?

Outsourced paraplanning is when financial advisers use external paraplanning support instead of hiring in-house. This allows firms to manage workload more efficiently, improve turnaround times and maintain consistent, high-quality advice delivery.

In this guide, we explain what outsourced paraplanning is, how it works and why more financial advisers are choosing to outsource paraplanning support.

If you are looking for outsourced paraplanning services, you can learn more about how we support financial advisers here.

What Does Outsourced Paraplanning Include?

Outsourced paraplanning typically covers a range of technical and administrative support tasks that sit behind the advice process. This allows advisers to focus more on client relationships and less on the time-intensive work involved in preparing recommendations.

Common areas of support include:

• Suitability report writing
• Technical research and analysis
• Product comparisons and recommendations
• Case preparation and documentation
• Ongoing support across the advice process

Why Do Financial Advisers Outsource Paraplanning?

Financial advisers outsource paraplanning to improve efficiency, manage capacity and maintain a consistent standard of advice delivery.

Key reasons include:

• Increasing capacity without hiring additional staff
• Reducing bottlenecks in the advice process
• Improving turnaround times on client work
• Maintaining consistent, high-quality documentation
• Accessing experienced paraplanning support when needed

In-House vs Outsourced Paraplanning

Many firms choose between building an in-house paraplanning team or using outsourced support. Both approaches have their place, but outsourced paraplanning offers greater flexibility for firms that want to scale without increasing fixed costs.

In-house paraplanning can provide full control and integration, but it often requires significant investment in recruitment, training and management. Outsourced paraplanning, on the other hand, allows firms to access experienced support as needed, without the long-term commitment.

Is Outsourced Paraplanning Right for Your Firm?

Outsourced paraplanning can be a good fit for firms that are experiencing growth, dealing with capacity constraints or looking to improve operational efficiency.

It is particularly useful for:

• Firms with inconsistent workloads
• Advisers who want to spend more time with clients
• Businesses looking to scale without increasing headcount
• Teams that need additional technical support

If you are considering outsourced paraplanning services and want to understand how this could work for your firm, you can find more about our approach here.