Here at We Complement, we’ve been immersing ourselves in extensive research to uncover what truly makes a standout Centralised Retirement Proposition (CRP).
A CRP isn’t just your typical Client Investment Proposition (CIP) with a few adjustments for retired clients. It’s about crafting a solid, repeatable, and reliable process specifically tailored for clients in decumulation. We’re honing in on the areas of financial planning that hold significant importance for individuals at this stage of life.
While there’s often overlap between your review processes for clients in accumulation and decumulation, this article is all about shining a light on how to adapt your review process for clients approaching retirement. Discover how these adaptations can be seamlessly integrated and documented within your CRP.
1. Frequency and type of review
As a client approaches and enters retirements, you may recommend that you meet for review meetings more regularly than when they were in accumulation. You might also feel that the client would benefit from in person meetings, rather than online or telephone meetings, to improve communication during what can be a period of significant change for many people. This could vary between sub segments of clients.
If there are any changes to how and when you meet your retirement clients for a review when compared to your processes for accumulation clients, this could be documented in your CRP. This demonstrates that you have considered the service you are offering your clients and whether it is still meeting their needs and providing value for money in this new stage of life.
2. Data gathering
How often do you ask your decumulation clients to complete a full fact find? Is there anything specific that would trigger a new fact find being requested?
Clients who are approaching retirement or who have recently entered retirement may experience a lot of life changes in a short period of time, compared to the average accumulation client. This could mean that you ask your clients to update their details more regularly when they reach retirement age. You may also have a different fact-finding process for clients once they reach this stage of their life. This is explored in more detail in our previous blog, Central Retirement Propositions – Deep Dive #3: The Fact Find.
3. Cashflow updates
Your approach to cashflow modelling and how often you update these models is something else that can be documented in your CRP.
How often do you run a cashflow model for your decumulation clients, and does this change depending on sub segments? Is this different for your accumulation clients?
You might also model more or different scenarios for your decumulation clients, use different stress testing methods, or incorporate tools like Monte Carlo simulations for certain clients.
4. Vulnerability
Clients can be vulnerable at any age. According to a 2022 survey by the FCA
47% of UK adults showed one or more of the key drivers of vulnerability, which are defined by the FCA as poor health, negative life events, low financial resilience or low capability.
However, as people get older, certain drivers of vulnerability, such as poor health or negative life events, may become more likely. Some clients may also consider retirement to be a stressful time, and so retirement itself could influence a client’s vulnerability.
How do you assess clients for vulnerability, and do you make any changes to your processes surrounding vulnerability for clients who are at or approaching retirement?
5. Event driven reviews
Certain events, whether life events specific to the client or world events that could affect all investors, could prompt you to arrange an ad hoc review meeting with a client. Your approach to this may change as clients enter retirement, and possibly vary between sub segments of clients.
For example, a market crash could affect all clients, but clients who are in decumulation may be affected more than clients who are in accumulation. Breaking this down further, clients who are at the start of their retirement journey and who are heavily reliant on their investments to provide them with an income may be particularly impacted by this. In contrast, clients who have significant secure income and who have already enjoyed many years of retirement may have less to worry about.
What is your process for identifying when retirement clients might benefit from a review outside of your agreed review schedule? Are there any particular trigger events that would prompt you to make contact with certain clients?