19 January 2023
If you are covering the FCA’s thematic review of retirement income advice, please see the following comment from Jon Greer, head of retirement policy at Quilter:
"Pension freedoms radically changed the retirement landscape and have no doubt been instrumental in helping to give people more choice and flexibility in retirement. But with greater choice, comes more complexity and its right that this Thematic Review announced by the FCA looks at how financial advice is helping consumers navigate these difficult and often perilous decisions.
"Planning your retirement is one of the most important decisions of your lifetime and financial advisers have a hugely important role to play in helping people make the best of their pension savings and ultimately accessing the best possible retirement. Making the wrong choice could make the difference between someone enjoying a fulfilling retirement and one where they are struggling to make ends meet.
"While new initiatives such as investment pathways make it easier for unadvised savers to choose investment solutions aligned to their specific desires and drawdown objectives, they are no substitute for financial advice. Everyone’s financial make up is different as well as their financial objectives, and advice often helps those who live well below their means for much of their retirement unnecessarily by illustrating exactly how much they can afford to drawdown without fear of running out.
"The results of the review from the FCA will also be a bellwether for how well firms are implementing Consumer Duty as the new regulation requires advice to be outcome-based and avoid foreseeable harm. Advisers will no doubt have an eye on how they document their advice and the solutions they use through the consumer duty lens with particular emphasis on protecting their customers from foreseeable harm.
"However, the government must also look at some of the other aspects of the pension system to see if they are working as they should too. The Money Purchase Annual Allowance, for example, is a contradiction to the principles of freedom and flexibility and government should consider whether it is achieving the desired outcome and explore whether a general anti-abuse approach could work better than the rigid, strict approach currently employed."
