Good governance arrangements – both by providers and advice firms – are crucial for achieving the best outcomes for clients. “Governance” can refer simply to investment governance, but it can also cover all aspects of a firm’s activities: from giving advice, writing suitability reports, training and competence to recruitment.
Even falling very slightly short of the standards laid out by the regulator can cause difficulty for firms. In our current climate of regulatory consultations, discussions and change, simply keeping up to date poses a major challenge.
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Value for money and retirement income were key themes in the FCA’s business plan for 2017/2018. Other key regulatory and industry issues that are likely to have an impact on adviser firms in 2018 and beyond are:
These could all become a drain on advice firms’ valuable resources. So this is a good time to review your governance processes. Small changes now could save a lot of time and money later.
Over £2 trillion is currently held in UK pension schemes (source: Spence Johnson, Market Intelligence 2016, UK Defined Contribution). A good portion of that will make its way into the retirement income space over the next few years, and the FCA is showing a keen interest. Reviewing your retirement advice proposition and processes now may save you both money and resources in the future.
We believe a structured, governed process to investing in retirement is essential for the majority of firms. If you don’t yet have a Centralised Retirement Proposition (CRP), developing one now could be very timely. Centralised Investment Propositions for clients still in saving have been around for a while, but will the FCA consider them appropriate for drawdown clients?
A good CRP will help you to:
In a market where you need to keep up to date with changing regulations (adding costs to your business), profitability and efficiency become increasingly important. If your drawdown business relies on a percentage charge of assets, you’ll have increased work while making drawdown reviews on a dwindling income stream.
A sound CRP will help you manage your existing clients and make advising new ones easier and more efficient. Having access to a range of investment solutions, specifically designed for drawdown clients, could help improve business efficiency and risk management.
To find out moredownload our CRP guide (pdf).