Futureproof your retirement business with a Centralised Retirement Proposition

The second Market in Financial Instruments Directive – MiFID II – came into force on the 3rd January 2018. It introduced the “Product Intervention and Product Governance Sourcebooks” or PROD. This may sound like a handbook that applies just to product providers and indeed it includes many rules for these firms; but it also includes sections that are relevant to advisory firms or “distributors.”

The aim of the handbook is to ensure all firms have good product governance and for advisory firms it relates to the approach taken for providing advice to clients, including the design and implementation of a Centralised Investment Proposition (CIP) and or a Centralised Retirement Proposition (CRP). These include rules relating to understanding products and liaising with providers but, also on the advisory firm’s proposition for clients.

Enshrined in PROD 3.3.15 R (1) it states “Distributors must have in place adequate product governance arrangements to ensure that….the financial instruments and investment services they intend to distribute are compatible with the needs, characteristics and objectives of the identified target market.”

In addition, back in January 2020 the FCA issued another “Dear CEO letter”, which highlighted four key areas of concern, relating to:

▪ receiving unsuitable advice for their needs and objectives

▪ falling victim to pension and investment scams

▪ not receiving redress as a result of the non-payment of FOS awards and/or failing firms being unable to compensate consumers

▪ paying excessive fees or charges for products and services

In July 2020, the FCA issued Guidance Consultation GC20/3 aiming to provide “Guidance for firms on the fair treatment of vulnerable customers” where it introduced the concept of a “spectrum of risk.” It includes consumers ability to meet the challenges they face through the pandemic, as well as addressing their skills and capability to use technology. We expect finalised guidance by early Q1 2021.

Finally, we know that in February 2021 we should have the introduction of Investment Pathways and the FCA will focus on consumer and client attitudes to ESG investing. All of these will have an impact not just for new clients but also for clients still in legacy products, policies and administrated on old systems. So, how will financial advisers deal with these issues and create opportunities out of adversity.

So, is it now time to revisit your business model and take a relook at you client service proposition? Should we revisit alternative solutions for unviable clients and perhaps even review our client fee agreements?

KEY LEARNING OBJECTIVES

• Discuss why a review of your client service and retirement proposition may be needed.
• Explain 5 key areas that go to make a robust Centralised Retirement Proposition and what they mean to you and your clients.
• Demonstrate and share some practical assistance to develop and evolve a Centralised Retirement Proposition.

Meeting details:

Centralised Retirement Proposition
Wed, Nov 4, 2020 12:30 PM - 1:30 PM (GMT)

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