Advisers can still pay a critical part in the pensions market following A-Day by making investment portfolios the key focus, claims Defaqto.
It says post A-Day clients will still have a wide choice of pension products and will require quality, professional advice to help them select the most appropriate one for their needs.
The financial research company says there are a few key questions advisers will need to consider post A-Day:
- Are they confident or, more importantly, qualified enough to professionally advise on the wide range of funds and assets available?
- Will their investment advice process hinge on the use of risk profiling and asset allocation tools?
- Or will they outsource investment decision making to multi-manager propositions or discretionary investment managers?
Matt Ward, head of pensions at Defaqto, says advisers will now face new challenges as the investment portfolio within the pension wrapper they select becomes a key focus.
He adds advisers will need to be sure about the service they are offering to clients, and those with defined service strategies and who have paid full attention to the planning opportunities provided by A-Day will be in a winning position.
Ward also points out advisers who specialise in estate and tax planning will have plenty of ways in which to add value, by fine-tuning the balancing act between maximising the use of the annual allowance while the client saves and minimising the impact of lifetime allowance at retirement.
Defaqto claims there are now more retirement solutions than ever for clients, and advisers who specialise in this area of business will not be short of opportunities, as the number of people retiring in the UK is rapidly increasing.
It also believe a key decision will be whether to utilise income drawdown or annuities, as there are still good cases for either option at retirement, with clients with more flexible incomes drawn towards income drawdown, while others will be tempted by the steadiness of annuities.
Ward says: “If implemented correctly the changes arising from A-Day will help to enhance the reputation of advisers and the financial services industry in general. Clients are always happy to pay for quality, value added services throughout life and financial services should be no different.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
Plus worked example
Risk-profiling tools have provided a framework for advisers to manage client expectations but, writes Chris Fleming, key issues persist that have varying levels of implications for advisers and clients
100 new clients
Achievements, charity work and other happy snippets
Square Mile’s series of informal interviews