Consumer Duty, Retirement Properties & Room for Improvement

Advisers having overlooked their client’s property options when planning around retirement have admitted that there is clear “room for improvement” with some citing concerns under consumer duty obligations in not considering a clients property options more fully in planning.
Having met with a larger number of CEO’s and Financial Planning Directors from a broad range of wealth & advice firms over recent months, it is clear to see that the majority of firms have simply overlooked the opportunity presented by discussing client’s retirement living.

As firms explained the process of their assessment when reviewing a client’s retirement, it was fascinating to see the lightbulb moment where they realised that they had been overlooking a potentially significant element that should have been a key discussion.
The obvious utilisation is from certain retirement living models providing an IHT tax benefit (of up to 35%), thus enabling greater financial planning opportunities, not to mention the wider benefits of fixed fees, wellbeing and more.

With consumer duty emphasising the need to deliver good customer outcomes through ensuring that clients are informed of all their options, it currently looks like most firms have unknowingly let this slip under the radar.
Interestingly, around 80 per cent admitted they are concerned about meeting consumer duty and regulatory requirements if they don’t review clients’ residences as part of the review in modelling client scenarios and outcomes.

As an aside, having met with the FCA last month it caused some scratching of heads as retirement living properties are not a product, but their IHT abilities lean into advice being offered and ultimately their focus is on consumer outcomes (which this can affect), so we’ll update on their views if they re-emerge from the dark room they disappeared into!

This led to a realisation that training of their advisor teams needed to take place to ensure they didn’t miss potential opportunities or fall short of the FCA’s expectations.
Wealth and advice firms are now engaging us to understand better the nuances and benefits of the different retirement living models so as to educate and support their advice teams and in turn their clients.

So, having conversations around a customer’s plans on retirement living is not only a financial consideration but a big influence on their health and lifestyle, which can again, lead to better outcomes.

Those on the front foot of reviewing and driving forward their retirement proposition include M&G who recently launched a campaign to “change the conversation” around later life by challenging outdated portrayals of retirement, along with Brooks Macdonald’s introduction of a suite of retirement investment solutions.

To find out more see: https://www.riverstoneliving.com/advisors