Consumer duty, retirement properties & room for improvement
50 Shades of Grey in retirement…
One of the hardest areas to navigate is “retirement” as it is not black & white, more a few shades of grey. Often approached by advisors as a financial decision or being financially led, rather than from a broader holistic approach of the opportunities, retirement is often seen as a wind down, a step back, taking things more slowly. But many don’t want this. They see developed retirement markets where the silver surfers actually go surfing, jump out of planes and ignite their remaining years into something a lot more enjoyable. This has a big effect on people’s wellbeing and this is something that has sprung up the advisor agenda over recent years, no doubt highlighted by the FCAs consumer outcomes focus.
But what about the day to day and not just the holidays and experiences. Can greater enjoyment be achieved more simply?
Most people, especially once retired, spend the majority of their time at home. So, living somewhere that fulfils their needs, and more, should be a high consideration. Many wouldn’t believe that they could live somewhere that resembled a five-star hotel with all the amenities, but new Independent Retirement Communities (IRCs) offer this choice.
Riverstone’s Kensington residence scored 87 per cent (an excellent) in its latest Customer Satisfaction score grading (CSAT), whilst the NPS (Net Promoter Score) was 88 per cent. Any score above 0 is good, above 20 is great and above 50 is amazing. As Google says “An NPS over 70 means your customers love you and your company is generating a lot of positive word-of-mouth from their referrals”. For reference that beats firms like Apple, Google, Netflix & Hilton hands down.
Unfortunately, the stereotypical images of dull dreary corridors, bingo and stale sandwiches prevail, but the reality is that for those in the know they can sit in an air-cooled library, pop down to the hydro pool, relax in the cinema watching their favourite film with their bestie or have an amazing dinner in the restaurant. All in the luxury of their own “home”.
And it’s affordable. Not only that, but the ability to utilise certain retirement living models that provide an IHT tax benefit (of up to 35%) enable greater financial reassurance and certainty around fees, whilst allowing wider flexibility in financial planning.
Thus, retirement living really can have a significant effect on clients’ wellbeing and advice around that plays a significant role.
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
