Spencer also emphasised how it was important for advisers to have strong relationships with their DFM’s to get a greater understanding of the investment solutions the firm can offer.
“From a discretionary fund management point of view most firms tend to have a core range of solutions. I hope that everybody in their own firm understands their own solutions really well but actually could I go and talk about a competitive solution in great detail? I could probably do an overview, but I certainly could not get into the nuts and bolts of it," she said.
“So, it really comes down to relationships. When you're working with your DFM partner, ask the questions, try and delve into, what are the types of investment solutions that the firm has, and what types of clients are they suitable for? How flexible is it, can you take the off the shelf solution and make adjustments to it for decumulation? Or is there already a formal decumulation service that's available?”
Centralised retirement propositions
As part of the discussion, the panel were asked from what they had seen, what ‘good’ looked like when it came to centralised retirement propositions’s.
Karl Heap, head of strategic partnerships at Brooks Macdonald said from what he had seen, predominantly the ‘good’ looked like how firms had segmented their clients for retirement.
He added: “The good ones are where, at a firm level, they know exactly what the assumptions are for the customer modelling, and they are reviewed on a regular basis.”
Spencer added there needed to be some sort of classification to a client’s risk of running out of money.
“Firms can dictate their own income percentage requirements as they see fit. But actually a client wanting two to three per cent income, generally, there's many investment solutions that would find that pretty sustainable for the rest of the client's life," she said.
“However, once you get into those higher levels of percentage requirements, for somebody wanting five or six per cent income, you've suddenly got a much less sustainable need, and therefore there's probably got to be either extra risk warnings given to the client, or there's certainly a smaller pool of potential solutions that can be looked at.
“So it's about having a formalised way to prove that actually you can give the right risk warnings to clients about what might happen to their capital."
The Evolution 2024 conference took place in London on Monday (September 10)
alina.khan@ft.com
What's your view?
