How well is your Centralised Retirement Proposition really holding up?

The FCA's retirement income thematic review took a close look at how firms evidence suitability in decumulation. Two areas it flagged as varying widely from firm to firm were cashflow modelling and stress-testing. Add Consumer Duty on top of that, with its expectation to avoid foreseeable harm and deliver good outcomes, and it's a good moment to look again at your own Centralised Retirement Proposition (CRP).

Whatever shape yours takes, three questions are worth asking of it.

1. Are you getting consistent outcomes across your client bank?

Two clients in similar circumstances should end up with broadly similar advice, whichever adviser they see. That consistency comes from having risk-graded portfolios that sit against clear client profiles, so the starting point is the same every time and each adviser is building from the same foundation.

2. Have the assumptions actually been tested?

Retirement is a very different investment problem to accumulation, and one that averages tend to flatter. Sequencing risk, inflation and longevity all compound in ways that only really show up when you stress the numbers. The portfolios inside a retirement proposition should have been run against thousands of forward-looking scenarios, not just a base case, so the ones described as resilient have earned the description under proper pressure.

3. Do the investment and planning sides tell the same story?

This is the one that often gets less attention. The portfolio side of a proposition tends to get plenty of scrutiny. The cashflow projection sitting alongside it can quietly rely on generic longevity and on a straight-line return that isn't tied to the portfolio you've actually recommended. Clients notice the mismatch even when they cannot name it, and evidencing suitability becomes harder than it needs to be.

Our integrated CRP package is built around these three questions. Resilient risk-graded portfolios, the CRP support you'd expect around target market documentation and Consumer Duty material, and our Sustainable Income Tool so the cashflow projection uses the same modelling as the portfolio it sits alongside.

If you'd like to discuss how our CRP package could work for your business, or arrange a demo of our Sustainable Income Tool, please get in touch.