Advisers are rejecting the view that Centralised Retirement Propositions (CRPs) are a restrictive “sausage factory” approach to retirement planning with almost three-quarters planning to have one in place by 2021.
Research carried out by NextWealth on behalf of Ascentric questioned 200 advisers on their use of CRPs. While just under half (48%) of advisers currently have a CRP in place this is expected to rise to 71% in the coming year.
For the purpose of the research a CRP is defined as a centrally agreed approach to retirement planning that typically includes investment and withdrawal strategy. It may also extend to fact finding and assessing capacity for risk.
Advisers are increasingly of the view that CRPs offer a framework than can be used to deliver advice. This flies in the face of traditional views that CRPs are restrictive and do not offer the capacity to offer advice tailored to the specific client– a view still shared by 89% of advisers who did not wish to offer a CRP.
The most commonly cited reasons for establishing a CRP are:
- 35% said they chose a CRP because they offer benefits to clients
- One-quarter (24%) said they increase business efficiency
- Almost one-fifth (18%) said CRPs help them meet regulatory requirements
Another key issue explored in the research is that of client segmentation – an issue brought increasingly into the headlines by PROD.
According to the results almost three-quarters of advisers (73%) are segmenting their client banks. Of these firms, the clients’ level of assets was the most popular method of segmentation.
When asked whether they adopted a different segmentation approach for retired clients, only one third said they did. However, there was evidence that a much larger proportion of advisers did differentiate their service for retired clients. For instance many recognised these clients may require extra meetings with more frequent capacity for loss and risk tolerance reviews.
In addition, nearly all the surveyed advisers had experience of managing vulnerable clients (only six out of 200 said they hadn’t dealt with a vulnerable client). Most firms have an agreed process for dealing with vulnerable clients, often consisting of having a friend or family member present for meetings.
Commenting on the research findings, Jo Kite, head of proposition and marketing at Ascentric said:
“The research found that clients seeking retirement advice make up 60% of advised clients and with demand set to grow even further then CRPs can play an important role in helping firms deliver retirement advice more efficiently and consistently. Most importantly, advisers told us it can deliver real client benefit and if we think of a CRP as a framework rather than an inflexible ‘sausage factory’ approach, it’s hard to see any reason not to adopt. This could be particularly the case as advisers help clients plan for a sustainable retirement income against a background of the volatility experienced from COVID-19.”
Commenting on the research findings, Heather Hopkins, managing director of NextWealth, said:
“Our research with Ascentric confirms that a CRP does not equate to an overly restrictive approach to financial planning. Instead, a CRP is a framework in which firms offer retirement advice. Firms that have adopted a CRP see it directly benefiting clients and driving efficiency in the firm. As more firms see the benefits of a CRP, I have no doubt we will see greater adoption across the profession.”