FCA Retirement Income Advice Survey – a threat or an opportunity?

We drew attention to the FCA’s Retirement Income Advice Survey in our ‘What lies beneath?’ article last month and there has been plenty of commentary in the industry press about the survey since, most of it covering how generally intrusive and onerous completion is, but are there some benefits to be had here?

It’s hard not to have some sympathy with some of the angst, given that the survey covers a wide remit, contains 87 questions (60, plus 27 supplementary ones), that many firms will struggle to complete large parts of it because they don’t have the relevant data, and it landed just a few weeks before Consumer Duty goes live!

What’s the survey all about anyway?

Well, we knew it was coming – the FCA announced it on 19th January – and made pointed reference to it within its Business Plan. The regulator was seen by many to be slow to react to the ‘Pension Freedoms’ which went live in April 2015 and the shift in the way people access their pension funds has created a potential minefield in this area, so it was no surprise that focus was placed on at retirement options, especially after the issues that DB transfers raised. And bearing in mind that most of the DB money is now in DC and that many clients will access this in one way or another at some point.

The FCA issued the survey to circa 1300 firms and indicated that the deadline for completion was within three weeks of receipt. However, they omitted to make it clear that completion wasn’t mandatory (although some firms who contacted us seemed to think that failure to respond will put them on the naughty step!).

In reality, few firms, if any, will be able to provide answers to all 87 questions, which cover a very broad spectrum. The survey requested data on the following:

  • Lifetime mortgages
  • Tools used when providing decumulation advice
  • Firm size (by adviser numbers)
  • Target market(s) and common client objectives
  • Client data
  • Vulnerability
  • Scope of advice
  • Typical funds by £ advised upon
  • Advice fees
  • Revenue from decumulation advice
  • Ongoing advice data
  • AUM
  • Platforms
  • Products recommended
  • KYC
  • Cashflow forecasting assumptions
  • Adviser qualifications and CPD

This list isn’t exhaustive but as you’ll note, it’s pretty comprehensive and even if all firms don’t respond, it will provide the FCA with a lot of data, the findings from which are due to be published before the end of the year.

So where are the benefits?

It doesn’t take a genius to work out that a fair proportion of what’s being examined here is pretty closely aligned with Consumer Duty and client outcomes. Those who have been involved in preparing implementation plans, price and value assessments and reviews of how their firm delivers its products and services will recognise much of the content, so if the FCA are focusing on this doesn’t it make sense to do the same?

The MI that the survey content looks at should provide plenty of clues as to what firms may be wise to gather data upon, analyse and monitor going forward. It may even drive the firm’s strategy by more clearly identifying its target market and providing new business opportunities, but there is perhaps a hidden benefit that many may not immediately figure – exit strategy.

Exit strategy?

Well, yes. Depending on your sources, the average age of an IFA ranges between 55 and 60 and many of these can foresee the point where they hang up their boots. Some will be considering this now, or are actively engaged in doing so. Look in the industry press virtually every week and you’ll see news of firms either merging, being acquired by other firms, or becoming part of a larger entity – frequently one of the large consolidators.

One of the most difficult aspects of agreeing a sale is the sale/purchase price and what it’s based upon. EBITDA is often the standard here, but this is really an accountancy model, so what is actually being sold/purchased?

Imagine if your firm can provide all the data requested within the FCA Retirement Income Advice Survey. How much does that show you know your business? And as a buyer, would you really go ahead and purchase a firm that isn’t able to provide this? EBITDA is all fine and dandy, but where is the real value?

MI can be very powerful, after all, knowledge is supposed to be power isn’t it?

Sometimes perhaps, what appears to be a pain in the rear end can actually have very tangible benefits. Every cloud and all that.


Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

This survey may appear to be yet another request for more information, but looking at it from another angle there may be some tangible benefits. The FCA has frequently commented that it expects firms to gather, analyse and act upon MI and whilst firms may not possess (or need to possess) the level of granular detail that the survey requests, it does provide some indicators as to what MI firms should consider looking at. If your firm does get its collar felt, or there are further requests for information, being able to provide a suite of MI with supporting rationale for the actions taken as a result will go a long way to evidencing that the firm is focused on the right outcomes. Some firms already do this very well, others have some way to go. If you need any help in this regard please speak to your ATEB Consultant.

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About the Author

Paul has in-depth experience across a wide spectrum, having headed up compliance, T&C, monitoring, oversight and MLRO functions previously. He was also an IFA for some time so can see things from more than one angle.

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