An increasing number of financial advisers are changing their retirement propositions following the Financial Conduct Authority’s (FCA) thematic review of retirement income advice, analysis has shown.

The research, conducted by Wealthtime and Copia Capital, found that the proportion of advisers operating a centralised retirement proposition (CRP) separate from their centralised investment proposition (CIP) had nearly doubled.

In January 2024, 17 per cent of advisers operated separate CRPs and CIPs. This rose to 29 per cent in October 2024, after the FCA had conducted its review in January to March.

The analysis also showed that the proportion of advisers using the same model portfolios for clients in accumulation and decumulation fell from 80 per cent to 64 per cent over the same period.

Meanwhile, those using bespoke portfolios for clients transitioning through retirement increased from 3 per cent to 7 per cent.

A “significant” change in the use of guaranteed investment products for clients in retirement was also identified, with the proportion of advisers using these products for at least some clients rising from 56 per cent in January to 88 per cent in October.

Furthermore, the proportion not using guaranteed investment products for any of their clients in retirement fell from 43 per cent to 13 per cent during the same period.

“The impact of the FCA’s thematic review of retirement income advice continues to be felt as firms increasingly realise that their retirement propositions might not be as robust as they previously thought,” commented Copia Capital head of sales, Tony Hicks.

“Ensuring that they are meeting the regulator’s standards is particularly important given the Dear CEO letter to financial advisers last month which reinforced the FCA’s expectations for good practice and its ongoing focus on this area.

“Pension freedoms unlocked greater flexibility around retirement planning for many people, but in doing so, created more complexity in mitigating the specific risks faced in decumulation to deliver a sustainable income throughout retirement.

“It is encouraging that firms are continuing to review their advice processes to protect clients from foreseeable harm.

“Providers have an important role to play too, with further innovation around investment solutions and retirement functionality that meets the needs of those in decumulation and helps support good outcomes for clients.”

This article originally appeared in our sister publication Wealth Investment News.

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