The Importance of Pension Reviews

The Importance of Pension Reviews

There have been articles in the press recently about service standards from some providers, and criticism about delays in giving information to IFAs.  One provider has been criticised for not doing reviews on a client’s SIPP that had been in cash for a number of years.

The regulator expects IFA firms to do reviews with clients, on at least an annual basis.  Advisers are paid ongoing adviser charges for doing precisely that.

But the question I want to raise is this:  What should be included in a review?

I think the first thing to remember is that you are reviewing the clients overall financial plan – and a pension plan happens to be a part of that.  It is no good just concentrating on one or two items; for example fund performance and asset allocation.  These are important, but should not be the centre of attention.

What does your review process look like?  Is there a system in place to check (like you would do on a piece of new business) that everything has been done, and that it is compliant?  There should be.  The FCA expect the senior management of a firm to have the appropriate Management Information (MI) on things like this.

If a client is in drawdown of some description, do you always do a comparison with an annuity to see how this could affect the client’s overall plan?  Previous research showed that 12% of advisers never considered an annuity when reviewing a capped drawdown plan.  Has continuing suitability been accurately assessed as required by the regulator under COBS 9?

The correct way to conduct a review is not prescribed by the FCA.  There is however lots of information out there stating what should be covered.  Firms need to make sure that they have a good process, and that it is adhered to. Never underestimate The Importance of Pension Reviews.

Tom Ryan APFS

Compliance Manager

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