Never mind the quality 2… and he marched them down again!

In this report, we follow up on Never mind the quality 1, where we looked in detail at adviser centralised investment propositions (CIPS)

Now, we seek to understand how advisers deal with decumulation. Whilst the issue is not a new one, Pensions Freedom has exponentially increased the focus on this aspect of financial planning. Increased longevity combined with low annuity rates and the end of defined benefit pension schemes has combined to change the face of retirement planning.

In this report, we seek to understand how adviser differentiate the CIPs from their CRIPS – centralised retirement investment propositions. We look at the demise of the annuity, and the challenge of longevity risk – too much life at the end of the money. We also wee how advisers deal with significant market corrections early in the drawdown phase – so-called sequence risk.

Possibly the most controversial finding is the apparent unsuitability of the commoner fee models where retirement income is the prime objective of the portfolio – a dilemma as fees need to be lower whilst work appears to be greater.