On top of all this we have the Financial Conduct Authority's thematic review of retirement income advice.
I am confident that the FCA will find that advice in this area has generally been appropriate. But with the environment for retirement income advice going through such change there is a risk that the decisions of the past are reviewed in the context of today.
So how might retirement advice need to develop from here?
We believe that retirement income clients are very different from those accumulating wealth in several ways.
Retirement income clients are likely to have more specific objectives in terms of income and legacy needs. They are also likely to be less resilient – that is, they have fewer options if markets go against them and therefore tend to focus on not losing money than further growing their wealth.
This presents an opportunity to think about risk in the context of achieving the client’s objectives rather than focusing just on investment volatility. The two are closely linked but are not the same.
The consequence of this is that investment strategies will need to focus more on balancing risk and reward rather than aiming to maximise return for a given level of risk.
Inevitably, the increase in interest rates will lead to greater use of secure income and annuity sales are already surging. But let’s not forget that low rates were not the only reason that annuities were unpopular.
With a couple of notable exceptions, products remain relatively inflexible. With state pensions increasing and client income needs declining with age, it is not clear that locking into a fixed income early in retirement makes sense.
There are other ways of capturing higher interest rates to provide security without sacrificing flexibility.
Finally, the FCA has said that it will use the review to assess how firms are implementing consumer duty in relation to retirement income advice.
While I hope that the regulator recognises the need and value of ongoing advice in retirement, there will no doubt be focus on the substance and cost of the service provided.
It will be important that it recognises the value that comes from ongoing financial coaching. Just because an annual review does not result in action being taken does not mean it is not necessary or valuable.
Good advice is often as much about stopping clients from making poor decisions as it is helping them make good ones.
We are entering a new phase for retirement income advice. Helping clients realise the aspirations Osborne set in that Budget nearly a decade ago remain front and centre for advisers.
