Regulatory disruption is currently a big challenge for advice firms as many worry about "getting it right" for their clients.
Speaking as part of a panel discussion at the FT Adviser Retirement Income briefing today (April 30) Heather Hopkins, managing director of Next Wealth unpacked the regulatory environment for retirement advice.
Hopkins said getting retirement advice right for clients was a “huge challenge” for advisers.
She said: “I ran into an adviser a year ago and asked him what was keeping him awake at night. He said ‘not getting it right for my clients’, because advisers’ biggest fear is that their clients will run out of money. So retirement advice is really important and we all want to get it right.”
Hopkins believed retirement advice was important to help clients achieve their goals and objectives but also to retain the number of clients advisers have.
“What we don’t want to see is a shrinking of client banks, the FCA financial lives survey found 8 per cent of the UK population paid for advice in the past year and that number needs to grow.
“However, advisers are consistently telling us the biggest challenge to their business is the pace of regulatory disruption,” she added.
Hopkins highlighted that advisers were also finding it challenging to know how to grow their business.
She said: “If advisers look at the section of the FCA's retirement income review that looks at good and bad practices, and also think about consistency in their approach to retirement advice, this review shouldn’t be seen as more work to do.
“If advisers can find a way to systematise their retirement advice and provide a consistent approach then this should help to grow their business.”
Hopkins was joined by Richard Parkin, head of retirement at BNY Mellon Investment Management, Rachel Vahey, head of public policy at AJ Bell and Kate Tuckley, department head, consumer investments at the FCA.
Tuckley disagreed that regulation was disruptive and said regulatory initiatives like the retirement income review builds on a set of standards the FCA has previously articulated.
She added: “It’s not disruptive, it’s about enhancing an opportunity and I see it in that context. I would advise everyone to take a look [at the retirement income advice review] even if advisers just dip in and out of the different sections, there is something in there that will help them.”
Parkin stressed how important advice was because clients do not always understand what they need to consider when it comes to their retirement.
He said: “It can be difficult to get clients to think beyond the next few years but you have to have some sort of idea of what the future is going to look like.
“So if we can get a better understanding of client objectives and then use those objectives in our approach it can add value to someone's life later in retirement.”
