Building a firm's value 

A robust retirement process can help create value for a firm in several ways:

  • Clients are less likely to run out of money during their retirement. In some circumstances, funds could even increase over time.

  • A thorough, evidence based, retirement proposition provides confidence in the firm’s expertise and the quality of its recommendations.

  • Clients will continue to rely on the firm for advice when their circumstances change during retirement.

  • There are multiple opportunities to engage with clients throughout their retirement journey. These include intergenerational transfers, lasting power of attorney, care needs and securing guaranteed income.  

The mortality cross subsidy of an annuity means its income is difficult for other asset classes to match without increased risk. Constructing a process to mitigate risks in decumulation helps to avoid certain foreseeable harms as outlined in the FCA’s Consumer Duty guidance. It could also enhance the reputation of the firm in the eyes of the client, their family and other external parties, such as Personal Indemnity insurers. All of this can add to the firm’s value. However, the main benefit is a better retirement and later life for clients.

It may be that a guaranteed income for life provides some or all of the required income. In fact, Timeline's research on rethinking guaranteed income as an asset in retirement portfolios, shows that longer-term asset values can be increased using a combination approach, whilst overcoming some of the inherent risks associated with decumulation. This could lead to future advice opportunities, perhaps even on an intergenerational basis.