We have seen a steady evolution in UK financial advisers’ propositions since pension freedoms with a tightening up of processes for clients in decumulation. This has included more cash flow planning, and greater emphasis on performing fuller and more proactive annual reviews to keep clients on track. It is the topic that we have discussed in our UK Financial Advisers: Advice in Decumulation report, published yesterday.

Relatively few advisers are running centralised retirement propositions (CRP) that are distinct from propositions built for accumulation. The risks of managing income in retirement – such as sequence risk and longevity – are effectively managed through enhanced financial planning rather than specific products. Annual reviews of cash flows are used to track sustainability of income, with clients coached on how much they can afford to spend, gift and bequeath, with adjustments required from year to year.

There are opportunities for product providers, but advisers appear torn on retirement-specific investments. They would be interested in products that address some of the risks, but income guarantees are deemed to be too expensive and smoothed funds have fallen slightly out of favour following recent market falls.

Advisers currently favour dealing with retirement income issues through the planning process rather than suffer the investment drag associated with dedicated products. The risk of running out of money is deemed to happen in slow motion – advisers believe they can pick this up during annual reviews with enough time to fix any problems. But this requires substantial financial planning time. Product providers are yet to convince advisers that their solution can do the heavy lifting.