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Discovery Series
08/01/24

Guarding Financial Futures: Supporting financial advisers in assessing and managing risk for retiring clients

In partnership with Just Group, we take a step inside the financial advice process to explore how the assessment and management of risk is undertaken by financial advisers for clients who are approaching or at retirement.

We asked more than 200 financial advice professionals representing a broad range of firms and business models about their process for determining and reviewing their clientsā€™ risk levels, the tools they use, and how they map risk profiles to investment solutions.

 

Methodology

The insights shared in this report are based on:

  • an online survey of 200 financial advisers
  • in-depth interviews with ten firms representing a broad range of businesses and business models.
  • in-depth interviews with four providers of risk profiling tools.

Key findings

  • More than threequarters (77%) of advice firms use a risk profiling tool to help determine their clientsā€™ attitude to risk.
  • Three quarters of advisers do not change the frequency or process of managing investment portfolios for clients in decumulation even though clients at this stage of life face significant changes.
  • Currently a third of advisers use a tool to manage risk around income generation; 56% take a manual approach.
  • 59% of advisers use the same DFM for clients in accumulation and clients in decumulation.

This report highlights a need to provide financial advisers with the right tools to consistently assess risks faced by customers in retirement as well as to map these risks and a customerā€™s financial objectives to the right solution.

We are pleased to have partnered with Just Group to explore such an important topic, particularly in light of Consumer Duty and the FCAā€™s current review of retirement advice practices.

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