As a welcome surprise at a time of greater-than-ever regulation, newcomers to cashflow modelling are finding that there are several advantages of using Synaptic Analyser when it comes to conducting reviews.
As is well known, the evolution of financial planning in the UK relied heavily on cashflow modelling, which was one of the hallmarks of practitioners within the old IFP. In those days, many will recall that there was something of a divide between those who did, and those who didn't.
Demographics and Pension Freedoms have changed the dynamic in the market by promoting the importance of retirement and post-retirement planning - advisers must have the relevant tools to analyse income in retirement, with the result that it is now difficult to imagine advice without a cashflow analysis of some kind. Knowing your client means working with defined objectives, and this can't be done without considering growth projections against objectives.
Synaptic Analyser has been designed with advisers who may be newcomers to cashflow modelling. It is worth pointing out that although retirement planning has certainly increased, according to our recent audit, the majority of advice is still very much in accumulation. Many of the newcomers to cashflow modelling are discovering that the tool provides a very effective method of bringing a saver's financial plan to life as part of advice in accumulation too.
The current pension consultation paper CP17/16 is in, and findings will be published shortly. A major theme is the requirement for advisers to assume full responsibility for their advice on a case-by-case basis. It is impossible to rely on third-party, generic illustrations. Only proper research, utilising actual scenario details will do. This is reinforced, by the way, in the new MiFID regime ex-ante and ex-post proof of suitability. The more rigorous scrutiny of advice at review will expose unsubstantial forecasts and inaccurate cost analysis.
The central proposition of the CP17/16 paper is that consumer protection requires pensions advice to be 'a personal recommendation'. 'We propose to require all advice on the transfer and conversion of safeguarded benefits to include a personal recommendation'. (clause 3.10)
Thriving within the regulatory requirements will require an up-skilling on use of research tools for many firms, particularly in the pension area. Adoption of Synaptic Analyser will assist in that area, as it has several unique features in addition to those generally available:
- Ability to access accurate annuity rates from within the tool (including the enhanced rates that most retirees are entitled to). This will enable the advisers to work with the new 'Appropriate Pension Transfer Analysis' and 'Transfer value Comparator' calculations (replacing the old critical yield calculation. This is a big upheaval as the current 'value analysis requirement (TVA) is on the way out):
'Adviser firms will be responsible for ensuring the APTA, including the TVC, is undertaken to a sufficient degree to support a suitable recommendation. Advice firms are liable for the advice even where it is checked by a third-party pension transfer specialist. Consequently, advisory firms must make sure that any software used meets their advice needs'.
- Focus on the analysis and illustration of pension recommendations, but allow a picture of wider retirement income to be included.
The Summary screen shows all of the inputs, the pension plans are captured on the left, but you can also see additional income sources.
The RED ROUTE. Here you can adjust the inputs 'on the fly', meaning that you don't have to go through steps if you don't want to. It also means that you can easily look at variables to assist the planning process, saving multiple scenarios for comparison.
The client's financial position is summarised in the fund value, illustrating longevity of the funds against life expectancy – fulfilling one of the key requirements of retirement planning. (See below).
Call 0800 783 4477 to request a demonstration or free trial.