The Synaptic Guide to SIPPs

Is decumulation where the money is?

With so much airtime given to pension freedoms – understandably so – and also the apparent lack of innovation across the market, we arranged a deeper look at what is available in the market – relating to platforms in particular. The reason for focusing on platforms, if reports are to be believed, is that platforms are seen as one of the leading solutions that will support the retirement market, in particular the provision of income for clients (and we have a platform!)

For those with an interest in platforms, the findings are enlightening, even for the seemingly straightforward stuff.

From a client’s perspective, obtaining income doesn’t have to be really complicated and must be delivered in a way they value. For instance, they may wish to have income supplied from across multiple tax wrappers on the platform but don’t want to receive lots of different payments in their bank account, preferring just one. But which platform can cope?

So we commissioned the report but stepped back from carrying out the research ourselves, or writing the resulting report for that matter. There are some who would be quite happy to suggest ’foul play’ if we had. Instead, we turned to those well-known felines of Edinburgh for help.

 An analysis by the lang cat

The lang cat (a consultancy based in Leith, Edinburgh, specialising in platforms, pensions and investments) researched fourteen adviser-led platforms at the turn of this year. If you would like a copy of ‘Income in retirement through platforms’, get in touch via Twitter @ZurichAlistair or @ZurichAdvisers, or ask your usual Zurich contact, and we’ll let you have it!

The Zurich platform also ensures clients are always paid their income even when there is insufficient cash available. The lang cat stated “We think this is pretty cool; the last thing anyone wants is the client not getting a monthly income that’s required to pay the bills…because somebody forgot to keep the cash account healthy.”

With the variety of responses in the report it does make me ponder which platforms are actually capable of delivering against the new flexibilities available to clients and advisers. After all, many (all) platforms reviewed here were built prior to the introduction of freedoms. And as the lang cat pointed out “…clients typically spend a bigger part of their platform experience in retirement than accumulation.”

Back in December we asked advisers who are part of the New Model Business Academy (NMBA):

“Given the new pension freedoms, are you reassessing the platforms you use to ensure they will meet your client needs going forward?”

Perhaps unsurprisingly, two thirds indicated they are. I wonder how this has changed following some of the direct and rather scathing comments made by the FCA following the publication of their due diligence findings in March.

So on reflection, should platforms perhaps review their own processes, functionality and suitability in this new world before embarking on delivering new solutions?

I will leave that one with you.