CRPs help boost business, research shows

4 min read 17 Feb 21

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Our research published today, Wednesday 17 February 2021 indicates that advice firms that have implemented a Centralised Retirement Proposition (CRP) may have fared better during the past year than those without a CRP.

The research carried out for us by NextWealth, based on a survey of 200 advice firms, reveals that those with a CRP in place are more likely to say they gained more clients than usual in 2020 compared to those without.

Whilst the pandemic has interrupted the roll-out of CRPs for some advice firms, others have reaped the benefit of working to a robust and repeatable process, and of having a clearly articulated framework of options to present to prospective clients.

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Currently half of advice firms have a CRP in place. A year ago, the same report found that 71% of firms aimed to have one by 2021, however attentions were diverted elsewhere in 2020 and some firms felt a shift to a CRP was one change too many.

A relatively static fifth of firms are still planning to introduce a CRP in the coming year and indications are that the trend towards adopting a framework within which to offer advice to retirement clients remains strong.

Reasons for a CRP

Reasons for establishing a CRP include:

  • Benefit to the client (31%) 
  • Business efficiency (20%)
  • Meeting regulatory requirements (18%)
  • Business process improvement (11%)

The report also shows that the main reason for firms to decide against a CRP is their preference to tailor advice to each client individually. Other firms however are challenging the notion that repeatable processes are incompatible with custom advice, in which the adviser works through a matrix of options to suit the client’s individual situation and objectives.

As one participant commented in the report; “All the FCA want is for advisers to be consistent. Show me your process. What they don't want to hear is “we’re bespoke, it'll be individual”, because that means potentially they're not treating every client the same.”

Developing segmentation of client banks

Elsewhere, advisers were surveyed on other aspects of how they work with clients and their strategies for delivering advice to retirement clients.

The use of other criteria than simply investible assets to segment client banks is growing:

  • 45% of advisers are now segmenting their clients based on their life stage, compared with 35% last year.
  • 41% are segmenting on complexity and needs, compared with 36% a year ago.

Impact of Covid on withdrawal rates in retirement

The impact of Covid on retirement plans and withdrawal rates is apparent with 39% of advisers reporting that their clients have decreased withdrawal rates since March 2020, and nearly a third say their clients have postponed their planned retirement.

Jo Kite, head of proposition and marketing, comments: “When it comes to Centralised Retirement Propositions, the research found that as well as enabling firms to deliver retirement advice more efficiently and consistently, CRPs may also help improve how advisers articulate the retirement proposition to clients and therefore support client acquisition and retention. With more people delaying retirement – and many concerned about the resilience of their retirement pot in the wake of Covid-19’s economic fall-out – demonstrating that your firm has a clear, robust and highly disciplined approach to help optimise retirement cashflow and manage risk is especially compelling.”

Heather Hopkins, Managing Director of NextWealth comments: “In our research with M&G Wealth this year, I was pleased to find evidence that advisers continue to place the needs of clients at the heart of their businesses. At NextWealth we believe this is absolutely key to successful advice models of the future. We are seeing more firms embracing client segmentation strategies based on the needs of the client rather than purely asset-based, and also advisers considering new ways to structure retirement portfolios to improve client outcomes.”

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