Defaqto says pension freedom “has brought drawdown to the masses” and moved existing pension savings from a source of income in retirement to a financial planning vehicle.
For some retirees, moving from the mindset of asset owner to custodian can create “significant benefits.”
The structured CPD guide pledged to give advisers “all they need to know when advising on drawdown including: how the market has evolved, an overview of retirement options, identifying income needs and sources, the main investment factors to consider, and the practical implications for drawdown income advice.”
The guide also highlights how one of the main issues with drawdown is that advisers have not always evidenced the suitability of their strategy and so may not understand the implications of their decisions.
Professional financial advisers and Paraplanners can add considerable value by helping their clients avoid the common pitfalls, including tax on withdrawals, tax on contributions, tax on savings, lost capital, lost income, and lost partner’s income.
The guide also includes due diligence checklist.
The document is accredited by the CII/PFS and CISI for up to 60 minutes of structured CPD and is designed to enable advisers to:
• Understand the death benefit options and how they impact on advice
• Understand the different retirement options
• Understand how to evidence the suitability of a selected level of income or withdrawal
• Understand the issues in managing an effective drawdown strategy
• Understand the risks associated with drawdown solutions
• Understand the due diligence required in recommending a drawdown solution
David Cartwright, head of insight for wealth and protection at Defaqto, said: “Get just one element of the advice process slightly wrong and there is the potential for advisers to destroy the standard of living for clients and their partner for the rest of their lives.
“Having a defined process, which they follow without fail, will help advisers identify the common pitfalls and issues, while ensuring advice remains suitable and compliant.
“We designed this guide to help advisers identify the factors to consider in their advice process and how to mitigate some of the issues and risks involved.”