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Scottish Life: A division of Royal London

Adviser  >  Individual pensions  >  Income Release  >  Helping you with the drawdown advice process

Helping you with the drawdown advice process

As a champion of independent financial advice, we're committed to providing you with the information and support material to advise your clients on their retirement options. Read on to find out how we can help you with this complex area of financial planning.

FSA’s advice guidance

The FSA has published ‘top tips’ on its website for advisers operating in the drawdown market. These can be summarised as:

  • Link recommendation to client’s personal & financial circumstances
  • Ensure plan recommended is appropriate for client’s attitude to risk
  • Consider relative importance of plan to client’s financial well-being
  • Discuss all options available and reasons for discounting them
  • Consider the suitability of the plan if the client is still working
  • Pay regard to client’s information needs
  • Provide all information to the client in a balanced manner
  • Record all essential client information

Clients looking to access their pension have many options open to them so it requires careful consideration of the pros of cons of each before a decision is made. As a financial adviser you need a full understanding of the options available and the client’s personal circumstances and objectives before making a recommendation.

Acquiring this expertise takes time and effort. So to help you we’ve created a suite of technical support material to build on your existing knowledge of the ‘at retirement’ market and give you the tools to determine whether income drawdown is appropriate for your clients.

Why is this important?

  • The FSA requires you to have a full understanding of the available options and be able to explain the risks of each option before advising clients to use drawdown
  • You are more able to demonstrate the value of your advice if you fully understand and are able to explain all the options available
  • May enable you to retain clients for longer and so increase the revenue generated for your business


How Scottish Life can help

Building on our many years experience in the drawdown market we’ve created a range of technical leaflets covering all aspects of the drawdown advice process. The topics covered are:

Comparing retirement benefit options

  1. Advantages & disadvantages
  2. Case study

Building investment portfolios

  1. Portfolio construction & review
  2. Income withdrawal strategies

Income drawdown advice process

  1. FSA’s guidance
  2. Client considerations

PCLS recycling

  1. What are the conditions?
  2. What are the consequences?

Calculating max GAD income

  1. How to calculate max income
  2. Advice implications

When max income is recalculated

  1. Formal & additional reviews
  2. Advice implications

The critical yield (CY)

  1. Definition of critical yield A & B
  2. Factors that influence the CY

Death benefits

  1. Crystallised & uncrystallised benefits
  2. Spousal by-pass

Next steps

Once you’ve identified those clients that could potentially benefit from using an income drawdown plan we’ve a range of material for our Income Release proposition that you can use with them, including:

  1. Client Leaflet
  2. Client approach letter
  3. Sample suitability letter

                                                                                                         

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© Scottish Life, St Andrew House, 1 Thistle Street, Edinburgh, EH2 1DG.
Scottish Life is a division of Royal London and markets products produced by Royal London. Royal London consists of The Royal London Mutual Insurance Society Limited and its subsidiaries. The Royal London Mutual Insurance Society Limited provides life and pension products, is a member of the Association of British Insurers and is authorised and regulated by the Financial Services Authority, registration number 117672. Royal London Marketing Limited acts as an insurance intermediary for general insurance products and is authorised and regulated by the Financial Services Authority, registration number 302391.