The rise (and expected rise) of CRPs

11 May 2020

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Whether you believe that this is just another marketing-infused acronym or the platform to provide robust retirement planning advice, there’s no denying that adviser usage of CRPs is now starting to surge.

Our friends over at Ascentric recently carried out some extensive research in this area and found that adviser centralised retirement proposition (CRP) usage is expected to swell over the next year, rising from 48% now to 71% in 2021, which is a substantial upswing.

To date, adviser interest in adopting a CRP approach has been much more muted than the rapid take up of centralised investment proposition (CIPs) that we saw post Retail Distribution Review. Part of the issue may stem from confusion with terminology. The first feature in this series highlighted that many adviser firms may actually be operating robust CRP approaches without actually realising it. Regardless, it’s not surprising to see CRPs moving more sharply into advisers’ focus as the regulatory scrutiny on drawdown advice increases.

Regulatory concerns

The FCA detailed in their business plan for 2020-21 that the suitability of drawdown advice remains one of its key priorities. Furthermore, their ‘Dear CEO’ letter towards the end of January 2020 highlighted this concern around the suitability of advice and that they essentially want retirement consumers to have access to ‘high quality advice and support’.

‘High quality advice and support’ happens to be a bread and butter service that many of the adviser firms that I’ve met provide to all of their clients, not just retirement clients but there is also this inter-connected issue of PROD which requires advisers to tailor their investment solutions and products to meet the needs of target markets.

Helping your clients better understand the risks

Regardless of whether a firm is using a CIP, a CRP or any other acronym someone wants to conjure up, it’s been great to see so many different firms evolve and adapt their processes for drawdown clients to help manage all of those inter-related risks and challenges in retirement. This can help you understand more about how different investments will perform in different scenarios whilst ensuring your clients have a better understanding of the risks they face in retirement. It also helps paint a clearer picture to your clients about how you are managing these risks for them and striving for stronger client outcomes.

As I highlighted in the previous piece, a CRP approach is about much more than just the investment solution being used. It’s about the retirement product, the use of planning tools to help you mitigate issues like sequencing risk, volatility drag and income sustainability and it’s about ultimately having a robust framework in place to support your conversations with your retirement clients, set expectations and review their plan against these expectations. As the popularity in drawdown continues to soar and the regulatory focus continues to gather momentum, it’s hard not to see adviser CRP adoption increasing further. And that can only be a good thing.

In the final instalment of this series, I take a look at some of the investment challenges that Covid-19 has thrown at the CRP landscape.

About the author

Ryan Medlock

Senior Investment Development & Technical Manager

Ryan’s journey with Royal London began back in 2008 after starting his career in compliance with Norwich Union. As an Investment Proposition Manager, Ryan contributed to the growth and development of Royal London’s Governed Range before moving to Aberdeen Standard Investments for a stint in the Strategic Client’s relationship team. Ryan returned to Royal London in 2018 with a focus on exploring adviser angles amongst complex regulation and investment themes. Ryan is involved in developing adviser facing content, presenting, writing articles and commenting for the press. Ryan holds the IMC qualification. Ryan is particularly proud of the fact that he finished 952nd in the 2008/09 edition of Fantasy Premier League.

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.